Exponent(US:EXPO)2019-02-01 02:59Financial Data and Key Metrics Changes - In 2018, the company grew net revenues by 8% to $355 million and expanded EBITDA margin by 77 basis points to 27.3% of net revenues, delivering earnings of $1.33 per diluted share [8][23] - For Q4 2018, net revenues increased by 3% to $85 million, with earnings per diluted share at $0.30, reflecting strong performance in several business areas [10][21] - Net income for 2018 was $72.3 million or $1.33 per diluted share, compared to $41.3 million or $0.77 per diluted share in the prior year [24] Business Line Data and Key Metrics Changes - The engineering and other scientific segment represented approximately 80% of the company's Q4 and 2018 net revenue, with net revenues growing 4% in Q4 and 8% for the fiscal year [14][16] - The environmental and health segment accounted for approximately 20% of the company's Q4 and 2018 net revenue, with revenues flat in Q4 and growing 4% for the fiscal year [16][17] Market Data and Key Metrics Changes - The company experienced strong demand in the consumer electronics industry, particularly in design consulting services, as clients faced manufacturability challenges [12] - There was increased reactive work in the U.S. regarding health effects of substances in consumer and agricultural products, indicating a focus on human health and environmental concerns [17] Company Strategy and Development Direction - The company aims to continue strategic market expansion in various industries and geographies, focusing on high-growth areas such as human factors and design consulting [8][11] - The management expressed confidence in the long-term financial performance and commitment to delivering increasing value to shareholders through actions like dividend increases and stock repurchase programs [9][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the first half of 2019 due to the conclusion of a large human factors project but expressed confidence in achieving mid to high single-digit revenue growth by year-end [51][44] - The company expects utilization to decline in 2019 but anticipates long-term growth as it builds critical mass in its offices and practices [30][44] Other Important Information - The company announced a 23% increase in its quarterly dividend from $0.13 to $0.16 per share and an additional $75 million for share repurchases, increasing the total authorization to approximately $92.5 million [41] - The company reported that Pacific Gas and Electric (PG&E) accounted for approximately 6.6% of total revenues in 2018, with ongoing engagements despite PG&E's bankruptcy filing [42][43] Q&A Session Summary Question: How does the company plan to manage the impact of the large project rolling off? - Management expressed confidence in transitioning staff from the large project to other practices, noting that the team had a baseline level of work to engage in [50] Question: What is the initial margin guidance for 2019? - The management indicated that utilization is expected to step down due to the large project impact, with a focus on gradually improving utilization throughout the year [53] Question: How does the company react to economic volatility? - Management noted that while clients may tighten budgets during downturns, demand for proactive services in design consulting remains strong, particularly in consumer electronics and medical devices [56][58] Question: Can you provide insights on hiring trends? - The company is focused on university recruiting, primarily hiring Ph.D. graduates for high-growth areas, with a strategy to develop talent internally [63][64] Question: What are the expectations for PG&E revenue in 2019? - Management expects PG&E revenue to remain stable in the short term, with some areas potentially increasing while others may decrease [70][72]