Exponent(EXPO) - 2022 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents Exponent, Inc.'s unaudited condensed consolidated financial statements and related notes for interim periods Condensed Consolidated Balance Sheets This statement provides a snapshot of the Company's financial position at specific interim dates Assets (in thousands) | Assets (in thousands) | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------- | :----------------- | :---------------- | | Cash and cash equivalents | $148,443 | $297,687 | | Accounts receivable, net | $166,014 | $139,861 | | Total current assets | $332,512 | $452,762 | | Total assets | $559,003 | $683,739 | Liabilities and Stockholders' Equity (in thousands) | Liabilities and Stockholders' Equity (in thousands) | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------------------ | :----------------- | :---------------- | | Total current liabilities | $137,917 | $152,982 | | Total liabilities | $239,203 | $266,674 | | Total stockholders' equity | $319,800 | $417,065 | | Total liabilities and stockholders' equity | $559,003 | $683,739 | Condensed Consolidated Statements of Income This statement details the Company's revenues, expenses, and net income over specific interim periods (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Revenues before reimbursements | $115,143 | $108,467 | $351,231 | $330,514 | | Revenues | $127,179 | $116,405 | $385,938 | $352,763 | | Operating income | $36,813 | $32,119 | $118,807 | $85,549 | | Net income | $24,442 | $24,574 | $79,806 | $80,822 | | Basic Net income per share | $0.47 | $0.47 | $1.54 | $1.54 | | Diluted Net income per share | $0.47 | $0.46 | $1.52 | $1.52 | | Cash dividends declared per common share | $0.24 | $0.20 | $0.72 | $0.60 | Condensed Consolidated Statements of Comprehensive Income This statement presents net income and other comprehensive income components for interim periods (in thousands) | (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Net income | $24,442 | $24,574 | $79,806 | $80,822 | | Other comprehensive income (loss): Foreign currency translation adjustments, net of tax | $(1,493) | $(266) | $(3,153) | $(55) | | Comprehensive income | $22,949 | $24,308 | $76,653 | $80,702 | Condensed Consolidated Statements of Stockholders' Equity This statement outlines changes in the Company's equity accounts over interim periods - Total stockholders' equity decreased from $417.1 million at December 31, 2021, to $319.8 million at September 30, 2022, primarily due to treasury stock repurchases and dividends[19] (In thousands) | (In thousands) | Balance at Dec 31, 2021 (in thousands) | Balance at Sep 30, 2022 (in thousands) | | :------------- | :---------------------- | :---------------------- | | Common Stock | $66 | $66 | | Additional paid-in capital | $281,419 | $298,589 | | Accumulated other comprehensive loss | $(1,983) | $(5,136) | | Retained earnings | $478,370 | $518,631 | | Treasury stock | $(340,807) | $(492,350) | | Total stockholders' equity | $417,065 | $319,800 | Condensed Consolidated Statements of Cash Flows This statement summarizes cash inflows and outflows from operating, investing, and financing activities (in thousands) | (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------------------------------------------ | :----------------------------- | :---------------------------- | | Net cash provided by operating activities | $53,237 | $70,378 | | Net cash (used in) provided by investing activities | $(9,108) | $14,569 | | Net cash used in financing activities | $(190,556) | $(52,766) | | Net change in cash and cash equivalents | $(149,244) | $32,260 | | Cash and cash equivalents at end of period | $148,443 | $229,785 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements Note 1: Basis of Presentation The financial statements are unaudited, prepared under GAAP for interim reporting, and consolidate all subsidiaries - Exponent, Inc. is an engineering and scientific consulting firm providing solutions to complex problems[30] - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and include all wholly-owned subsidiaries[31][32] Note 2: Revenue Recognition Revenue is primarily recognized from time and materials and fixed-price contracts over time - Substantially all engagements are under Time and materials or fixed-price arrangements[34] Revenue Type | Revenue Type | Sep 30, 2022 (3 Months) | Oct 1, 2021 (3 Months) | Sep 30, 2022 (9 Months) | Oct 1, 2021 (9 Months) | | :------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Time and materials | 78% | 78% | 79% | 79% | | Fixed price | 22% | 22% | 21% | 21% | - Deferred revenues of $6.3 million (Q3 2022) and $14.2 million (9M 2022) were recognized from prior period balances[38] Note 3: Fair Value Measurements Certain financial assets and liabilities are measured at fair value, primarily classified as Level 1 (In thousands) Assets | (In thousands) Assets | September 30, 2022 Total (in thousands) | September 30, 2022 Level 1 (in thousands) | | :-------------------- | :----------------------- | :------------------------- | | Money market securities | $51,794 | $51,794 | | Fixed income trading securities held in deferred compensation plan | $33,772 | $33,772 | | Equity trading securities held in deferred compensation plan | $60,807 | $60,807 | | Total Assets | $146,373 | $146,373 | (In thousands) Liabilities | (In thousands) Liabilities | September 30, 2022 Total (in thousands) | September 30, 2022 Level 1 (in thousands) | | :------------------------- | :----------------------- | :------------------------- | | Deferred compensation plan | $94,502 | $94,502 | | Total Liabilities | $94,502 | $94,502 | - All fair value measurements for money market securities and deferred compensation plan trading securities are classified as Level 1[41][44] - Cash and cash equivalents decreased from $297.7 million at December 31, 2021, to $148.4 million at September 30, 2022[45][47] Note 4: Net Income Per Share Basic and diluted net income per share are calculated using weighted-average common shares outstanding (In thousands) Shares used in per share computations | (In thousands) Shares used in per share computations | Three Months Ended Sep 30, 2022 | Three Months Ended Oct 1, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Oct 1, 2021 | | :--------------------------------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Basic | 51,492 | 52,618 | 51,934 | 52,597 | | Dilutive common stock options | 202 | 245 | 202 | 239 | | Dilutive restricted stock units | 314 | 449 | 353 | 480 | | Diluted | 52,008 | 53,312 | 52,489 | 53,316 | Note 5: Stock-Based Compensation Compensation expense for restricted stock units and stock options is recognized over their vesting periods - Stock-based compensation expense for accrued bonus awards was $2.6 million (Q3 2022) and $8.1 million (9M 2022)[54] - Stock-based compensation expense for unvested RSUs was $1.8 million (Q3 2022) and $7.3 million (9M 2022)[54] - Stock-based compensation expense for stock options was $212 thousand (Q3 2022) and $623 thousand (9M 2022)[55] Note 6: Deferred Compensation Plans Nonqualified deferred compensation plans for highly compensated employees impact compensation expense and other income - Invested amounts under deferred compensation plans totaled $94.6 million at September 30, 2022, and $109.3 million at December 31, 2021[60] - Vested amounts due under the plans totaled $94.5 million at September 30, 2022, and $110.4 million at December 31, 2021[61] - A reduction in compensation expense of $4.9 million (Q3 2022) and $20.9 million (9M 2022) was recognized due to changes in the market value of trust assets, with a corresponding loss in miscellaneous income (expense), net[61] Note 7: Supplemental Cash Flow Information This note provides additional details on cash paid for income taxes and non-cash investing/financing activities (In thousands) | (In thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------- | :----------------------------- | :---------------------------- | | Cash paid for income taxes | $24,349 | $16,481 | | Vested stock unit awards issued to settle accrued bonuses | $10,200 | $7,637 | | Right-of-use asset obtained in exchange for operating lease obligations | $8,090 | $792 | Note 8: Accounts Receivable, Net Accounts receivable includes billed and unbilled amounts, net of an allowance for losses (In thousands) | (In thousands) | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------- | :----------------- | :---------------- | | Billed accounts receivable | $110,428 | $102,028 | | Unbilled accounts receivable | $61,743 | $42,256 | | Allowance for contract losses and doubtful accounts | $(6,157) | $(4,423) | | Total accounts receivable, net | $166,014 | $139,861 | (In thousands) Allowance for contract losses and doubtful accounts | (In thousands) Allowance for contract losses and doubtful accounts | Amount (in thousands) | | :----------------------------------------------------------------- | :----- | | Balance at December 31, 2021 | $4,423 | | Provision for contract losses and doubtful accounts | $2,112 | | Write-offs | $(378) | | Balance at September 30, 2022 | $6,157 | Note 9: Segment Reporting The Company operates in Engineering and Other Scientific, and Environmental and Health segments - The Company has two reportable operating segments: Engineering and Other Scientific, and Environmental and Health[67] (In thousands) Revenues | (In thousands) Revenues | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :---------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Engineering and Other Scientific | $107,403 | $97,100 | $321,168 | $288,848 | | Environmental and Health | $19,776 | $19,305 | $64,770 | $63,915 | | Total revenues | $127,179 | $116,405 | $385,938 | $352,763 | (In thousands) Operating Income | (In thousands) Operating Income | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Engineering and Other Scientific | $39,385 | $36,676 | $117,907 | $108,646 | | Environmental and Health | $6,378 | $5,851 | $21,059 | $21,265 | | Total segment operating income | $45,763 | $42,527 | $138,966 | $129,911 | | Corporate operating expense | $(8,950) | $(10,408) | $(20,159) | $(44,362) | | Total operating income | $36,813 | $32,119 | $118,807 | $85,549 | - One client accounted for 16% (Q3 2022) and 15% (9M 2022) of total revenues[71] Note 10: Leases The Company primarily leases office and laboratory space, recognizing right-of-use assets and liabilities - The Company leases office, laboratory, and storage space in 13 states, D.C., and internationally (China, Hong Kong, Singapore, Switzerland, UK)[74] - Rental income from leasing excess space was $739 thousand (Q3 2022) and $2.2 million (9M 2022)[77] (In thousands) Lease Expense | (In thousands) Lease Expense | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :--------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Operating lease cost | $1,681 | $1,635 | $5,247 | $4,896 | | Variable lease cost | $274 | $246 | $913 | $793 | | Short-term lease cost | $194 | $68 | $425 | $319 | - Weighted Average Remaining Lease Term: 4.3 years (Sep 30, 2022); Weighted Average Discount Rate: 4.0% (Sep 30, 2022)[78] Note 11: Contingencies The Company is involved in legal actions, but their outcome is not expected to materially affect financials - The Company is a party to various legal actions, but the outcome is not expected to have a material adverse effect on financial condition, results of operations, or liquidity[80] Note 12: Subsequent Events A cash dividend of $0.24 per share was declared post-period end - A cash dividend of $0.24 per share was declared on October 27, 2022, payable December 23, 2022[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Company's financial condition and operating results for the interim periods Forward-Looking Statements This section highlights forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including global economic downturn, COVID-19 impacts, demand for services, competition, ability to attract and retain employees, and tort reform[84] Business Overview Exponent, Inc. is an engineering and scientific consulting firm offering multidisciplinary expertise - Exponent, Inc. is an engineering and scientific consulting firm offering multidisciplinary expertise (over 90 technical disciplines) to solve complex problems in product development, recall, regulatory compliance, and litigation support[85] Critical Accounting Estimates No significant changes in critical accounting estimates occurred during the nine months ended September 30, 2022 - No significant changes in critical accounting estimates occurred during the nine months ended September 30, 2022, compared to the prior fiscal year[86] Results of Consolidated Operations This section analyzes the Company's consolidated operational performance, including revenues and expenses Revenues Revenues increased due to proactive and reactive engagements across various industries Revenues (in thousands, except percentages) | Segment | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------------------------------ | :------------------------------ | :----------------------------- | :------------- | | Engineering and Other Scientific | $107,403 | $97,100 | 10.6% | | Environmental and Health | $19,776 | $19,305 | 2.4% | | Total revenues | $127,179 | $116,405 | 9.3% | Revenues (in thousands, except percentages) | Segment | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------------------------------ | :----------------------------- | :---------------------------- | :------------- | | Engineering and Other Scientific | $321,168 | $288,848 | 11.2% | | Environmental and Health | $64,770 | $63,915 | 1.3% | | Total revenues | $385,938 | $352,763 | 9.4% | - Q3 2022 revenues increased 9% to $127.2 million, driven by proactive engagements in consumer products and transportation (virtual reality, wearable technologies, energy storage) and reactive business from litigation and product safety/recall work[89][90] - 9M 2022 revenues increased 9.4% to $385.9 million, with growth across a broad range of industries, including electric vehicles, energy storage, international arbitrations, and integrity management advisory services[109] Compensation and Related Expenses Compensation expenses decreased primarily due to changes in deferred compensation expense Compensation and Related Expenses (in thousands, except percentages) | Expense Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :------------------------------ | :----------------------------- | :------------- | | Compensation and related expenses | $62,779 | $64,138 | -2.1% | | Percentage of total revenues | 49.4% | 55.1% | | Compensation and Related Expenses (in thousands, except percentages) | Expense Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :----------------------------- | :---------------------------- | :------------- | | Compensation and related expenses | $189,982 | $210,491 | -9.7% | | Percentage of total revenues | 49.2% | 59.7% | | - Q3 2022 compensation expenses decreased 2.1% due to a $4.7 million decreased in deferred compensation expense, partially offset by increased payroll and fringe benefits from annual salary adjustments and higher technical full-time equivalent employees[97] - 9M 2022 compensation expenses decreased 9.7% due to a $30.9 million decreased in deferred compensation expense, partially offset by increases in payroll, fringe benefits, and bonus expense[111] Other Operating Expenses Other operating expenses increased due to higher occupancy, IT, and office costs reflecting growth Other Operating Expenses (in thousands, except percentages) | Expense Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :------------------------------ | :----------------------------- | :------------- | | Other operating expenses | $8,822 | $8,017 | 10.0% | | Percentage of total revenues | 6.9% | 6.9% | | Other Operating Expenses (in thousands, except