MENLO PARK, Calif., April 25, 2024 (GLOBE NEWSWIRE) -- Exponent, Inc. (NASDAQ:EXPO) today announced that its Board of Directors has declared a quarterly cash dividend of $0.28 per share of common stock to be paid on June 21, 2024 to all common stockholders of record as of June 7, 2024. Exponent has paid, and expects to continue to pay, quarterly dividends each year in March, June, September, and December. Future declarations of quarterly dividends and the establishment of future record and payment dates are ...

MENLO PARK, Calif., April 09, 2024 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO), today announced that it will report First Quarter of fiscal year 2024 financial results for the period ended March 29, 2024 following the close of the market on Thursday, April 25, 2024. On that day, Dr. Catherine Corrigan, Chief Executive Officer and President, and Richard Schlenker, Executive Vice President and Chief Financial Officer, will host a conference call and webcast at 4:30 p.m. ET (1:30 p.m. PT) to discuss the ...

MENLO PARK, Calif., April 09, 2024 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO), today announced that it will report First Quarter of fiscal year 2024 financial results for the period ended March 29, 2024 following the close of the market on Thursday, April 25, 2024. On that day, Dr. Catherine Corrigan, Chief Executive Officer and President, and Richard Schlenker, Executive Vice President and Chief Financial Officer, will host a conference call and webcast at 4:30 p.m. ET (1:30 p.m. PT) to discuss the ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Exponent, Inc. is a science and engineering consulting firm providing solutions to complex problems across various industries through two segments: Engineering and Other Scientific, and Environmental and Health - Exponent is a science and engineering consulting firm with over 50 years of experience, organized into two reportable operating segments: (i) Engineering and Other Scientific and (ii) Environmental and Health[8](index=8&type=chunk)[12](index=12&type=chunk) - Services are provided on either a fixed-price or time and material basis, with professional rates ranging from **$200 to $985 per hour**[11](index=11&type=chunk) - In 2023, the number of technical full-time equivalent employees increased by **10% to 1,048**[78](index=78&type=chunk) Revenue by Client Industry (2023) | Industry | Percentage of Revenue | | :--- | :--- | | Consumer Products | ~22% | | Energy and Utilities | ~18% | | Transportation | ~17% | | Chemical | ~11% | Employee Statistics (as of Dec 29, 2023) | Category | Number | | :--- | :--- | | Total Employees | 1,320 | | Engineering & Scientific Staff | 1,047 | | Employees with Advanced Degrees | 955 | | Employees with Doctorate Degrees | 746 | [Services](index=5&type=section&id=SERVICES) The company's services are divided into two main segments, encompassing 12 practices in Engineering and Other Scientific, and 4 practices in Environmental and Health Sciences - The Engineering and Other Scientific segment includes practices like Biomechanics, Buildings & Structures, Data Sciences, Electrical Engineering & Computer Science, Materials & Corrosion Engineering, Thermal Sciences, and Vehicle Engineering[13](index=13&type=chunk) - The Environmental and Health segment includes practices such as Chemical Regulation & Food Safety, Ecological & Biological Sciences, Environmental & Earth Sciences, and Health Sciences[14](index=14&type=chunk) [Competition](index=12&type=section&id=COMPETITION) Exponent operates in a fragmented and competitive marketplace with low barriers to entry, where technical capability and professional reputation are key competitive factors - The market for Exponent's services is fragmented and highly competitive, with low barriers to entry[67](index=67&type=chunk)[69](index=69&type=chunk) - Principal competitive factors are technical capability, breadth of services, timely delivery, professional reputation, and knowledge of litigation and regulatory processes[68](index=68&type=chunk) [Human Capital](index=13&type=section&id=HUMAN%20CAPITAL) The company's success relies on attracting and retaining exceptional scientific and engineering talent, with a significant portion of staff holding advanced degrees - Attracting, developing, and rewarding exceptional people is central to the company's mission and success[71](index=71&type=chunk) - The company's Diversity, Equity, and Inclusion (DE&I) strategy is built on four pillars: communication, development, outreach, and recruiting[74](index=74&type=chunk) Employee Composition (as of Dec 29, 2023) | Category | Count | | :--- | :--- | | Total Employees | 1,320 | | Engineering and Scientific Staff | 1,047 | | Employees with Doctorate Degrees | 746 | | U.S. Employees | ~89% | | International Employees | ~11% | [Executive Officers](index=14&type=section&id=EXECUTIVE%20OFFICERS%20OF%20THE%20REGISTRANT) This section lists the executive officers of Exponent, Inc. as of February 23, 2024, including their names, ages, and positions Key Executive Officers (as of Feb 23, 2024) | Name | Age | Position | | :--- | :--- | :--- | | Catherine Ford Corrigan, Ph.D. | 55 | President and Chief Executive Officer | | Richard L. Schlenker, Jr. | 58 | Executive Vice President, Chief Financial Officer and Corporate Secretary | | Sally B. Shepard | 63 | Chief Human Resources Officer | [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company identifies several risk factors categorized into three main areas: client and demand, operational, and general risks - **Client & Demand Risks:** The business is unpredictable and reactive, with a small backlog, making performance uneven. A significant portion of revenue comes from clients in the chemical, construction, consumer products, energy, life sciences, and transportation industries, and the loss of a large client could be detrimental[92](index=92&type=chunk)[95](index=95&type=chunk) - **Operational Risks:** Success depends on attracting and retaining highly qualified technical and managerial personnel. The company is also subject to risks from professional liability, litigation, and security breaches that could disrupt operations or lead to unauthorized disclosure of confidential information[103](index=103&type=chunk)[105](index=105&type=chunk)[107](index=107&type=chunk) - **General Risks:** The market is highly competitive with low barriers to entry, which could pressure pricing. The company is also exposed to risks from economic and political uncertainty, potential impairment of goodwill and long-lived assets, and volatility in its common stock price[115](index=115&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments from the SEC - None[132](index=132&type=chunk) [Cybersecurity](index=26&type=section&id=Item%201C.%20Cybersecurity) Exponent has implemented a comprehensive cybersecurity and data privacy program aligned with ISO 27001:2013 and 27701:2019 standards, with governance provided by the Board of Directors and a dedicated management committee - The company has developed cybersecurity and data privacy programs in accordance with ISO standards 27001:2013 and 27701:2019[134](index=134&type=chunk) - The cybersecurity incident response plan is based on the NIST 800-61r2 "Computer Security Incident Handling Guide"[135](index=135&type=chunk) - Oversight is provided by the Board of Directors, with a Security and Privacy Management Committee (SPMC) tasked with ensuring risks are adequately addressed[138](index=138&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) Exponent owns key properties in California and Massachusetts, and leases a 147-acre Test and Engineering Center in Arizona, along with 21 other leased locations globally - The company owns its Silicon Valley office, laboratory, and warehouse facilities in Menlo Park, California[141](index=141&type=chunk) - The company leases a 147-acre Test and Engineering Center in Phoenix, Arizona, under a 30-year lease agreement expiring in January 2028[142](index=142&type=chunk) - The company owns its office and laboratory facilities in Natick, Massachusetts[143](index=143&type=chunk) - Exponent leases additional office and laboratory space in 21 other locations across 13 states, the District of Columbia, and internationally in China, Hong Kong, Singapore, Switzerland, and the United Kingdom[144](index=144&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company states that it is not engaged in any material legal proceedings - Exponent is not engaged in any material legal proceedings[145](index=145&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[146](index=146&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Exponent's common stock trades on the NASDAQ Global Select Market under "EXPO," with the company repurchasing 98,000 shares for approximately **$7.2 million** in Q4 2023 and authorizing an additional **$61.6 million** for its repurchase program in February 2024 - The company's common stock is traded on the NASDAQ Global Select Market under the symbol "EXPO"[148](index=148&type=chunk) - As of the end of Q4 2023, approximately **$38.4 million** remained available for share repurchases. On February 1, 2024, the Board authorized an additional **$61.6 million** for the program[149](index=149&type=chunk) Share Repurchases (Q4 2023) | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | Sep 30 - Oct 27 | 44 | $73.51 | | Oct 28 - Nov 24 | 54 | $73.73 | | Nov 25 - Dec 29 | - | - | | **Total** | **98** | **$73.63** | [(Reserved)](index=29&type=section&id=Item%206.%20%28Reserved%29) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2023, Exponent's revenues increased by **4.6% to $536.8 million**, driven by higher billable hours and rates, while net income decreased by **1.9% to $100.3 million** due to increased compensation expenses and a smaller excess tax benefit - Revenues for 2023 increased **5%** (**7%** before reimbursements) compared to 2022, driven by higher billable hours and billing rates. Growth was strong in the reactive business, particularly in the transportation and energy sectors[161](index=161&type=chunk) - Net income decreased to **$100.3 million** (**$1.94 per diluted share**) in 2023 from **$102.3 million** (**$1.96 per diluted share**) in 2022. The decrease was partly due to a smaller excess tax benefit from stock-based awards (**$3.6 million** in 2023 vs. **$5.8 million** in 2022)[163](index=163&type=chunk) Consolidated Statements