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 [14] - 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] - EBITDA decreased by 6% to $37.5 million, producing a margin of 27.3% of net revenues, compared to 29.2% in Q1 2024 [16] - Billable hours decreased by 4% year over year to approximately 376,000, and average technical full-time equivalent employees decreased by 4% to 966 [17] Business Line Data and Key Metrics Changes - The Engineering and Scientific segment represented 84% of revenues before reimbursement, with revenues flat in Q1 2025 [20] - The Environmental and Health segment represented 16% of revenues before reimbursement, with a 2% increase driven by engagements in the chemicals industry [21] 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 [8] - The energy industry represents about 20% of revenue, split evenly between reactive and proactive services [9] - The transportation industry contributes mid-teens percentage of revenue, with approximately 90% being reactive [10] Company Strategy and Development Direction - The company maintains a diversified business model, with 60% of work being reactive and 40% proactive, focusing on litigation support and regulatory consulting [7][34] - The company is strategically hiring in areas with increasing demand, such as automated vehicles and digital health [62] - The company anticipates long-term growth opportunities driven by technological advancements and increasing safety and health expectations [30] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainties but expressed confidence in the company's resilience through economic cycles [13] - The company expects revenue before reimbursements to grow in the low single digits for fiscal 2025, maintaining margin guidance [21] - Management highlighted ongoing opportunities in regulatory consulting and compliance work, particularly in the chemicals industry [28] Other Important Information - The company experienced a negative tax impact associated with share-based awards, resulting in a consolidated tax rate of 29.4% for Q1 2025 [16] - Capital expenditures for the full year 2025 are expected to be between $10 million and $12 million [27] Q&A Session Summary Question: Growth rates in proactive and reactive work - Reactive business grew in the low single digits, offset by a slight decline in proactive services overall [33] Question: Changes in productivity across end markets - Clients are exploring supply chain diversification, which may take time to manifest [36] 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 [42][44] Question: Impact of government policies and macro environment - Clients are tightening budgets but continue to proceed with necessary work, indicating resilience in the business [56] 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 [63]