percentages) | Expense Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :----------------------------- | :---------------------------- | :------------- | | Other operating expenses | $25,742 | $23,848 | 7.9% | | Percentage of total revenues | 6.7% | 6.8% | | - Q3 2022 other operating expenses increased 10.0% due to higher occupancy, IT-related, and office expenses, reflecting growth in employees and return to office[98] - 9M 2022 other operating expenses increased 7.9% due to increased occupancy, IT-related, and depreciation expenses, driven by employee growth and corporate infrastructure investments[113] Reimbursable Expenses Reimbursable expenses significantly increased due to higher project-related travel as restrictions eased Reimbursable Expenses (in thousands, except percentages) | Expense Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :------------------------------ | :----------------------------- | :------------- | | Reimbursable expenses | $12,036 | $7,938 | 51.6% | | Percentage of total revenues | 9.5% | 6.8% | | Reimbursable Expenses (in thousands, except percentages) | Expense Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :----------------------------- | :---------------------------- | :------------- | | Reimbursable expenses | $34,707 | $22,249 | 56.0% | | Percentage of total revenues | 9.0% | 6.3% | | - Reimbursable expenses increased significantly (51.6% in Q3, 56.0% in 9M) due to increased project-related travel and other expenses as COVID-19 restrictions eased[100][114] General and Administrative Expenses General and administrative expenses rose due to increased travel, consulting, and recruiting costs General and Administrative Expenses (in thousands, except percentages) | Expense Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :------------------------------ | :----------------------------- | :------------- | | General and administrative expenses | $6,729 | $4,193 | 60.5% | | Percentage of total revenues | 5.3% | 3.6% | | General and Administrative Expenses (in thousands, except percentages) | Expense Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :--------------- | :----------------------------- | :---------------------------- | :------------- | | General and administrative expenses | $16,700 | $10,626 | 57.2% | | Percentage of total revenues | 4.3% | 3.0% | | - Q3 2022 general and administrative expenses increased 60.5% due to higher travel and meals (firm-wide meeting, easing restrictions), increased outside consulting, and recruiting expenses[101] - 9M 2022 general and administrative expenses increased 57.2% due to significant increases in travel and meals, outside consulting, recruiting, and marketing/business development expenses[115] Operating Income Operating income increased, driven by revenue growth and reduced corporate operating expenses Operating Income (in thousands, except percentages) | Segment | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------------------------------ | :------------------------------ | :----------------------------- | :------------- | | Engineering and Other Scientific | $39,385 | $36,676 | 7.4% | | Environmental and Health | $6,378 | $5,851 | 9.0% | | Total segment operating income | $45,763 | $42,527 | 7.6% | | Corporate operating expense | $(8,950) | $(10,408) | -14.0% | | Total operating income | $36,813 | $32,119 | 14.6% | Operating Income (in thousands, except percentages) | Segment | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------------------------------ | :----------------------------- | :---------------------------- | :------------- | | Engineering and Other Scientific | $117,907 | $108,646 | 8.5% | | Environmental and Health | $21,059 | $21,265 | -1.0% | | Total segment operating income | $138,966 | $129,911 | 7.0% | | Corporate operating expense | $(20,159) | $(44,362) | -54.6% | | Total operating income | $118,807 | $85,549 | 38.9% | - Q3 2022 total operating income increased 14.6% to $36.8 million, driven by revenue growth in both segments and a decrease in corporate operating expenses due to lower deferred compensation expense[102][105] - 9M 2022 total operating income increased 38.9% to $118.8 million, primarily due to revenue growth in Engineering and Other Scientific and a significant decrease in corporate operating expenses from deferred compensation adjustments[117][119] Other Income, Net Other income, net, decreased significantly due to changes in deferred compensation plan asset values Other Income, Net (in thousands, except percentages) | Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------- | :------------------------------ | :----------------------------- | :------------- | | Other income, net | $(3,337) | $270 | -1335.9% | | Percentage of total revenues | -2.6% | 0.2% | | Other Income, Net (in thousands, except percentages) | Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------- | :----------------------------- | :---------------------------- | :------------- | | Other income, net | $(17,092) | $11,633 | -246.9% | | Percentage of total revenues | -4.4% | 3.3% | | - Q3 2022 other income, net, decreased significantly due to a $4.7 million decreased from changes in deferred compensation plan asset values, partially offset by gains on foreign exchange and increased interest income[106] - 9M 2022 other income, net, decreased significantly due to a $30.9 million decreased from changes in deferred compensation