[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements for the second quarter and first half of 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $759.4 million, while stockholders' equity increased due to a reduction in total liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | **Total current assets** | $425,651 | $446,881 | | **Total assets** | **$759,430** | **$777,270** | | **Total current liabilities** | $134,969 | $163,183 | | **Total liabilities** | **$331,654** | **$356,202** | | **Total stockholders' equity** | **$427,776** | **$421,068** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Revenues grew modestly in Q2 and H1 2025, but net income declined year-over-year due to higher operating expenses Key Financial Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $141,962 | $140,536 | +1.0% | $287,469 | $285,469 | +0.7% | | **Operating Income** | $17,177 | $35,744 | -51.9% | $61,609 | $66,457 | -7.3% | | **Net Income** | $26,553 | $29,227 | -9.1% | $53,203 | $59,369 | -10.4% | | **Diluted EPS** | $0.52 | $0.57 | -8.8% | $1.03 | $1.15 | -10.4% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while cash used in financing activities rose significantly, driven by increased stock repurchases Cash Flow Summary for the Six Months Ended (in thousands) | Cash Flow Category | July 4, 2025 | June 28, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,496 | $58,771 | | Net cash used in investing activities | $(4,028) | $(2,628) | | Net cash used in financing activities | $(67,517) | $(39,829) | | **Net change in cash and cash equivalents** | **$(27,100)** | **$16,112** | - The significant increase in cash used for financing activities was primarily due to repurchases of common stock, which rose to **$32.7 million** in H1 2025 from **$5.7 million** in H1 2024[29](index=29&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue recognition, and segment data, providing crucial context to the financial statements - The company's revenue is primarily generated from time and materials contracts, which accounted for **80% of total revenues** in the first six months of 2025, consistent with the prior year[38](index=38&type=chunk) Segment Revenues for the Six Months Ended (in thousands) | Segment | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Engineering and other scientific | $243,115 | $239,948 | +1.3% | | Environmental and health | $44,354 | $45,521 | -2.6% | | **Total revenues** | **$287,469** | **$285,469** | **+0.7%** | - Changes in the market value of deferred compensation plan assets resulted in a **$17.0 million increase in compensation expense** and a corresponding gain in miscellaneous income for Q2 2025, significantly impacting reported operating income[58](index=58&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial results, highlighting modest revenue growth offset by lower net income due to rising expenses [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Segment performance analysis shows a decline in billable hours and utilization, with operating income impacted by deferred compensation and lease costs Q2 2025 vs Q2 2024 Segment Revenue Performance (in thousands) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Engineering and other scientific | $120,980 | $118,477 | +2.1% | | Environmental and health | $20,982 | $22,059 | -4.9% | | **Total revenues** | **$141,962** | **$140,536** | **+1.0%** | - Key operational metrics declined in Q2 2025 compared to Q2 2024: - Billable hours decreased by **6%** to 359,000 - Utilization decreased to **72%** from 75% - Technical full-time equivalent employees decreased by **2%** to 958[83](index=83&type=chunk) - Compensation and related expenses increased **22.7%** in Q2 2025, primarily due to a **$16.1 million** YoY increase in deferred compensation expense, which is linked to market value changes of plan assets and offset in 'Other income, net'[86](index=86&type=chunk)[87](index=87&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $231.8 million in cash, despite a decrease from significant share repurchases and dividends Cash Flow Summary for H1 2025 (in thousands) | Category | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,496 | $58,771 | | Net cash used in investing activities | $(4,028) | $(2,628) | | Net cash used in financing activities | $(67,517) | $(39,829) | - The company extended its Arizona land lease, which will increase annual lease payments from approximately **$1.0 million to $6.2 million** beginning in January 2028[114](index=114&type=chunk) [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) EBITDA and EBITDAS are presented as key non-GAAP performance metrics, both showing a decline in Q2 2025 compared to the prior year Reconciliation of Net Income to EBITDA and EBITDAS (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net income** | $26,553 | $29,227 | $53,203 | $59,369 | | Income taxes | 10,262 | 10,455 | 21,372 | 20,736 | | Interest income, net | (2,344) | (2,231) | (5,058) | (4,857) | | Depreciation and amortization | 2,520 | 2,486 | 5,012 | 4,810 | | **EBITDA** | **$36,991** | **$39,937** | **$74,529** | **$80,058** | | Stock-based compensation | 5,246 | 5,577 | 13,426 | 12,917 | | **EBITDAS** | **$42,237** | **$45,514** | **$87,955** | **$92,975** | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk on its cash equivalents