Exponent(EXPO) - 2025 Q2 - Quarterly Results

Exponent Q2 2025 Earnings Release Management Commentary 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] - Growth was driven by dispute-related services in the construction, automotive, and medical device sectors[2] - Proactive work in the utilities sector was strong, but offset by weaker demand in chemical regulatory services[2] - The company sees significant growth potential in emerging areas like digital health, AI usability, and distributed energy systems[2] Financial Performance 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 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] Year-to-Date 2025 Financial Results 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] Shareholder Returns 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] 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 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] - 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] Business Outlook 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] Appendix: Financial Statements 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 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 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) 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 |