plan asset values, partially offset by a realized gain on foreign exchange and increased interest income[120] Income Taxes Income tax expense increased due to a lower excess tax benefit from stock-based awards Income Taxes (in thousands, except percentages) | Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------- | :------------------------------ | :----------------------------- | :------------- | | Income taxes | $9,034 | $7,815 | 15.6% | | Percentage of total revenues | 7.1% | 6.7% | | | Effective tax rate | 27.0% | 24.1% | | Income Taxes (in thousands, except percentages) | Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | Percent Change | | :------- | :----------------------------- | :---------------------------- | :------------- | | Income taxes | $21,909 | $16,360 | 33.9% | | Percentage of total revenues | 5.7% | 4.6% | | | Effective tax rate | 21.5% | 16.8% | | - Q3 2022 income tax expense increased 15.6% due to a decrease in the excess tax benefit associated with stock-based awards (zero in Q3 2022 vs $1.1 million in Q3 2021)[107] - 9M 2022 income tax expense increased 33.9%, with the effective tax rate rising to 21.5% (from 16.8%), primarily due to a lower excess tax benefit from stock-based awards and an increase in non-deductible officer compensation[122] Liquidity and Capital Resources The Company's liquidity is supported by cash and operating cash flow, despite increased share repurchases - Cash and cash equivalents were $148.4 million at September 30, 2022, down from $297.7 million at December 31, 2021[125] (in thousands) Cash Flows | (in thousands) Cash Flows | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------------------ | :----------------------------- | :---------------------------- | | Net cash provided by operating activities | $53,237 | $70,378 | | Net cash (used in) / provided by investing activities | $(9,108) | $14,569 | | Net cash used in financing activities | $(190,556) | $(52,766) | - The increase in net cash used in financing activities was due to increased common stock repurchases and dividends[128] Non-GAAP Financial Measures EBITDA and EBITDAS are non-GAAP measures used for internal evaluation, budgeting, and compensation - EBITDA and EBITDAS are non-GAAP measures used to evaluate operating performance, develop budgets, and determine employee compensation[133] EBITDA and EBITDAS Reconciliation (in thousands) | (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Oct 1, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Oct 1, 2021 (in thousands) | | :------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Net income | $24,442 | $24,574 | $79,806 | $80,822 | | EBITDA | $34,561 | $34,021 | $106,105 | $102,071 | | Stock-based compensation | $4,605 | $4,365 | $16,072 | $15,239 | | EBITDAS | $39,166 | $38,386 | $122,177 | $117,310 | - EBITDA as a percentage of revenues before reimbursements decreased in both Q3 2022 (30.0% vs 31.4%) and 9M 2022 (30.2% vs 30.9%) due to lower utilization and increased operating and G&A expenses[134][136][137] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to interest rate risk and foreign currency risk from international operations - The Company manages interest rate risk by investing in debt instruments with high credit quality and short average effective maturities (max 3 years, portfolio max 12 months)[140] - Foreign currency risk exists for revenues and expenses in British Pound, Chinese Yuan, and Hong Kong Dollar[141] - Net assets denominated in non-functional currencies were approximately $8.3 million at September 30, 2022[143] Item 4. Controls and Procedures Disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were effective as of September 30, 2022[145] - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2022[147] PART II – OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings Exponent is not currently involved in any material legal proceedings - Exponent is not engaged in any material legal proceedings[149] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Company's 2021 Annual Report - No material changes from risk factors previously discussed in the Company's 2021 Annual Report[150] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details of common stock repurchases under publicly announced programs for the period Period | Period | Total Number of Shares Purchased (in thousands) | Average Price Per Share (in thousands) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (in thousands) | | :----- | :---------------------------------------------- | :---------------------- | :------------------------------------------------------------------------------------------- | | August 27 to September 30 | 334 | $92.04 | $75,828 | | Total | 334 | $92.04 | $75,828 | - The Company's Board of Directors authorized $45.0 million (May 2020) and an additional $150.0 million (February 2022) for common stock repurchases, with no expiration dates[151] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period Item 5. Other Information This item is not applicable to the Company for the reporting period Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including certifications - Exhibits include CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350) and various Inline XBRL documents[157] SIGNATURES This section contains the required signatures for the Form 10-Q filing