and foreign currency risk from its international operations - The company's primary foreign currency exposures are to the **British Pound, Euro, Chinese Yuan, and Hong Kong Dollar**[122](index=122&type=chunk) - As of July 4, 2025, the company had net assets denominated in non-functional currencies of approximately **$3.4 million** and does not use foreign exchange contracts to hedge its currency exposures[124](index=124&type=chunk)[125](index=125&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by this report[126](index=126&type=chunk) [PART II – OTHER INFORMATION](index=33&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently engaged in any material legal proceedings - Exponent is **not engaged in any material legal proceedings**[128](index=128&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There were **no material changes** from risk factors as previously discussed in the Company's 2024 Annual Report[129](index=129&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 365,000 shares for $27.6 million in Q2 2025, with $61.6 million remaining under its repurchase authorization Share Repurchases for the Three Months Ended July 4, 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Approximate Dollar Value Remaining for Repurchase (thousands) | | :--- | :--- | :--- | :--- | | April 5 to May 2 | 102 | $74.94 | $81,610 | | May 3 to May 30 | - | - | $81,610 | | May 31 to July 4 | 263 | $75.95 | $61,610 | | **Total** | **365** | **$75.66** | **$61,610** | [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section discloses the adoption of a Rule 10b5-1 trading plan by the company's President and CEO for potential stock sales - On May 15, 2025, CEO Catherine Ford Corrigan adopted a **Rule 10b5-1 trading plan** for the sale of **16,128 shares**, expiring on August 30, 2026[134](index=134&type=chunk)

Core Viewpoint - Exponent reported stable performance in Q2 FY2025 with a slight revenue increase, but faced profitability pressures due to rising operating costs and mixed demand trends across segments [1][5][7] Financial Performance - Total revenue for Q2 FY2025 was $142.0 million, a 1.1% increase from $140.5 million in Q2 FY2024 [2] - Diluted earnings per share (EPS) decreased by 8.8% to $0.52 from $0.57 year over year [2] - EBITDA fell to $37.0 million, down 7.3% from $39.9 million in Q2 FY2024, with margins declining to 27.8% from 30.2% [2][7] - Net income decreased by 8.9% to $26.6 million compared to $29.2 million in Q2 FY2024 [2][7] Business Model and Strategy - Exponent operates as a technical consulting firm, focusing on specialized projects in engineering, data science, biomedical engineering, and environmental health [3] - The company aims to broaden its client base, increase technical specialization, and expand into emerging areas like digital health and artificial intelligence [4] Segment Performance - The Engineering and Other Scientific segment, contributing 85% of revenues before reimbursements, grew by 1% year over year, driven by demand for dispute-related consulting [5][10] - The Environmental and Health segment, accounting for 15% of revenues before reimbursements, contracted by 4% due to reduced activity in proactive services [6][10] Client Base and Market Trends - Exponent's client base is diversified across various industries, which helps mitigate risk [11] - Recent growth was noted in dispute-related activities in construction and medical devices, with potential future growth in digital health and AI usability [11] Future Outlook - Management expects low-single-digit revenue growth before reimbursements for FY2025, with EBITDA margins projected between 26.25% and 27.0% [14] - For Q3 FY2025, revenue before reimbursements is anticipated to increase by mid-single-digit percentages year over year [14] - The board declared a quarterly dividend of $0.30 per share, continuing a steady capital return policy [15]

Core Viewpoint - Exponent (EXPO) reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, but down from $0.57 per share a year ago, indicating an earnings surprise of +8.33% [1][2] Financial Performance - The company achieved revenues of $132.87 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.38% and showing a slight increase from $132.43 million year-over-year [2] - Over the last four quarters, Exponent has consistently surpassed consensus EPS estimates four times and revenue estimates three times [2] Stock Performance - Exponent shares have declined approximately 22.8% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current Zacks Rank for Exponent is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $133.65 million, while the estimate for the current fiscal year is $1.96 on revenues of $530.18 million [7] - The trend of earnings estimate revisions is mixed ahead of the earnings release, which may influence future stock performance [6] Industry Context - The Consulting Services industry, to which Exponent belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenues in Q2 2025 increased by 1% to $142 million, while net revenues were approximately flat at $132.9 million compared to the same period in 2024 [11] - Net income decreased to $26.6 million or $0.52 per diluted share, down from $29.2 million or $0.57 per diluted share in the prior year [11] - EBITDA decreased by 7% to $37 million, with