• Exponent Reports First Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 27 Apr 2023 15:01:00   America/Chicago

    MENLO PARK, Calif., April 27, 2023 (GLOBE NEWSWIRE) --  Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the first quarter of fiscal year 2023 ended March 31, 2023.

    “Exponent had a solid start to the year, growing revenues by over 9% on a year-over-year basis. This is a testament to the strength and resiliency of our business model, which is built upon a highly diversified portfolio of critical and integrated services,” commented Dr. Catherine Corrigan, President and Chief Executive Officer. “We continue to position ourselves for future growth by adding to our world-class team of scientists and engineers, increasing headcount year-over-year by 12% through strong talent acquisition and improved retention.”

    “Increased demand for our reactive services, which have been foundational to Exponent since our inception, supported our results in the first quarter. This work includes robust litigation-related activity as well as product safety- and recall-related work. Our proactive engagements were driven by work in the consumer products, chemicals, utilities, automotive and life sciences sectors,” continued Dr. Corrigan. “As we look ahead, our expertise will be increasingly sought after as the world places greater emphasis on safety, health, and environmental issues. Exponent remains well positioned to address our clients’ needs across the product lifecycle, developing solutions for today while empowering innovations for tomorrow.”

    First Quarter Financial Results

    Total revenues and revenues before reimbursements for the first quarter of 2023 increased 9.2% to $140.3 million and $128.7 million, respectively, as compared to $128.5 million and $117.9 million in the first quarter of 2022, respectively.

    Net income was $29.1 million, or $0.56 per diluted share, in the first quarter of 2023, as compared to $29.6 million, or $0.56 per diluted share, in the same period of 2022. The tax benefit for the classification of tax adjustments associated with share-based awards realized in the first quarter of 2023 was $3.6 million, or $0.07 per diluted share, as compared to $6.0 million or $0.11 per diluted share, in the first quarter of 2022. Including the tax benefit, Exponent’s consolidated tax rate was 18% in the first quarter of 2023, as compared to 9.7% for the same period in 2022.

    EBITDA1 increased to $35.8 million, or 27.8% of revenues before reimbursements, in the first quarter of 2023, as compared to $34.5 million, or 29.2% of revenues before reimbursements in the first quarter of 2022.

    In a separate press release today, Exponent announced its quarterly cash dividend of $0.26 to be paid on June 23, 2023, and reiterated its intent to continue to pay quarterly dividends. During the first quarter of 2023, Exponent paid $14.5 million in dividends and closed the period with $125.6 million in cash and cash equivalents. 

    Business Overview

    Exponent’s engineering and other scientific segment represented 83% of the Company’s revenues before reimbursements in the first quarter of 2023. Revenues before reimbursements in this segment increased 11% in the first quarter as compared to the prior year period. Growth during the quarter was driven by continued strong demand for Exponent's services from the transportation, utilities, consumer electronics, and life sciences industries.

    Exponent’s environmental and health segment represented 17% of the Company’s revenues before reimbursements in the first quarter. Revenues before reimbursements in this segment decreased 1% in the first quarter as compared to the prior year period. Excluding the impact of foreign exchange of $478,000, revenues before reimbursements for the environmental and health segment increased 2% in the first quarter as compared to the prior year period. Work in this segment was primarily driven by Exponent’s safety-related engagements evaluating the impacts of chemicals on human health and the environment, as well as activity in the life sciences industry.

    Business Outlook

    “Our accelerated recruiting efforts over the last year have strengthened our unique position to meet the complex and dynamic needs of our clients. As always, we will continue to strategically manage headcount and balance utilization based on market demand, which will support our business model over the long term,” commented Richard Schlenker, Executive Vice President and Chief Financial Officer.

    Our full year 2023 guidance is unchanged. For the second quarter of 2023, as compared to the same period one year prior, Exponent anticipates:

    • Revenues before reimbursements to grow in the high-single to low-double digits; and,
    • EBITDA1 to be 27.5% to 28.5% of revenues before reimbursements.

    For the full year 2023 as compared to the same period one year prior, Exponent anticipates:

    • Revenues before reimbursements to grow in the high-single to low-double digits; and,
    • EBITDA1 to be 28.0% to 28.5% of revenues before reimbursements.

    “For over five decades, Exponent has stood firmly at the cornerstone of engineering and scientific excellence, connecting the lessons of past failures with tomorrow's solutions to create a safer, healthier, and more sustainable world. Our first quarter results demonstrate Exponent's resilient business model and continued financial strength. Backed by our world class talent, multidisciplinary capabilities, and diverse client relationships, we remain confident in our ability to grow Exponent profitably and drive long-term value for our shareholders,” concluded Dr. Corrigan.

    Today's Conference Call Information

    Exponent will discuss its financial results in more detail on a conference call today, Thursday, April 27, 2023, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (844) 481-2781 or (412) 317-0672. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 6019209#.

    Footnotes

    1 EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the measures to GAAP is set forth below.

    About Exponent

    Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's interdisciplinary organization of scientists, physicians, engineers, and business consultants draws from more than 90 technical disciplines to solve the most pressing and complicated challenges facing stakeholders today. The firm leverages over 50 years of experience in analyzing accidents and failures to advise clients as they innovate their technologically complex products and processes, ensure the safety and health of their users, and address the challenges of sustainability.