of Income Highlights (% of Revenues) | | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | 100.0% | 100.0% | | Compensation and related expenses | 59.6% | 51.5% | | Operating income | 20.7% | 27.4% | | Net income | 18.7% | 19.9% | Key Operational Metrics (2023 vs 2022) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Billable Hours (thousands) | 1,495 | 1,465 | +2% | | Utilization | 69% | 74% | -5 p.p. | | Technical FTEs | 1,047 | 955 | +10% | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For fiscal year 2023, total revenues grew **4.6% to $536.8 million**, but operating income decreased **21.0% to $111.3 million**, primarily due to a **21.1%** increase in compensation expenses driven by deferred compensation plan asset value changes - Compensation and related expenses increased by **21.1%** in 2023, primarily due to a **$28.5 million** increase in deferred compensation expense resulting from changes in the value of associated plan assets[171](index=171&type=chunk)[172](index=172&type=chunk) - The effective tax rate increased to **26.2%** in 2023 from **22.6%** in 2022, mainly due to a smaller excess tax benefit from stock-based awards[184](index=184&type=chunk) Revenues by Segment (in thousands) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Engineering and Other Scientific | $446,888 | $427,796 | 4.5% | | Environmental and Health | $89,878 | $85,497 | 5.1% | | **Total revenues** | **$536,766** | **$513,293** | **4.6%** | Operating Income by Segment (in thousands) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Engineering and Other Scientific | $153,918 | $152,679 | 0.8% | | Environmental and Health | $28,432 | $27,340 | 4.0% | | Corporate operating expense | ($71,028) | ($39,177) | 81.3% | | **Total operating income** | **$111,322** | **$140,842** | **(21.0)%** | [Liquidity and Capital Resources](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintained strong liquidity, with cash and cash equivalents increasing to **$187.2 million** at the end of 2023, and net cash from operating activities at **$127.4 million**, while cash used in financing activities decreased significantly due to reduced share repurchases - Cash and cash equivalents increased to **$187.2 million** as of December 29, 2023, compared to **$161.5 million** at the end of 2022[185](index=185&type=chunk) - The decrease in cash used for financing activities was mainly due to lower common stock repurchases in 2023 compared to 2022[188](index=188&type=chunk) Summary of Cash Flows (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by Operating activities | $127,352 | $93,807 | | Net cash used in Investing activities | ($16,356) | ($12,043) | | Net cash used in Financing activities | ($86,009) | ($215,977) | [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures EBITDA and EBITDAS to evaluate operating performance, with EBITDA for 2023 at **$137.7 million**, nearly flat compared to 2022, and EBITDAS at **$158.0 million** - EBITDA as a percentage of revenues before reimbursements decreased to **27.7%** in 2023 from **29.6%** in 2022, attributed to lower utilization (**69%** vs. **74%**) and increased operating expenses[194](index=194&type=chunk) EBITDA and EBITDAS Reconciliation (in thousands) | | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $100,339 | $102,330 | | Add back: Income taxes | 35,557 | 29,904 | | Subtract: Interest income | (7,150) | (2,096) | | Add back: Depreciation and amortization | 8,916 | 7,079 | | **EBITDA** | **$137,662** | **$137,217** | | Add back: Stock-based compensation | 20,357 | 20,364 | | **EBITDAS** | **$158,019** | **$157,581** | [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Exponent manages interest rate risk through conservative investment policies and faces foreign currency risk from international operations, primarily in British Pounds, Chinese Yuan, and Hong Kong Dollars, without using derivative instruments for hedging - The company is exposed to interest rate risk on its cash and cash equivalents, managed by investing in high-credit-quality debt instruments with short maturities[196](index=196&type=chunk) - Foreign currency risk exists for revenues and expenses denominated in currencies other than the U.S. dollar, mainly the British Pound, Chinese Yuan, and Hong Kong Dollar[198](index=198&type=chunk) - As of December 29, 2023, the company held net assets with functional currencies of approximately **$17.2 million** in British Pounds, **$2.7 million** in Hong Kong Dollars, and **$2.4 million** in Chinese Yuan[199](index=199&type=chunk) - The company does not use foreign exchange contracts to hedge currency exposures, and to date, the impact of exchange rate changes has not been material[201](index=201&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's consolidated financial statements for the past three fiscal years, along with KPMG LLP's unqualified audit opinion and identification of "Collectibility of accounts receivable" as a critical audit matter - The independent auditor, KPMG LLP, issued an unqualified opinion, stating the financial statements are presented fairly and the company maintained effective internal control over financial reporting as of December 29, 2023[222](index=222&type=chunk) - The