Exponent(EXPO) - 2024 Q4 - Annual Results

Exponent Reports Fourth Quarter and Fiscal Year 2024 Financial Results Management Commentary Exponent's Q4 exceeded expectations, concluding a strong year with mid-single-digit net revenue growth and improved EBITDA margin, driven by proactive and reactive services, with 2025 demand anticipated from tech advancements and industry challenges - Q4 results exceeded expectations, with annual net revenue growth in the mid-single digits and improved utilization and EBITDA margin[2] - Key growth drivers in 2024 included proactive services for consumer electronics and utilities, and reactive services for utilities and medical devices, with the chemicals industry showing improvement in Q4[2] - Anticipated demand drivers for 2025 include technological advancements in transportation, energy infrastructure challenges, digital health and wearables, and heightened chemical scrutiny[3] Fourth Quarter 2024 Financial Results Exponent's 14-week Q4 2024 saw total revenues increase by 11.3% to $136.8 million and net income rise to $23.6 million, with EBITDA at $31.2 million Q4 2024 vs. Q4 2023 Financial Highlights | Metric | Q4 2024 (14 weeks) | Q4 2023 (13 weeks) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $136.8M | $122.9M | +11.3% | | Revenues before Reimbursements | $123.8M | $113.9M | +8.7% | | Net Income | $23.6M | $20.9M | +12.9% | | Diluted EPS | $0.46 | $0.41 | +12.2% | | EBITDA | $31.2M | $30.5M | +2.3% | | EBITDA Margin (as % of net revenues) | 25.2% | 26.8% | -1.6 p.p. | - The fourth quarter of 2024 was a 14-week period, compared to a 13-week period in 2023, which contributed to the revenue increase[4] - The consolidated tax rate was 24.7% in Q4 2024, down from 30.4% in Q4 2023, influenced by a $0.6 million tax benefit from share-based awards[5] Fiscal Year 2024 Financial Results For the 53-week fiscal year 2024, total revenues increased by 4.1% to $558.5 million, with net income rising to $109.0 million and a strong year-end cash position of $258.9 million Fiscal Year 2024 vs. Fiscal Year 2023 Financial Highlights | Metric | FY 2024 (53 weeks) | FY 2023 (52 weeks) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $558.5M | $536.8M | +4.1% | | Revenues before Reimbursements | $518.5M | $497.2M | +4.3% | | Net Income | $109.0M | $100.3M | +8.7% | | Diluted EPS | $2.11 | $1.94 | +8.8% | | EBITDA | $147.1M | $137.7M | +6.8% | | EBITDA Margin (as % of net revenues) | 28.4% | 27.7% | +0.7 p.p. | - The company increased its quarterly cash dividend from $0.28 to $0.30 per share[9] - During fiscal year 2024, Exponent paid $58.3 million in dividends and closed the period with $258.9 million in cash and cash equivalents[10] Business Segment Performance The Engineering and Other Scientific segment, 84% of FY2024 net revenues, grew 5%, while the Environmental and Health segment, 16% of net revenues, saw an 11% Q4 increase driven by chemicals Segment Revenue Before Reimbursements Performance | Segment | % of FY24 Net Revenue | Q4 2024 YoY Growth | FY 2024 YoY Growth | | :--- | :--- | :--- | :--- | | Engineering and Other Scientific | 84% | +8% | +5% | | Environmental and Health | 16% | +11% | Approx. Flat | - Growth in the Engineering segment was driven by demand from the consumer products and utilities industries[12] - The Environmental and Health segment's strong Q4 growth was primarily due to a resurgence in engagements within the chemicals industry[13] Business Outlook for Fiscal Year 2025 Exponent forecasts low-single-digit revenue growth for FY2025 with an EBITDA margin of 26.25% to 27.0%, despite Q1 declines and initial headcount headwinds Q1 2025 Outlook (vs. Q1 2024) | Metric | Guidance | | :--- | :--- | | Revenues before reimbursements | Down in the low-single digits | | EBITDA % of net revenues | 25.0% to 26.0% | Full Fiscal Year 2025 Outlook (vs. FY 2024) | Metric | Guidance | | :--- | :--- | | Revenues before reimbursements | Grow in the low-single digits | | EBITDA % of net revenues | 26.25% to 27.0% | - The company is starting 2025 with a 5-6% headwind in technical full-time-equivalent employees but expects to grow headcount by 1-2% sequentially each quarter[14] - Fiscal year 2025 will be a 52-week year, which poses a headwind for year-over-year comparisons against the 53-week fiscal year 2024[14] Financial Statements Condensed Consolidated Statements of Income The income statement reflects year-over-year increases in both quarterly and annual revenues and net income, with FY2024 total revenues reaching $558.5 million and net income $109.0 million Condensed Consolidated Statements of Income (in thousands) | | Quarters Ended | | Years Ended | | | :--- | :--- | :--- | :--- | :--- | | | Jan 3, 2025 | Dec 29, 2023 | Jan 3, 2025 | Dec 29, 2023 | | Revenues before reimbursements | $123,764 | $113,872 | $518,490 | $497,189 | | Total revenues | $136,766 | $122,900 | $558,514 | $536,766 | | Operating income | $27,253 | $18,394 | $119,557 | $111,322 | | Income before income taxes | $31,328 | $30,088 | $147,370 | $135,896 | | Net income | $23,589 | $20,929 | $109,002 | $100,339 | | Diluted Net income per share | $0.46 | $0.41 | $2.11 | $1.94 | Condensed Consolidated Balance Sheets As of January 3, 2025, Exponent's total assets increased to $777.3 million, driven by a rise in cash to $258.9 million, with total liabilities at $356.2 million and equity at $421.1 million Condensed Consolidated Balance Sheets (in thousands) | | Jan 3, 2025 | Dec 29, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $258,901 | $187,150 | | Total current assets | $446,881 | $379,532 | | Total Assets | $777,270 | $646,777 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $163,183 | $161,909 | | Total liabilities | $356,202 | $290,692 | | Total stockholders' equity | $421,068 | $356,085 | | Total Liabilities and Stockholders' Equity | $777,270 | $646,777 | Reconciliation of Non-GAAP Measures (EBITDA & EBITDAS) The reconciliation shows FY2024 EBITDA increased to $147.1 million and EBITDAS, excluding stock-based compensation, rose to $170.3 million EBITDA and EBITDAS Reconciliation (in thousands) | | Quarters Ended | | Years Ended | | | :--- | :--- | :--- | :--- | :--- | | | Jan 3, 2025 | Dec 29, 2023 | Jan 3, 2025 | Dec 29, 2023 | | Net Income | $23,589 | $20,929 | $109,002 | $100,339 | | Plus: Taxes, Interest, D&A | ... | ... | ... | ... | | EBITDA | $31,233 | $30,540 | $147,058 | $137,662 | | Stock-based compensation | $4,857 | $3,180 | $23,239 | $20,357 | | EBITDAS | $36,090 | $33,720 | $170,297 | $158,019 |