8-K - EXPO - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2023

_______________________________

Exponent, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware	0-18655	77-0218904
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

149 Commonwealth Drive

Menlo Park, California 94025

(Address of Principal Executive Offices) (Zip Code)

(650) 326-9400

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	EXPO	Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition. On July 27, 2023, Exponent, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2023. The press release is attached hereto as Exhibit 99.1 and incorporated by reference.

Item 7.01. Regulation FD Disclosure. On July 27, 2023, Exponent, Inc. announced that its Board of Directors has declared a quarterly cash dividend of $0.26 per share to be paid on September 22, 2023 to all common stockholders of record as of September 8, 2023. A copy of the press release announcing the dividend is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

99.1	Press Release dated July 27, 2023.
99.2	Press Release dated July 27, 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Exponent, Inc.
Date: July 27, 2023	By:	/s/ Richard L. Schlenker
		Richard L. Schlenker
		Executive Vice President, Chief Financial Officer, and Corporate Secretary

EdgarFiling EXHIBIT 99.1

Exponent Reports Second Quarter 2023 Financial Results

MENLO PARK, Calif., July 27, 2023 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the second quarter of fiscal year 2023 ended June 30, 2023.

“Exponent delivered solid second quarter results, growing revenues before reimbursements by 10% on a year-over-year basis and expanding earnings per diluted share. We continue to demonstrate the strength of our diverse and ever-evolving services portfolio, which anticipates and adapts to our clients’ critical needs throughout their product lifecycles,” stated Dr. Catherine Corrigan, President and Chief Executive Officer.

“Growth in the quarter was driven by robust demand for our reactive offerings, which included product safety engagements and disputes-related work spanning multiple industries. The proactive side benefited from increased demand in the chemicals and life sciences sectors, offset by some moderation in the electronics sector. Overall, I am pleased to see the power of our portfolio delivering solid growth through economic cycles as we address our clients’ most complex challenges,” Dr. Corrigan continued.

Second Quarter Financial Results

Total revenues and revenues before reimbursements for the second quarter of 2023 increased 7.6% to $140.2 million and 9.7% to $129.7 million as compared to $130.3 million and $118.2 million in the second quarter of 2022, respectively.

Net income was $25.7 million, or $0.50 per diluted share, in the second quarter of 2023, as compared to $25.8 million, or $0.49 per diluted share, in the same period of 2022. The tax benefit for the classification of tax adjustments associated with share-based awards was immaterial in the second quarters of 2023 and 2022. Exponent’s consolidated tax rate was 29.0% in the second quarter of 2023, as compared to 27.3% for the same period in 2022.

EBITDA^1^ decreased slightly to $36.8 million, or 28.4% of revenues before reimbursements, in the second quarter of 2023, as compared to $37.1 million, or 31.4% of revenues before reimbursements in the second quarter of 2022.

Year-to-Date Financial Results

Total revenues and revenues before reimbursements for the first half of 2023 increased 8.4% to $280.5 million and 9.4% to $258.4 million, respectively, as compared to $258.8 million and $236.1 million in the same period one year ago.

Net income was $54.9 million, or $1.06 per diluted share, in the first half of 2023, as compared to $55.4 million, or $1.05 per diluted share, in the same period of 2022. The tax benefit for the classification of tax adjustments associated with share-based awards realized in the first half of 2023 was $3.6 million, as compared to $6.0 million in the first half of 2022. Inclusive of the tax benefit, Exponent’s consolidated tax rate was 23.6% in the first half of 2023, as compared to 18.9% for the same period last year.

EBITDA^1^ increased to $72.6 million, or 28.1% of revenues before reimbursements, in the first half of 2023, as compared to $71.5 million, or 30.3% of revenues before reimbursements, in the first half of 2022.

In a separate press release today, Exponent announced its quarterly cash dividend of $0.26 to be paid on September 22, 2023, and reiterated its intent to continue to pay quarterly dividends. For the first half of 2023, Exponent paid $27.7 million in dividends and closed the period with $148.2 million in cash and cash equivalents.