audit identified the 'Collectibility of accounts receivable' as a Critical Audit Matter, as the estimate for the specific allowance involves subjective judgment regarding the likelihood of collection[231](index=231&type=chunk) Consolidated Income Statement (in thousands) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenues | $536,766 | $513,293 | $466,269 | | Operating income | $111,322 | $140,842 | $108,927 | | Net income | $100,339 | $102,330 | $101,202 | | Diluted EPS | $1.94 | $1.96 | $1.90 | Consolidated Balance Sheet (in thousands) | | Dec 29, 2023 | Dec 30, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $187,150 | $161,458 | | Total Assets | $646,777 | $586,662 | | Total Liabilities | $290,692 | $265,910 | | Total Stockholders' Equity | $356,085 | $320,752 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=40&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[203](index=203&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures, as well as internal control over financial reporting, were effective as of December 29, 2023, with no material changes reported during the most recent fiscal quarter - Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year[205](index=205&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 29, 2023, based on the framework in Internal Control - Integrated Framework (2013) issued by COSO[206](index=206&type=chunk) - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[207](index=207&type=chunk) [Other Information](index=40&type=section&id=Item%209B.%20Other%20Information) The company reports that no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth fiscal quarter of 2023 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fourth fiscal quarter of 2023[208](index=208&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=40&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[209](index=209&type=chunk) Part III Part III of the Form 10-K incorporates information by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders, covering directors, executive officers, corporate governance, executive compensation, security ownership, certain relationships and transactions, and principal accounting fees and services [Directors, Executive Officers and Corporate Governance](index=41&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The information for this item is incorporated by reference from the company's definitive Proxy Statement[211](index=211&type=chunk) [Executive Compensation](index=41&type=section&id=Item%2011.%20Executive%20Compensation) Information required by this item is incorporated by reference from the company's definitive Proxy Statement - The information for this item is incorporated by reference from the company's definitive Proxy Statement[212](index=212&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=41&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information required by this item is incorporated by reference from the company's definitive Proxy Statement - The information for this item is incorporated by reference from the company's definitive Proxy Statement[213](index=213&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=41&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required by this item is incorporated by reference from the company's definitive Proxy Statement - The information for this item is incorporated by reference from the company's definitive Proxy Statement[214](index=214&type=chunk) [Principal Accounting Fees and Services](index=41&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information required by this item is incorporated by reference from the company's definitive Proxy Statement - The information for this item is incorporated by reference from the company's definitive Proxy Statement[215](index=215&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=42&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section includes the consolidated financial statements of Exponent, Inc., the Report of Independent Registered Public Accounting Firm (KPMG LLP), financial statement schedules, and a comprehensive index of all exhibits filed with the report - This item contains the consolidated financial statements, the Report of Independent Registered Public Accounting Firm, and financial statement schedules[217](index=217&type=chunk) - An index of exhibits filed as part of the Annual Report on Form 10-K is provided, including governance documents, material contracts, and certifications[328](index=328&type=chunk)[329](index=329&type=chunk)

Earnings from consulting firm Exponent (EXPO -13.30%) came in below expectations, and the company continues to see challenges heading into 2024. Investors are moving to the sidelines, sending shares of Exponent down 15% as of 10:45 Eastern Friday.The growth engine is sputtering heading into 2024Exponent is an engineering and tech consulting firm, offering expertise in about 90 technical disciplines to companies around the world. But with so many of those customers looking to trim costs due to concerns about ...

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to___________ Commission File Number 0-18655 EXPONENT, INC. (Exact name of registrant as specified in its charter) (State or other jurisdicti ...

