Exponent(US:EXPO)2025-05-01 20:30Financial Data and Key Metrics Changes - For Q1 2025, total revenues were approximately flat at $145.5 million, with net revenues also flat at $137.4 million compared to Q1 2024 [15][21] - Net income decreased to $26.7 million or $0.52 per diluted share, down from $30.1 million or $0.59 per diluted share in the prior year [15][16] - EBITDA for the quarter decreased by 6% to $37.5 million, producing a margin of 27.3% of net revenues, compared to 29.2% in Q1 2024 [16][20] - Billable hours decreased by 4% year over year to approximately 376,000, and average technical full-time equivalent employees decreased by 4% to 966 [18] Business Line Data and Key Metrics Changes - The Engineering and Scientific segment represented 84% of revenues before reimbursement, with revenues flat in Q1 2025 [21] - The Environmental and Health segment represented 16% of revenues before reimbursement, with a 2% increase driven by engagements in the chemicals industry [21][22] Market Data and Key Metrics Changes - The consumer products industry accounts for approximately 25% of revenue, with two-thirds being proactive work for consumer electronics clients [9] - The energy industry represents about 20% of revenue, split evenly between reactive and proactive services, with growing demand driven by AI and infrastructure development [10] - The transportation industry contributes mid-teens percentage of revenue, with 90% being reactive, driven by disputes in advanced vehicle technologies [11] Company Strategy and Development Direction - The company maintains a diversified business model, with 60% of work being reactive and 40% proactive, allowing it to navigate economic cycles effectively [7][14] - The focus remains on advancing capabilities, investing in talent, and delivering insights to help clients adapt to changes in their industries [31] - The company is strategically hiring in areas with increasing demand, such as automated vehicles and digital health [64] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty but expressed confidence in the company's resilience and ability to generate long-term profitable growth [14][30] - The company expects revenue before reimbursements to decline in the low single digits for Q2 2025, with EBITDA margins projected at 26% to 27% [22][24] - Management highlighted ongoing opportunities in regulatory consulting and compliance work, particularly in the chemicals industry [29] Other Important Information - The company anticipates a tax rate of approximately 28% for Q2 2025, up from 26% in the same quarter last year [27] - Capital expenditures for the full year 2025 are expected to be between $10 million and $12 million [28] Q&A Session Summary Question: Growth rates in proactive and reactive work - The reactive business saw low single-digit growth, offset by a slight decline in proactive services overall [35][36] Question: Changes in productivity across end markets - Clients are exploring supply chain diversification, which may lead to increased demand, but changes take time to manifest [38][39] Question: Second quarter outlook and utilization - Utilization is expected to be slightly below last year, impacted by the July 4 holiday and some delays in client projects [44][46] Question: FTE growth in a choppy environment - The company plans to continue hiring in areas of increasing demand, expecting a 4% increase in headcount by year-end [64][66]