Business Overview

Exponent’s engineering and other scientific segment represented 83% of the Company’s revenues before reimbursements in the second quarter and first half of 2023. Revenues before reimbursements in this segment increased 10% in the second quarter and 11% in the first half, as compared to the prior year period. Growth during the quarter was driven by strong demand for Exponent's services across the transportation and construction sectors.

Exponent’s environmental and health segment represented 17% of the Company’s revenues before reimbursements in the second quarter and first half of 2023. Revenues before reimbursements in this segment increased 10% in the second quarter and 4% in the first half, as compared to the same period in the prior year. Growth was led by evolving regulatory requirements which drove safety-related engagements evaluating the impacts of chemicals on human health and the environment.

Business Outlook

“Our accelerated recruiting efforts over the last year combined with lower-than-expected turnover drove a 15% increase in headcount as compared to a year ago, highlighting the strength of Exponent’s employee value proposition. While these investments in our future are critical, we are focused on strategically aligning our resources with the growth of the business and our pursuit of future opportunities over the long-term,” stated Richard Schlenker, Executive Vice President and Chief Financial Officer.

For the third quarter of 2023 as compared to the same period one year prior. Exponent anticipates:

Revenues before reimbursements to grow in the high-single to low-double digits; and,
EBITDA^1^ to be 27.5% to 28.5% of revenues before reimbursements.

For the full 2023 fiscal year, we are maintaining our revenue and margin guidance. Exponent anticipates:

Revenues before reimbursements to grow in the high-single to low-double digits; and,
EBITDA^1^to be 28.0% to 28.5% of revenues before reimbursements.

“As products and processes become increasingly complex and the focus on safety, health and the environment intensifies, Exponent’s multidisciplinary team of scientists and engineers is poised to solve high stakes challenges and deliver breakthrough insights to an expanding portfolio of clients. We remain confident in our strategy and competitive advantage, which will drive long-term value for all our stakeholders,” Dr. Corrigan concluded.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, Thursday, July 27, 2023, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (844) 481-2781 or (412) 317-0672. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 1934428#.

Footnotes

^1^ EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation, and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income, and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present, and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the measures to GAAP is set forth below.

About Exponent

In an era of accelerating change, Exponent is the only premium engineering and scientific consulting firm with the depth and breadth of expertise to solve our clients’ most profoundly unique, unprecedented, and urgent challenges.

Exponent brings together 90+ technical disciplines and 950+ consultants to help our clients navigate the increasing complexity of more than a dozen industries, connecting decades of pioneering work in failure analysis to develop solutions for a safer, healthier, more sustainable world.

Exponent’s consultants deliver the highest value by leveraging multidisciplinary expertise and resources from across Exponent’s offices in North America, Asia, and Europe. Exponent’s consultants, laboratories, databases, and computing resources work seamlessly together around the globe, enabling us to produce the breakthrough insights needed to help multinational companies, startups, law firms, insurance companies, governments, and society respond to incidents and push their products and processes forward.

Exponent may be reached at (888) 656-EXPO, info@exponent.com, or www.exponent.com.

Forward Looking Statements

This news release contains, and incorporates by reference, certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. When used in this document and in the documents incorporated herein by reference, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the possibility that the demand for our services may decline as a result of changes in generally applicable and industry-specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10-K under the heading “Risk Factors” and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements.

Source: Exponent, Inc.

EXPONENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2023 and July 1, 2022
(unaudited)
(in thousands, except per share data)
			Quarter Ended					Six Months Ended
			June 30,		July 1,			June 30,		July 1,
			2023			2022		2023			2022
Revenues
	Revenues before reimbursements		$	129,653	$	118,218		$	258,358	$	236,088
	Reimbursements			10,568		12,063			22,172		22,671
		Revenues		140,221		130,281			280,530		258,759
Operating expenses
	Compensation and related expenses			82,836		58,446			167,017		127,203
	Other operating expenses			10,305		8,755			19,866		16,920
	Reimbursable expenses			10,568		12,063			22,172		22,671
	General and administrative expenses			6,637		5,740			12,480		9,971
				110,346		85,004			221,535		176,765
		Operating income		29,875		45,277			58,995		81,994
Other income
	Interest income, net			1,593		175			3,363		196
	Miscellaneous income (expense), net			4,785		(10,020	)		9,433		(13,951	)
				6,378		(9,845	)		12,796		(13,755	)
		Income before income taxes		36,253		35,432			71,791		68,239
Income taxes				10,505		9,677			16,919		12,875
		Net income	$	25,748	$	25,755		$	54,872	$	55,364
Net income per share:
	Basic		$	0.50	$	0.50		$	1.07	$	1.06
	Diluted		$	0.50	$	0.49		$	1.06	$	1.05
Shares used in per share computations:
	Basic			51,255		51,890			51,193		52,154
	Diluted			51,692		52,394			51,694		52,725
EXPONENT, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2023 and December 30, 2022
(unaudited)
(in thousands)
				June 30,			December 30,
					2023			2022
Assets
Current assets:
	Cash and cash equivalents			$	148,174		$	161,458
	Accounts receivable, net				175,830			170,114
	Prepaid expenses and other assets				20,624			17,585
		Total current assets			344,628			349,157
Property, equipment and leasehold improvements, net					76,793			65,539
Operating lease right-of-use asset					25,636			18,007
Goodwill					8,607			8,607
Other assets					148,620			145,352
				$	604,284		$	586,662
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities			$	19,838		$	29,115
	Accrued payroll and employee benefits				87,609			105,822
	Deferred revenues				11,343			18,834
	Operating lease liability				5,750			5,258
		Total current liabilities			124,540			159,029
Other liabilities					99,623			93,538
Operating lease liability					23,042			13,343
		Total liabilities			247,205			265,910
Stockholders' equity:
	Common stock				66			66
	Additional paid-in capital				317,346			301,002
	Accumulated other comprehensive loss				(3,260	)		(3,587	)
	Retained earnings				555,354			528,810
	Treasury stock, at cost				(512,427	)		(505,539	)
			Total stockholders' equity		357,079			320,752
				$	604,284		$	586,662
EXPONENT, INC.
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EBITDA and EBITDAS (1)
For the Three and Six Months Ended June 30, 2023 and July 1, 2022
(unaudited)
(in thousands)
			Quarter Ended						Six Months Ended
			June 30,			July 1,			June 30,			July 1,
				2023			2022			2023			2022
Net Income			$	25,748		$	25,755		$	54,872		$	55,364
Add back (subtract):
	Income taxes			10,505			9,677			16,919			12,875
	Interest income, net			(1,593	)		(175	)		(3,363	)		(196	)
	Depreciation and amortization			2,186			1,812			4,174			3,501
		EBITDA (1)		36,846			37,069			72,602			71,544
	Stock-based compensation			5,223			4,597			12,286			11,467
		EBITDAS (1)	$	42,069		$	41,666		$	84,888		$	83,011
(1) EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.

EdgarFiling EXHIBIT 99.2

Exponent Declares Quarterly Dividend for Q3 2023

MENLO PARK, Calif., July 27, 2023 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO) today announced that its Board of Directors has declared a quarterly cash dividend of $0.26 per share of common stock to be paid on September 22, 2023, to all common stockholders of record as of September 8, 2023.

Exponent has paid, and expects to continue to pay, quarterly dividends each year in March, June, September, and December. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of Exponent’s Board of Directors.

“Exponent’s quarterly cash dividend payment reinforces our confidence in the business and our commitment to our shareholders,” stated Dr. Catherine Corrigan, President and Chief Executive Officer. “As the complexity of innovation continues to rise, Exponent will leverage the strength of our differentiated portfolio to anticipate and adapt to our clients’ high stakes needs which will drive further value over the long term.”

About Exponent

Exponent may be reached at (888) 656-EXPO, info@exponent.com, or www.exponent.com.

Forward Looking Statements