a margin of 27.8% of net revenues, compared to $39.9 million or 30.2% in the same period in 2024 [12] - Utilization in Q2 was 72.1%, down from 75.1% in the same period of 2024 [13] Business Line Data and Key Metrics Changes - The engineering and other scientific segment represented 85% of net revenues, with a 1% increase driven by demand in construction, automotive, and medical device sectors [15] - The Environmental and Health segment, representing 15% of net revenues, saw a 4% decrease due to lower activity in proactive projects in life sciences and chemical regulation services [16] Market Data and Key Metrics Changes - Demand for failure analysis expertise drove growth in dispute-related activities, particularly in construction, automotive, and medical device sectors [4] - Proactive engagements in the utilities sector were strong, while there was softer demand for chemical regulatory work [5] Company Strategy and Development Direction - The company is focused on capitalizing on market drivers at the intersection of safety, health, and the environment, with a strong emphasis on recruiting top-tier talent [8] - Engagements in transformative innovations, including distributed energy systems and AI applications, are seen as significant long-term growth opportunities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate complex challenges and capitalize on growth drivers, particularly in safety-critical systems and advanced technologies [23] - The company expects revenues before reimbursements to grow in the low single digits for the full year 2025, with EBITDA margins projected between 26.5% and 27% [17] Other Important Information - The company is experiencing a return to headcount growth, with expectations of a 1% to 2% increase in technical full-time equivalent employees for Q3 2025 [18] - Capital expenditures for the full year 2025 are expected to be between $10 million and $12 million [21] Q&A Session Summary Question: How did the utilization play out in the quarter? - Management indicated that the decline in utilization was partly due to the July 4 holiday and a step down from strong utilization last year [26][27] Question: Can you discuss trends related to easing tariff uncertainty? - Management noted that clients are cautious due to tariff uncertainties, which has caused some delays in engagements, particularly in the chemical sector [28][30] Question: What are the growth rates in proactive and reactive sides of the business? - Growth rates were similar in both proactive and reactive sides, with litigation-related work growing 7% year over year [45][46] Question: How has the regulatory environment impacted demand? - Management acknowledged some delays due to the EPA's movement but stated that most work continues and clients are committed to their global product strategies [47][50]

Exponent Q2 2025 Earnings Release [Management Commentary](index=1&type=section&id=Management%20Commentary) Exponent's Q2 2025 revenues were flat but exceeded expectations, driven by dispute-related growth in construction, automotive, and medical devices, with optimism for emerging digital health, AI, and distributed energy opportunities - Q2 revenues were flat but surpassed expectations, driven by disciplined execution[2](index=2&type=chunk) - Growth was driven by dispute-related services in the construction, automotive, and medical device sectors[2](index=2&type=chunk) - Proactive work in the utilities sector was strong, but offset by weaker demand in chemical regulatory services[2](index=2&type=chunk) - The company sees significant growth potential in emerging areas like digital health, AI usability, and distributed energy systems[2](index=2&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) For Q2 and H1 2025, Exponent reported flat revenues, but net income, EPS, and EBITDA declined due to a higher tax rate and negative tax impact from share-based awards [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) In Q2 2025, total revenues increased 1% to $142.0 million, while revenues before reimbursements were flat, with net income, diluted EPS, and EBITDA all declining Q2 2025 vs. Q2 2024 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $142.0M | $140.5M | +1% | | Revenues before Reimbursements | $132.9M | $132.4M | ~0% | | Net Income | $26.6M | $29.2M | -8.9% | | Diluted EPS | $0.52 | $0.57 | -8.8% | | EBITDA | $37.0M | $39.9M | -7.3% | | EBITDA Margin | 27.8% | 30.2% | -240 bps | - The consolidated tax rate increased to **27.9%** in Q2 2025 from **26.3%** in Q2 2024, with the tax impact from share-based awards being immaterial in Q2 2025 compared to a **$0.7 million** benefit in Q2 2024[5](index=5&type=chunk) [Year-to-Date 2025 Financial Results](index=1&type=section&id=Year-to-Date%202025%20Financial%20Results) For H1 2025, total revenues grew 1% to $287.5 million, with revenues before reimbursements flat, while net income, diluted EPS, and EBITDA all decreased H1 2025 vs. H1 2024 Financial Highlights | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $287.5M | $285.5M | +1% | | Revenues before Reimbursements | $270.3M | $269.6M | ~0% | | Net Income | $53.2M | $59.4M | -10.4% | | Diluted EPS | $1.03 | $1.15 | -10.4% | | EBITDA | $74.5M | $80.1M | -7.0% | | EBITDA Margin | 27.6% | 29.7% | -210 bps | - The company experienced a negative