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 ...

Exponent, Inc. (NASDAQ:EXPO) Q4 2023 Earnings Conference Call February 1, 2024 4:30 PM ET Company Participants Joni Konstantelos - Investor Relations Catherine Corrigan - President and Chief Executive Officer Rich Schlenker - Executive Vice President and Chief Financial Officer Conference Call Participants Andrew Nicholas - William Blair Josh Chan - UBS Tobey Sommer - Truist Operator Good afternoon and welcome to the Exponent Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructio ...

(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]

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 March 31, 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) DELAWARE 77-0218904 (State or ...

Financial Data and Key Metrics Changes - In Q1 2023, total revenues increased by 9.2% to $140.3 million, while net revenues rose to $128.7 million, reflecting a strong performance despite macroeconomic challenges [79] - Net income decreased by 1.6% to $29.1 million, maintaining earnings per diluted share at $0.56 [57] - EBITDA increased by 3.7% to $35.8 million, with an EBITDA margin of 27.8% [80] - Utilization dropped to 70.4% from 76.5% in the prior year, attributed to significant headcount growth [81] - The realized rate increase was approximately 6% for the first quarter compared to the same period a year ago [58] Business Line Data and Key Metrics Changes - The engineering and other scientific segment, which represents 83% of net revenues, increased by 11% year-over-year, driven by demand in transportation, utilities, consumer products, and life sciences [76] - The environmental and health segment accounted for 17% of net revenues but saw a 1% decrease compared to the prior year [54] Market Data and Key Metrics Changes - Increased demand for reactive services was noted, particularly in litigation-related activities and product safety across various industries [4] - Proactive engagements were primarily driven by regulatory issues and product design consulting in electronics and medical devices [51] Company Strategy and Development Direction - The company is focused on strategic hiring to meet the complex needs of clients, with a headcount growth of 12% year-over-year [6][13] - Exponent aims to capitalize on macro trends related to safety, health, and environmental concerns, positioning itself for future growth [75] - The company plans to continue investing in talent and capabilities to expand its client base and services [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for critical work despite market uncertainties, indicating that regulatory needs remain strong [23][35] - The full-year 2023 outlook remains unchanged, with expected revenue growth in the high-single to low-double digits and an EBITDA margin of 28% to 28.5% [16][85] - Management noted that the hiring environment has improved, with strong acceptance rates and retention contributing to headcount growth [100] Other Important Information - G&A expenses increased by 38.1% to $5.8 million, primarily due to increased marketing and recruiting activities [60] - The company expects a tax rate of approximately 28% for 2023, up from 27% in 2022 [89] Q&A Session Summary Question: What drove the stronger-than-expected headcount growth? - Management attributed the growth to strong acceptance rates and a robust employee value proposition, indicating a favorable hiring environment [100] Question: How did the reactive and proactive business lines perform? - The reactive side was stronger, particularly in litigation and recall-related work, while proactive engagements faced some delays due to client adjustments in response to market uncertainty [102][94] Question: Has there been any impact from recent layoffs in the tech sector? - Management noted that while some clients are resetting their teams, the demand for Exponent's services remains stable, and they have not observed a significant impact from the layoffs [109]