Financial Data and Key Metrics Changes - Total revenues for Q3 2023 increased by 4.8% to $133.3 million, while net revenues rose by 8.5% to $125 million compared to Q3 2022 [10] - Net income for Q3 was $24.5 million, or $0.48 per diluted share, slightly up from $24.4 million or $0.47 per diluted share in the prior year [11] - EBITDA for the quarter was $34.5 million, with a margin of 27.6%, down from 30% in the same period of 2022 [11][36] - Billable hours increased by 4.1% year-over-year to approximately 380,000 [12] - Cash and cash equivalents at the end of Q3 were $137.1 million [14] Business Line Data and Key Metrics Changes - The Environmental & Health segment represented 17% of net revenues, increasing by 13% in Q3 and 7% for the first three quarters compared to the prior year [8] - The Engineering and Other Scientific segment accounted for 83% of net revenues, increasing by 8% in Q3 and 10% for the first three quarters compared to the prior year [30] Market Data and Key Metrics Changes - Demand in the chemicals and life sciences sectors increased, while there was continued moderation in the consumer electronics sector, which created a headwind of approximately $8 million [4][11] - The company expects mid-single-digit revenue growth for Q4 2023, with similar headwinds from the consumer electronics business [15] Company Strategy and Development Direction - The company is focused on expanding capabilities and aligning resources with current and long-term demand trends through targeted recruiting and performance management [15][31] - Investments to drive organic growth and development remain a priority, with a focus on safety, health, and environmental complexities [18][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business and the ability to drive further profitable growth despite headwinds in the consumer electronics sector [17][18] - The company anticipates that headwinds in the consumer electronics sector will begin to abate in Q1 2024 [22] Other Important Information - Other operating expenses increased by 24.7% to $11 million, primarily due to increased employee engagement [35] - Stock-based compensation expense for Q3 was $4.9 million, up from $4.6 million in the prior year [35] Q&A Session Summary Question: What is the expected run rate for billable headcount growth as the company exits Q4 into next year? - Management anticipates ending the year with a headcount around 1,025 and expects to grow throughout 2024 [19] Question: Can you elaborate on the PFAS opportunity and the composition of the project book regarding large projects? - There is increased activity around PFAS, with opportunities arising from regulatory and litigation environments [43][54] - The current portfolio consists of projects that are predominantly 2% or less, fitting into a normal project mix [56] Question: What is the outlook for demand outside the consumer electronics sector? - Demand remains strong in sectors such as transportation, life sciences, and energy, despite the headwinds in consumer electronics [41][60] Question: How does the company plan to align staffing levels with demand? - The company is focused on recruiting in areas with constrained resources while managing performance to ensure retained consultants contribute to future growth [31] Question: Can you provide insight into customer planning and visibility for 2024? - Management indicated that visibility into customer planning is limited, but they are in dialogue with clients to understand their needs [53]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to___________ Commission File Number 0-18655 EXPONENT, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of ...

Financial Data and Key Metrics Changes - Total revenues increased by 7.6% to $140.2 million, while net revenues grew by 9.7% to $129.7 million compared to the same period in 2022 [98] - Net income for the second quarter was $25.7 million or $0.50 per diluted share, slightly down from $25.8 million or $0.49 per diluted share in the prior year [99] - EBITDA decreased less than 1% to $36.8 million, resulting in a margin of 28.4% of net revenues, down from 31.4% in the same period of 2022 [82] Business Line Data and Key Metrics Changes - The engineering and other scientific segment represented 83% of net revenues, increasing by 10% in the second quarter and 11% in the first half compared to the prior year, driven by strong demand in transportation and construction sectors [79] - The environmental and health segment accounted for 17% of net revenues, also increasing by 10% in the quarter and 4% in the first half, primarily due to regulatory consulting in chemicals and life sciences [80] Market Data and Key Metrics Changes - Utilization in the second quarter was 69%, down from 77% in the same period of 2022, attributed to higher than anticipated headcount [4] - The realized rate increase was approximately 5.3% for the second quarter compared to the same period a year ago [16] Company Strategy and Development Direction - The company is focused on strategically balancing resources with business growth and future opportunities, with a long-term target of sustained mid-70s utilization [20][19] - Increased performance management is expected to lead to a turnover increase, with a planned sequential decline in