tax impact of **$0.5 million** from share-based awards in H1 2025, compared to a positive benefit of **$1.7 million** in H1 2024, contributing to a higher consolidated tax rate of **28.7%** versus **25.9%** last year[8](index=8&type=chunk) [Shareholder Returns](index=1&type=section&id=Shareholder%20Returns) Exponent announced a $0.30 quarterly cash dividend and in H1 2025 paid $31.6 million in dividends and repurchased $32.7 million of common stock, demonstrating commitment to shareholder returns - Announced a quarterly cash dividend of **$0.30** to be paid on September 19, 2025[10](index=10&type=chunk) Capital Allocation in H1 2025 | Activity | Amount | | :--- | :--- | | Dividends Paid | $31.6M | | Common Stock Repurchased | $32.7M | | Cash and Cash Equivalents (End of Period) | $231.8M | [Business Segment Overview](index=1&type=section&id=Business%20Overview) Q2 2025 segment performance was mixed, with 'Engineering and Other Scientific' growing 1% from dispute services, while 'Environmental and Health' declined 4% - The Engineering and Other Scientific segment, representing **85%** of Q2 revenues before reimbursements, grew **1%** year-over-year, driven by dispute services in construction, automotive, and medical devices[12](index=12&type=chunk) - The Environmental and Health segment, representing **15%** of Q2 revenues before reimbursements, decreased by **4%** year-over-year due to lower proactive project activity in life sciences and chemical regulatory services[13](index=13&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) Exponent maintains full-year 2025 guidance for low single-digit revenue growth and 26.50-27.0% EBITDA margin, anticipating mid-single-digit revenue growth for Q3 Q3 2025 Guidance | Metric | Guidance | | :--- | :--- | | Revenues before reimbursements growth | Up in the mid-single digits | | EBITDA % of revenues before reimbursements | 26.75% to 27.75% | Full Year 2025 Guidance | Metric | Guidance | | :--- | :--- | | Revenues before reimbursements growth | Grow in the low single digits | | EBITDA % of revenues before reimbursements | 26.50% to 27.0% | - The company's full-year comparison faces a headwind as fiscal year 2025 is a **52-week** year, whereas fiscal 2024 was a **53-week** year[14](index=14&type=chunk) [Appendix: Financial Statements](index=3&type=section&id=Appendix%3A%20Financial%20Statements) This section presents Exponent's unaudited condensed consolidated financial statements, including Statements of Income, Balance Sheets, and a reconciliation of GAAP Net Income to non-GAAP EBITDA and EBITDAS [Condensed Consolidated Statements of Income](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The income statement details revenues and expenses, showing declining operating income and net income for Q2 and H1 2025 compared to prior year periods Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $141,962 | $140,536 | $287,469 | $285,469 | | Operating income | $17,177 | $35,744 | $61,609 | $66,457 | | Income before income taxes | $36,815 | $39,682 | $74,575 | $80,105 | | Net income | $26,553 | $29,227 | $53,203 | $59,369 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet as of July 4, 2025, shows decreases in cash, cash equivalents, and total assets compared to year-start, with total liabilities also down and stockholders' equity slightly up Balance Sheet Highlights (in thousands) | Line Item | July 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $231,801 | $258,901 | | Total current assets | $425,651 | $446,881 | | Total assets | $759,430 | $777,270 | | Total liabilities | $331,654 | $356,202 | | Total stockholders' equity | $427,776 | $421,068 | [Non-GAAP Reconciliation (EBITDA & EBITDAS)](index=5&type=section&id=EBITDA%20and%20EBITDAS) This table reconciles Net Income to non-GAAP EBITDA and EBITDAS, both of which decreased for Q2 2025 compared to Q2 2024 EBITDA & EBITDAS Reconciliation (in thousands) | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $26,553 | $29,227 | $53,203 | $59,369 | | EBITDA | $36,991 | $39,937 | $74,529 | $80,058 | | EBITDAS | $42,237 | $45,514 | $87,955 | $92,975 |

Core Viewpoint - Exponent, Inc. is set to report its financial results for the second quarter of fiscal year 2025 on July 31, 2025, with a conference call scheduled to discuss the results and business performance [1]. Group 1: Financial Results Announcement - Exponent, Inc. will announce its second quarter financial results for the period ending July 4, 2025, after market close on July 31, 2025 [1]. - The conference call will be hosted by Dr. Catherine Corrigan, CEO, and Richard Schlenker, CFO, at 4:30 p.m. ET [1][2]. Group 2: Conference Call Details - The conference call can be accessed via live call numbers (844) 481-2781 or (412) 317-0672 [2]. - An archived webcast of the conference call will be available on the Investor Relations section of Exponent's website [2]. - A telephonic replay of the conference call will be available until August 7, 2025, with specific dialing instructions provided [2]. Group 3: Company Overview - Exponent integrates over 90 technical disciplines and employs more than 950 consultants to assist clients across various industries [3]. - The company focuses on failure analysis and developing solutions aimed at creating a safer, healthier, and more sustainable world [3][4]. - Exponent's global resources, including consultants, laboratories, and databases, work collaboratively to provide insights for multinational companies, startups, law firms, insurance companies, and governments [4].