    Exponent may be reached at (888) 656­-EXPO, info@exponent.com, or www.exponent.com.

    Forward Looking Statements

    This news release contains, and incorporates by reference, certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. When used in this document and in the documents incorporated herein by reference, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the COVID-19 pandemic (including factors relating to measures implemented by governmental authorities or by us to promote the safety of our employees, vendors and clients; other direct and indirect impacts on our business and the businesses of our clients, vendors and other partners; impacts which may, among other things, adversely affect our clients’ ability to utilize our services at the levels they have previously; disruptions of access to our facilities or those of our clients or third parties; and increased and potentially significant economic uncertainty and volatility, including credit and collectability risks and potential disruptions of capital and credit markets), the possibility that the demand for our services may decline as a result of changes in generally applicable and industry-specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10-K under the heading “Risk Factors” and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements.

    Note on Forward-looking Non-GAAP Measures

    The Company believes that the presentation of non-GAAP financial information on a forward-looking basis, including the guidance contained in this release, provides important supplemental information to management and investors regarding its anticipated results of operations. The Company is unable to provide a reconciliation of GAAP measures to corresponding forward-looking non-GAAP measures without unreasonable effort due to the high variability and low visibility of most of the items that have been excluded from these non-GAAP measures. The effects of these reconciling items may be significant, as the items that are being excluded are difficult to predict.

    Source: Exponent, Inc.



    EXPONENT, INC.  
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
    For the Quarters Ended March 31, 2023 and April 1, 2022 
    (unaudited) 
    (in thousands, except per share data) 
                
              
           Quarters Ended  
           March 31, April 1,  
            2023  2022   
                
    Revenues         
     Revenues before reimbursements $128,705 $117,870   
     Reimbursements    11,604  10,608   
                
      Revenues    140,309  128,478   
                
    Operating expenses        
     Compensation and related expenses  84,181  68,757   
     Other operating expenses   9,561  8,165   
     Reimbursable expenses   11,604  10,608   
     General and administrative expenses  5,843  4,231   
                
      Total operating expenses  111,189  91,761   
                
      Operating income   29,120  36,717   
                
    Other income          
     Interest income, net   1,770  21   
     Miscellaneous income, net   4,648  (3,931)  
            6,418  (3,910)  
                
      Income before income taxes  35,538  32,807   
                
    Income taxes     6,414  3,198   
                
                
      Net income   $29,124 $29,609   
                
                
    Net income per share:       
     Basic    $0.57 $0.56   
     Diluted    $0.56 $0.56   
                
    Shares used in per share computations:      
     Basic     51,132  52,419   
     Diluted     51,682  53,039   
                



    EXPONENT, INC. 
    CONDENSED CONSOLIDATED BALANCE SHEETS 
    March 31, 2023 and December 30, 2022 
    (unaudited) 
    (in thousands) 
                
                
           March 31,  December 30,  
            2023   2022   
    Assets          
    Current assets:         
     Cash and cash equivalents  $125,649  $161,458   
     Accounts receivable, net   173,064   170,114   
     Prepaid expenses and other assets  19,588   17,585   
      Total current assets   318,301   349,157   
    Property, equipment and leasehold improvements, net  69,413   65,539   
    Operating lease right-of-use asset  16,629   18,007   
    Goodwill     8,607   8,607   
    Other assets     153,477   145,352   
      Total assets   $566,427  $586,662   
                
    Liabilities and Stockholders' Equity      
    Current liabilities:        
     Accounts payable and accrued liabilities $26,322  $29,115   
     Accrued payroll and employee benefits  63,390   105,822   
     Deferred revenues    14,567   18,834   
     Operating lease liability   4,900   5,258   
      Total current liabilities  109,179   159,029   
    Other liabilities     103,843   93,538   
    Operating lease liability   11,549   13,343   
      Total liabilities   224,571   265,910   
                
    Stockholders' equity:        
     Common stock    66   66   
     Additional paid-in capital   314,502   301,002   
     Accumulated other comprehensive loss  (3,127)  (3,587)  
     Retained earnings    542,983   528,810   
     Treasury stock, at cost   (512,568)  (505,539)  
      Total stockholders' equity  341,856   320,752   
      Total liabilities & stockholders' equity $566,427  $586,662   
                



    EXPONENT, INC.  
    EBITDA and EBITDAS (1)  
    For the Quarters Ended March 31, 2023 and April 1, 2022 
    (unaudited) 
    (in thousands) 
                
              
           Quarters Ended  
           March 31, April 1,  
            2023   2022   
                
    Net Income    $29,124  $29,609   
                
    Add back (subtract):        
                
     Income taxes    6,414   3,198   
     Interest income, net   (1,770)  (21)  
     Depreciation and amortization  1,988   1,689   
                
      EBITDA (1)    35,756   34,475   
                
     Stock-based compensation   7,063   6,870   
                
      EBITDAS (1)  $42,819  $41,345   
                
                
                
    (1) EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. 
                




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