technical full-time equivalent employees by 2% to 3% over the next two quarters [19][8] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth potential, particularly in the chemicals and life sciences sectors, despite short-term moderation in the electronics industry [76][37] - The company expects revenues before reimbursements to grow in the high single to low double digits for the full year 2023, with an EBITDA margin of 27.5% to 28.5% for the third quarter [7][103] Other Important Information - Stock-based compensation expense for the second quarter was $5.2 million, up from $4.6 million in the prior year [5] - Interest income increased to $1.6 million for the second quarter, driven by rising interest rates [6] Q&A Session Summary Question: What is the outlook for demand in the reactive and proactive sides of the business? - Management noted that the reactive side is experiencing above-normal growth, while the proactive side has seen some moderation, particularly in the electronics sector due to product life cycle timing and industry layoffs [35][37] Question: How is the company managing headcount growth in relation to demand? - The company is focused on slowing headcount growth to align with near-term and long-term demand, with a strategic approach to recruiting in high-utilization areas [68][57] Question: What is driving the margin improvement despite lower utilization? - Margin improvement is attributed to lower stock-based compensation in the second quarter compared to the first quarter, along with a favorable mix of entry-level hiring [41][42]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the reporting period [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) Exponent, Inc. reported a 9.2% increase in total revenues to $140.3 million, while operating income decreased by 20.7% to $29.1 million, primarily due to higher compensation expenses [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $566.4 million and stockholders' equity of $341.9 million as of March 31, 2023 Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 30, 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$566,427** | **$586,662** | **($20,235)** | | Cash and cash equivalents | $125,649 | $161,458 | ($35,809) | | Accounts receivable, net | $173,064 | $170,114 | $2,950 | | **Total Liabilities** | **$224,571** | **$265,910** | **($41,339)** | | Accrued payroll and employee benefits | $63,390 | $105,822 | ($42,432) | | **Total Stockholders' Equity** | **$341,856** | **$320,752** | **$21,104** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Revenues increased by 9.2% year-over-year, but operating income declined by 20.7% and net income by 1.6% Income Statement Summary (in thousands, except per share data) | Metric | Q1 2023 (Three Months Ended Mar 31) | Q1 2022 (Three Months Ended Apr 1) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenues** | **$140,309** | **$128,478** | **+9.2%** | | Revenues before reimbursements | $128,705 | $117,870 | +9.2% | | **Operating Income** | **$29,120** | **$36,717** | **-20.7%** | | **Net Income** | **$29,124** | **$29,609** | **-1.6%** | | Diluted EPS | $0.56 | $0.56 | 0.0% | | Cash dividends declared per share | $0.26 | $0.24 | +8.3% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was negative, a typical seasonal pattern, while financing activities saw a significant decrease in cash usage due to no stock repurchases Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Apr 1, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,703) | ($6,352) | | Net cash used in investing activities | ($5,668) | ($2,606) | | Net cash used in financing activities | ($23,740) | ($73,408) | | **Net decrease in cash** | **($35,809)** | **($82,637)** | | Cash at end of period | $125,649 | $215,050 | - The primary use of cash in financing activities for Q1 2023 was for **dividends ($14.5M)** and **payroll taxes for restricted stock units ($9.9M)**[20](index=20&type=chunk) - Unlike Q1 2022, there were no common stock repurchases in Q1 2023[20](index=20&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Revenue is primarily derived from time and materials contracts, with the Engineering and Other Scientific segment showing strong growth - Revenue is primarily generated from **time and materials contracts (80% in Q1 2023)**, with the remainder from fixed-price contracts (20%)[27](index=27&type=chunk)[30](index=30&type=chunk) Segment Revenues (in thousands) | Segment | Q1 2023 | Q1 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Engineering and Other Scientific | $117,048 | $104,615 | +11.9% | | Environmental and Health | $23,261 | $23,863 | -2.5% | | **Total Revenues** | **$140,309** | **$128,478** | **+9.2%** | Segment Operating Income (in thousands) | Segment | Q1 2023 | Q1 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Engineering and Other Scientific | $43,619 | $38,490 | +13.3% | | Environmental and Health | $7,554 | $7,835 | -3.6% | | **Total Segment Operating Income** | **$51,173** | **$46,325** | **+10.5%** | - One client accounted for **13% of total revenues** in Q1 2023, consistent with the same period in 2022[57](index=57&type=chunk) - On April 27, 2023, the Board of Directors declared a quarterly cash dividend of **$0.26 per share**[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to