Financial Performance - Revenues for 2022 increased by 10.1% to $513,293,000 compared to $466,269,000 in 2021, driven by an increase in billable hours and billing rates [162]. - Net income for 2022 was $102,330,000, a slight increase from $101,202,000 in 2021, with diluted earnings per share rising to $1.96 from $1.90 [165]. - Total operating income increased by 29.3% to $140,842,000 in 2022 from $108,927,000 in 2021, driven by higher revenues in the Engineering and Other Scientific segment [180]. - Revenues before reimbursements rose to $463,820,000 in 2022, up from $434,850,000 in 2021, with EBITDA at $137,217,000, representing 29.6% of revenues [196]. Expenses and Costs - Compensation and related expenses decreased by 5.0% to $264,235,000, representing 51.5% of total revenues in 2022, down from 59.6% in 2021 [173]. - General and administrative expenses increased by 54.8% to $23,660,000, representing 4.6% of total revenues, up from 3.3% in 2021 [177]. - Other income decreased significantly by 150.9% to $(8,608,000) in 2022 from $16,910,000 in 2021, primarily due to changes in the value of assets associated with the deferred compensation plan [184]. - The corporate operating expenses decreased by 34.1% to $(39,177,000) in 2022 from $(59,425,000) in 2021, mainly due to a reduction in deferred compensation expenses [183]. Operational Metrics - Billable hours increased by 4% to 1,465,000 in 2022 from 1,405,000 in 2021, while technical full-time equivalent employees rose by 6% to 955 [169]. - Utilization rates decreased slightly to 74% in 2022 from 75% in 2021, indicating a need for continued focus on efficiency [169]. - The utilization rate decreased to 74% in 2022 from 75% in 2021, impacting EBITDA margins [196]. Segment Performance - The Engineering and Other Scientific segment saw revenues rise by 12.3% to $427,796,000, while the Environmental and Health segment's revenues increased by 0.2% to $85,497,000 [170]. Cash Flow and Taxation - Net cash provided by operating activities was $93,807,000 in 2022, down from $124,568,000 in 2021, indicating a decrease in cash flow generation [187]. - The effective tax rate increased to 22.6% in 2022 from 19.6% in 2021, attributed to a decrease in excess tax benefits from stock-based awards [186]. Future Outlook and Investments - The company plans to continue expanding its capabilities through selective hiring and investments in corporate infrastructure to enhance service offerings [166]. - Capital expenditures are expected to continue, with cash reserves potentially used for stock repurchases, dividends, and strategic acquisitions [192]. Foreign Currency Exposure - The company had net assets of approximately $10.7 million in British Pounds, $1.8 million in Chinese Yuan, and $1.1 million in Hong Kong Dollars as of December 30, 2022, indicating exposure to foreign currency risks [201]. - The company does not use foreign exchange contracts to hedge currency exposures, which may affect future results due to international expansion [203].

Financial Data and Key Metrics Changes - For fiscal year 2022, total revenues increased by 10.1% to $513.3 million, while net revenues rose by 6.7% to $463.8 million compared to 2021 [11] - Net income for the year increased by 1.1% to $102.3 million, maintaining earnings per diluted share at $1.96 [11] - EBITDA for the year increased by 3.8% to $137.2 million, resulting in an EBITDA margin of 29.6% of net revenues [11] Business Line Data and Key Metrics Changes - The engineering and other scientific segments accounted for 83% of net revenues, with a 10% increase in Q4 and an 8% increase for the full year [6] - The environmental and health segment represented 17% of net revenues, with a 2% decrease in Q4 and flat growth for the full year [6] - Proactive services saw strong demand in user experience research and machine learning studies, while reactive services experienced robust demand in litigation and product safety [5] Market Data and Key Metrics Changes - Billable hours for 2022 were approximately 1,465,000, an increase of 4.2% year-over-year [12] - Utilization for the full year was 73.8%, down from 75.1% in 2021, reflecting increased headcount [12] - The realized rate increase was approximately 2.5% for the year 2022 [12] Company Strategy and Development Direction - The company aims to evolve its service portfolio to meet rising societal expectations for safety, health, and sustainability [6] - Exponent is focused on capitalizing on disruptive trends and enhancing its capabilities in response to complex innovations [6] - The company plans to continue investing in talent and client relationships, particularly in the digital health and life sciences sectors [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow profitably despite macroeconomic challenges, citing the critical nature of their work [21] - For 2023, the company expects revenue growth in the high single to low double digits, with an EBITDA margin of 28% to 28.5% [13] - The anticipated headcount growth for 2023 is 6% to 8%, with a slight decrease in utilization expected [13] Other Important Information - The company generated $93.8 million in cash from operations in 2022 and had $161.5 million in cash at year-end [12] - G&A expenses increased by 54.8% to $23.7 million in 2022, primarily due to in-person meetings and increased marketing efforts [12] - The tax benefit associated with share-based awards for 2023 is expected to be approximately $3 million, impacting net income [15] Q&A Session Summary Question: Margin guidance assumptions for 2023 - Management confirmed that the guidance for other operating and G&A costs reflects a return to normalized levels in 2023 [18] Question: Consultant compensation rates and realized rate gains - Management expects stronger pricing increases compared to the previous year, anticipating growth in compensation for consulting staff [20] Question: Impact of economic conditions on proactive business - Management noted that the critical nature of their work continues to support demand, despite potential client spending pullbacks [21] Question: Growth algorithm for headcount and pricing - Management indicated that a growth expectation of 6% to 8% in headcount and 3% to 4% in pricing is reasonable for the medium to long term [26] Question: Update on digital health and pharma focus - Management reported increased traction in the digital health space, with ongoing investments in talent and client relationships [31]