Exponent(US:EXPO)2019-10-18 01:01Financial Data and Key Metrics Changes - Exponent reported net revenues of $95.5 million for Q3 2019, an 8% increase year-over-year, while net income rose 13% to $19.6 million and EBITDA increased 5% to $26 million [6][13] - Year-to-date net income increased 13% to $63.3 million, with earnings per diluted share at $1.17 compared to $1.04 last year [14] - EBITDA margin for Q3 decreased by 78 basis points to 27.2% of net revenue, while year-to-date EBITDA margin decreased 11 basis points to 27.5% [17] Business Line Data and Key Metrics Changes - The engineering and scientific segment accounted for approximately 81% of net revenues, growing 8% year-over-year [9] - The environmental and health segments represented about 19% of net revenues, with a 6% growth in Q3 and 4% year-to-date [10] Market Data and Key Metrics Changes - Exponent's work for Pacific Gas and Electric contributed approximately 4% of revenues in Q3, with ongoing projects expected to step down over time [8] - International arbitration work expanded geographically, with projects in Asia, Australia, Europe, the Middle East, and North America [8] Company Strategy and Development Direction - Exponent is focused on addressing technological challenges and leveraging its leadership in failure analysis to drive long-term growth [25] - The company aims to capitalize on long-term trends in engineering and scientific consulting, particularly in human factors and battery technology [11][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued execution and reiterated revenue guidance for the full year, expecting high-single-digit growth [5][23] - The company anticipates a decline in utilization in Q4 due to additional holidays and vacations, but expects long-term utilization to increase as it builds critical mass [15][20] Other Important Information - Exponent distributed $25.2 million to shareholders through dividends and ended the period with $210 million in cash and short-term investments [22] - The company expects capital expenditures to be between $20 million and $22 million for 2019, returning to approximately $6 million to $8 million annually after completing a new building in Boston [21] Q&A Session Summary Question: Update on large projects and PG&E - Management confirmed ongoing work with PG&E, which represented about 4% of revenue in the quarter, and highlighted the challenges faced by the client [27][28] Question: Expectations for growth rates and margins in 2020 - Management indicated that it is early in the planning process for 2020, but expects long-term growth in the high-single to low-double digits [33][34] Question: Opportunities in autonomous driving and other areas - Management highlighted human factors and battery technology as key growth drivers across multiple industries [36][37] Question: Specific timeline for revenue contribution step down from PG&E - Management stated that it is difficult to predict the timeline due to the dynamic nature of the situation [40] Question: Impact of Brexit on regulatory opportunities - Management noted that while they are monitoring the situation, they have not seen material effects yet [41] Question: Headcount growth expectations - Management expects headcount to grow in the 4% to 7% range to support business growth [50] Question: Progress on sales strategies and market approach - Management discussed the focus on business development planning across various industries and the positive outlook for cross-selling opportunities [52][53] Question: Success in battery technology markets - Management identified micro mobility and large-scale energy storage as key areas of growth in battery technology [65][66]