strong demand for reactive and proactive services, while operating income decreased due to higher compensation and G&A expenses [Results of Consolidated Operations](index=18&type=section&id=RESULTS%20OF%20CONSOLIDATED%20OPERATIONS) Revenue growth was driven by increased demand for reactive and proactive services, despite a decrease in utilization due to increased technical headcount - Revenue growth was driven by increased demand for reactive services (litigation, product safety/recall) and proactive engagements in consumer products, chemicals, utilities, automotive, and life sciences[73](index=73&type=chunk) Key Operational Metrics | Metric | Q1 2023 | Q1 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Billable Hours (thousands) | 385 | 374 | +3% | | Utilization | 70% | 77% | -7 p.p. | | Technical FTEs | 1,052 | 939 | +12% | - The decrease in net income was primarily due to a smaller excess tax benefit from stock-based awards, which fell to **$3.6 million in Q1 2023** from $6.0 million in Q1 2022[76](index=76&type=chunk) - Compensation and related expenses increased by **22.4%**, largely due to an **$8.6 million increase in deferred compensation expense** resulting from changes in the market value of plan assets[83](index=83&type=chunk)[92](index=92&type=chunk) - This had a corresponding offset in 'Other income, net'[83](index=83&type=chunk)[92](index=92&type=chunk) - General and administrative expenses rose **38.1%** due to increased travel, marketing, and recruiting as pandemic-related restrictions eased and hiring efforts grew[88](index=88&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash and cash equivalents decreased due to seasonal bonus payments and increased capital expenditures, but the company maintains sufficient liquidity for future needs - Cash and cash equivalents decreased by **$35.8 million** during the quarter to **$125.6 million**, primarily due to the payment of annual bonuses accrued in the prior year[96](index=96&type=chunk)[97](index=97&type=chunk) - Net cash used in investing activities increased to **$5.7 million** from $2.6 million YoY, driven by higher capital expenditures for corporate infrastructure[98](index=98&type=chunk) - Net cash used in financing activities decreased significantly to **$23.7 million** from $73.4 million YoY, as the company did not repurchase any common stock in Q1 2023, compared to **$48.6 million in repurchases in Q1 2022**[99](index=99&type=chunk)[20](index=20&type=chunk) - The company believes existing cash balances and cash from operations will be sufficient to fund working capital, capital expenditures, stock repurchases, and dividends for at least the next twelve months[95](index=95&type=chunk) [Non-GAAP Financial Measures](index=23&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like EBITDA and EBITDAS to evaluate operating performance, with EBITDA margin decreasing due to lower utilization and higher expenses - The company uses non-GAAP measures EBITDA and EBITDAS to evaluate operating performance[103](index=103&type=chunk) - EBITDA is defined as net income before interest, taxes, depreciation, and amortization[103](index=103&type=chunk) - EBITDAS further excludes stock-based compensation[103](index=103&type=chunk) EBITDA Performance | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | EBITDA (in thousands) | $35,756 | $34,475 | | EBITDA as a % of revenues before reimbursements | 27.8% | 29.2% | - The decrease in EBITDA margin was attributed to lower utilization and increases in other operating and general & administrative expenses[105](index=105&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate and foreign currency risks but does not use derivative instruments to hedge these exposures - The company manages interest rate risk by maintaining a portfolio of high-credit-quality debt instruments with short average maturities[107](index=107&type=chunk) - Foreign currency risk exists for revenues and expenses denominated in currencies other than the U.S. dollar[108](index=108&type=chunk) - As of March 31, 2023, net assets exposed to functional currency translation were approximately **$9.9 million (British Pound)**, **$1.6 million (Chinese Yuan)**, and **$2.2 million (Hong Kong Dollar)**[108](index=108&type=chunk)[109](index=109&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[112](index=112&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[113](index=113&type=chunk) [PART II – OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and exhibits [Legal Proceedings](index=26&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[115](index=115&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - There have been no material changes from risk factors as previously discussed in the Company's 2022 Annual Report[116](index=116&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during the quarter, with approximately $62.6 million remaining available for future repurchases Share Repurchase Activity (Q1 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased | | :--- | :--- | :--- | :--- | | Dec 31 to Mar 31 | 0 | $ - | $62,598,000 | [Exhibits](index=27&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 documents - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350, as well as Inline XBRL documents[122](index=122&type=chunk)