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2025 present flat revenues, a decline in net income and operating cash flow, and balance sheet changes, with accompanying notes providing essential financial context [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of April 4, 2025, the balance sheet shows a decrease in total assets and liabilities, primarily due to reduced cash and accrued payroll, while total stockholders' equity increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | April 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $245,113 | $258,901 | | Total current assets | $432,796 | $446,881 | | Total assets | $763,239 | $777,270 | | **Liabilities & Equity** | | | | Total current liabilities | $130,272 | $163,183 | | Total liabilities | $321,831 | $356,202 | | Total stockholders' equity | $441,408 | $421,068 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q1 2025, revenues remained flat, but net income and diluted earnings per share decreased significantly, largely due to a negative swing in miscellaneous income, while the quarterly dividend per share increased Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | Change | | :--- | :--- | :--- | :--- | | Revenues | $145,507 | $144,933 | +0.4% | | Operating Income | $44,432 | $30,713 | +44.7% | | Net Income | $26,650 | $30,142 | -11.6% | | Diluted EPS | $0.52 | $0.59 | -11.9% | | Dividends per share | $0.30 | $0.28 | +7.1% | - The significant increase in **operating income year-over-year** is primarily due to a **$15,600 thousand decrease** in compensation expense related to the change in value of deferred compensation plan assets, which is offset in 'Other income (loss), net'[9](index=9&type=chunk)[79](index=79&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2025 decreased to **$27,596 thousand** from **$29,932 thousand** in Q1 2024, reflecting lower net income partially offset by a positive foreign currency translation adjustment Comprehensive Income (in thousands) | Component | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | Net income | $26,650 | $30,142 | | Foreign currency translation adjustments | $946 | $(210) | | **Comprehensive income** | **$27,596** | **$29,932** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased by **$20,340 thousand** during Q1 2025, driven by net income, partially offset by dividends and treasury stock purchases - Key changes in stockholders' equity for Q1 2025 include: **net income of $26,650 thousand**, **dividends of $15,800 thousand**, and **treasury stock purchases of $5,025 thousand**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased in Q1 2025 due to working capital changes, while cash used in financing activities fell due to lower stock repurchases, with cash and cash equivalents ending at **$245,113 thousand** Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,274 | $10,432 | | Net cash used in investing activities | $(1,754) | $(1,482) | | Net cash used in financing activities | $(20,049) | $(27,227) | | **Net decrease in cash** | **$(13,788)** | **$(18,485)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide critical context to the financial statements, detailing revenue sources, segment performance, stock compensation, and a significant long-term lease extension, along with a subsequent dividend declaration - In Q1 2025, **82%** of the company's revenue was generated from time and materials contracts, compared to **80%** in Q1 2024[28](index=28&type=chunk) Segment Revenues (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Engineering and Other Scientific | $122,135 | $121,471 | | Environmental and Health | $23,372 | $23,462 | | **Total revenues** | **$145,507** | **$144,933** | - The company extended its land lease in Arizona to January 2043, resulting in additional non-cash rent expense of approximately **$1,085 thousand** during Q1 2025[63](index=63&type=chunk)[80](index=80&type=chunk) - On May 1, 2025, the Board of Directors declared a cash dividend of **$0.30 per share**[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported a slight increase in quarterly revenues to **$145,507 thousand**, offset by a **12%** decrease in net income to **$26,650 thousand**, attributed to higher operating expenses and a reduced tax benefit, while affirming focus on talent, expense control, and capital returns [Executive Summary](index=21&type=section&id=Executive%20Summary) Revenues for Q1 2025 increased slightly to **$145,507 thousand**, while net income decreased **12%** to **$26,650 thousand**, primarily due to higher operating expenses and a lower tax benefit, with growth in certain sectors offset by easing demand in consumer electronics - Revenues increased slightly to **$145,507 thousand** in Q1 2025, while net income decreased **12%** to **$26,650 thousand**[72](index=72&type=chunk)[73](index=73&type=chunk) - Growth drivers included dispute-related activities in chemicals, transportation, and utilities, while the consumer electronics sector saw an expected easing[72](index=72&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Total revenues grew **0.4%**, with operating income increasing **44.7%** to **$44,432 thousand**, largely due to a **$15,600 thousand** deferred compensation adjustment, despite rising other operating expenses from a lease extension and IT spending - Billable hours decreased **4%** to **376,000**, while utilization remained flat at **75%** year-over-year[75](index=75&type=chunk) - Compensation expenses decreased **16.0%** primarily due to a **$15,600 thousand** change in the value of assets in the deferred compensation plan, which had an offsetting loss in 'Other income, net'[78](index=78&type=chunk)[79](index=79&type=chunk) - Other operating expenses increased **14.9%**, mainly from a **$1,100 thousand** non-cash rent expense for the Arizona land lease extension and a **$336 thousand** increase in computer-related expenses[80](index=80&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q1 2025 with **$245,113 thousand** in cash, with net cash from operations at **$7,274 thousand**, and significant future commitments including an extended Arizona land lease with annual payments increasing to approximately **$6,200 thousand** starting in 2028 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,274 | $10,432 | | Net cash used in investing activities | $(1,754) | $(1,482) | | Net cash used in financing activities | $(20,049) | $(27,227) | - The company's Arizona land lease was extended, with annual payments increasing from **$1,000 thousand** to approximately **$6,200 thousand** beginning in January 2028[94](index=94&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures EBITDA and EBITDAS to evaluate performance, with EBITDA for Q1 2025 at **$37,538 thousand**, representing **27.3%** of revenues before reimbursements, a decrease from the prior year due to higher stock-based compensation and occupancy expense EBITDA Reconciliation and Margin (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $26,650 | $30,142 | | EBITDA | $37,538 | $40,121 | | EBITDAS | $45,717 | $47,461 | | EBITDA as a % of revenues before reimbursements | 27.3% | 29.2% | [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on cash and foreign currency risk from international operations, which it manages through investment policy and without derivative instruments, having experienced no significant impact from currency fluctuations to date - The company has **interest rate risk** associated with its cash and cash equivalents, managed via an investment policy with short maturities[102](index=102&type=chunk) - Foreign currency risk exists from operations denominated in British Pound, Euro, Chinese Yuan, and Hong Kong Dollar, with the company not using foreign exchange contracts to hedge this exposure[103](index=103&type=chunk)[106](index=106&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) As of April 4, 2025, management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of April 4, 2025[107](index=107&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[108](index=108&type=chunk) [PART II – OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - Exponent is not engaged in any material legal proceedings[109](index=109&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes from risk factors as previously discussed in the Company's 2024 Annual Report[110](index=110&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **65,000 shares** of common stock for approximately **$5,025 thousand**, with **$89,300 thousand** remaining available for repurchase under existing programs Common Stock Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Total Value (in thousands) | | :--- | :--- | :--- | :--- | | March 1 to April 4 | 65,000 | $77.31 | $5,025 | | **Total** | **65,000** | **$77.31** | **$5,025** | - As of April 4, 2025, approximately **$89,300 thousand** remained available for repurchase under the company's stock repurchase programs, which have no expiration dates[111](index=111&type=chunk) [Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[112](index=112&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[113](index=113&type=chunk) [Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No directors or officers of the company adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement during the first fiscal quarter of 2025 - None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter[114](index=114&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - The report includes CEO and CFO certifications pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350, as well as Inline XBRL documents[115](index=115&type=chunk)

Core Viewpoint - Exponent, Inc. is conducting its first quarter 2025 earnings conference call to discuss financial results and market opportunities [1][3]. Group 1: Company Overview - The conference call features key participants including Dr. Catherine Corrigan, President and CEO, and Rich Schlenker, EVP and CFO [4]. - The call is being recorded and will be available for webcast on the company's investor relations website [3]. Group 2: Financial Results and Forward-Looking Statements - The discussion includes forward-looking statements regarding Exponent's market opportunities and future financial results, which are subject to risks and uncertainties [5]. - Actual results may differ materially from those discussed due to various factors outlined in Exponent's periodic SEC filings [5].

Group 1 - Exponent (EXPO) reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, but down from $0.59 per share a year ago, representing an earnings surprise of 8.33% [1] - The company achieved revenues of $137.44 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.92%, and showing a slight increase from $137.21 million year-over-year [2] - Exponent has outperformed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Group 2 - The stock has underperformed the market, losing about 11.7% since the beginning of the year compared to the S&P 500's decline of 5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $134.15 million, and for the current fiscal year, it is $1.98 on revenues of $531.67 million [7] - The Consulting Services industry, to which Exponent belongs, is currently ranked in the top 11% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

Financial Data and Key Metrics Changes - For Q1 2025, total revenues were approximately flat at $145.5 million, with net revenues also flat at $137.4 million compared to Q1 2024 [15][21] - Net income decreased to $26.7 million or $0.52 per diluted share, down from $30.1 million or $0.59 per diluted share in the prior year [15][16] - EBITDA for the quarter decreased by 6% to $37.5 million, producing a margin of 27.3% of net revenues, compared to 29.2% in Q1 2024 [16][20] - Billable hours decreased by 4% year over year to approximately 376,000, and average technical full-time equivalent employees decreased by 4% to 966 [18] Business Line Data and Key Metrics Changes - The Engineering and Scientific segment represented 84% of revenues before reimbursement, with revenues flat in Q1 2025 [21] - The Environmental and Health segment represented 16% of revenues before reimbursement, with a 2% increase driven by engagements in the chemicals industry [21][22] Market Data and Key Metrics Changes - The consumer products industry accounts for approximately 25% of revenue, with two-thirds being proactive work for consumer electronics clients [9] - The energy industry represents about 20% of revenue, split evenly between reactive and proactive services, with growing demand driven by AI and infrastructure development [10] - The transportation industry contributes mid-teens percentage of revenue, with 90% being reactive, driven by disputes in advanced vehicle technologies [11] Company Strategy and Development Direction - The company maintains a diversified business model, with 60% of work being reactive and 40% proactive, allowing it to navigate economic cycles effectively [7][14] - The focus remains on advancing capabilities, investing in talent, and delivering insights to help clients adapt to changes in their industries [31] - The company is strategically hiring in areas with increasing demand, such as automated vehicles and digital health [64] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty but expressed confidence in the company's resilience and ability to generate long-term profitable growth [14][30] - The company expects revenue before reimbursements to decline in the low single digits for Q2 2025, with EBITDA margins projected at 26% to 27% [22][24] - Management highlighted ongoing opportunities in regulatory consulting and compliance work, particularly in the chemicals industry [29] Other Important Information - The company anticipates a tax rate of approximately 28% for Q2 2025, up from 26% in the same quarter last year [27] - Capital expenditures for the full year 2025 are expected to be between $10 million and $12 million [28] Q&A Session Summary Question: Growth rates in proactive and reactive work - The reactive business saw low single-digit growth, offset by a slight decline in proactive services overall [35][36] Question: Changes in productivity across end markets - Clients are exploring supply chain diversification, which may lead to increased demand, but changes take time to manifest [38][39] Question: Second quarter outlook and utilization - Utilization is expected to be slightly below last year, impacted by the July 4 holiday and some delays in client projects [44][46] Question: FTE growth in a choppy environment - The company plans to continue hiring in areas of increasing demand, expecting a 4% increase in headcount by year-end [64][66]