EXPONENT INC [EXPO] Filings

10-Q 1 expo-10q_20211001.htm 10-Q expo-10q_20211001.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to___________

Commission File Number 0-18655

EXPONENT, INC.

(Exact name of registrant as specified in its charter)

delaware		77-0218904
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

149 COMMONWEALTH DRIVE, MENLO PARK, California		94025
(Address of principal executive office)		(Zip Code)

(650) 326-9400

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol		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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐		Non-accelerated filer	☐		Smaller reporting company	☐
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. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☒

As of October 29, 2021, the latest practicable date, the registrant had 52,111,508 shares of common stock outstanding.

EXPONENT, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page

PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited):	3

	Condensed Consolidated Balance Sheets as of October 1, 2021 and January 1, 2021	3

	Condensed Consolidated Statements of Income for the Three and Nine Months Ended October 1, 2021 and October 2, 2020	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended October 1, 2021 and October 2, 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended October 1, 2021 and October 2, 2020	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 2021 and October 2, 2020	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II – OTHER INFORMATION		33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

	Signatures	35

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

October 1, 2021 and January 1, 2021

(in thousands, except par value)

(unaudited)

	October 1, 2021			January 1, 2021
Assets
Current assets:
Cash and cash equivalents	$	229,785		$	197,525
Short-term investments		24,998			45,001
Accounts receivable, net of allowance for contract losses and doubtful accounts of $4,815 and $3,995 at October 1, 2021 and January 1, 2021, respectively		144,039			111,565
Prepaid expenses and other current assets		18,738			12,741
Total current assets		417,560			366,832
Property, equipment and leasehold improvements, net		60,082			59,823
Operating lease right-of-use assets		15,777			19,322
Goodwill		8,607			8,607
Deferred income taxes		42,561			40,539
Deferred compensation plan assets		92,048			83,731
Other assets		1,670			1,242
Total assets	$	638,305		$	580,096
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	21,443		$	16,327
Accrued payroll and employee benefits		87,179			83,194
Deferred revenues		12,192			11,800
Operating lease liabilities		5,604			5,987
Total current liabilities		126,418			117,308
Other liabilities		3,078			2,986
Deferred compensation plan liabilities		93,111			83,961
Operating lease liabilities		10,709			14,343
Total liabilities		233,316			218,598
Stockholders’ equity:
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at October 1, 2021 and January 1, 2021		66			66
Additional paid-in capital		279,250			265,328
Accumulated other comprehensive income (loss)
Investment securities, available-for-sale		-			65
Foreign currency translation adjustments		(2,052	)		(1,997	)
		(2,052	)		(1,932	)
Retained earnings		468,578			421,809
Treasury stock, at cost; 13,595 and 13,903 shares held at October 1, 2021 and January 1, 2021, respectively		(340,853	)		(323,773	)
Total stockholders’ equity		404,989			361,498
Total liabilities and stockholders’ equity	$	638,305		$	580,096

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

- 3 -

EXPONENT, INC.

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended October 1, 2021 and October 2, 2020

(in thousands, except per share data)

(unaudited)

	Three Months Ended				Nine Months Ended
	October 1, 2021		October 2, 2020		October 1, 2021		October 2, 2020
Revenues:
Revenues before reimbursements	$	108,467	$	93,499	$	330,514	$	281,082
Reimbursements		7,938		5,164		22,249		15,579
Revenues		116,405		98,663		352,763		296,661
Operating expenses:
Compensation and related expenses		64,138		62,419		210,491		180,541
Other operating expenses		8,017		7,839		23,848		23,736
Reimbursable expenses		7,938		5,164		22,249		15,579
General and administrative expenses		4,193		2,834		10,626		11,290
Total operating expenses		84,286		78,256		267,214		231,146
Operating income		32,119		20,407		85,549		65,515
Other income, net:
Interest income, net		13		316		54		1,496
Miscellaneous income (expense), net		257		3,915		11,579		3,096
Total other income, net		270		4,231		11,633		4,592
Income before income taxes		32,389		24,638		97,182		70,107
Income taxes		7,815		6,554		16,360		9,395
Net income	$	24,574	$	18,084	$	80,822	$	60,712
Net income per share:
Basic	$	0.47	$	0.35	$	1.54	$	1.16
Diluted	$	0.46	$	0.34	$	1.52	$	1.14
Shares used in per share computations:
Basic		52,618		52,316		52,597		52,383
Diluted		53,312		53,209		53,316		53,342
Cash dividends declared per common share	$	0.20	$	0.19	$	0.60	$	0.57

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements

- 4 -

EXPONENT, INC.

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended October 1, 2021 and October 2, 2020

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	October 1, 2021			October 2, 2020			October 1, 2021			October 2, 2020
Net income	$	24,574		$	18,084		$	80,822		$	60,712
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		(266	)		550			(55	)		(1,052	)
Unrealized losses on available- for-sale investment securities arising during the period, net of tax		-			(129	)		(65	)		(172	)
Comprehensive income	$	24,308		$	18,505		$	80,702		$	59,488

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements

- 5 -

EXPONENT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)

	Three and Nine Months Ended October 1, 2021
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 1, 2021		65,707	$	66	$	265,328		$	(1,932	)	$	421,809			13,903		$	(323,773	)	$	361,498
Employee stock purchase plan		-		-		909			-			-			(12	)		114			1,023
Amortization of unrecognized stock-based compensation		-		-		5,676			-			-			-			-			5,676
Purchase of treasury stock		-		-		-			-			-			79			(7,000	)		(7,000	)
Foreign currency translation adjustments		-		-		-			211			-			-			-			211
Grant of restricted stock units to settle accrued bonus		-		-		7,637			-			-			-			-			7,637
Settlement of restricted stock units		-		-		(3,269	)		-			(1,679	)		(322	)		(10,718	)		(15,666	)
Unrealized loss on investments		-		-		-			(65	)		61			-			-			(4	)
Dividends and dividend equivalent rights		-		-		-			-			(21,856	)		-			-			(21,856	)
Net income		-		-		-			-			56,248			-			-			56,248
Balance at July 2, 2021		65,707	$	66	$	276,281		$	(1,786	)	$	454,583			13,648		$	(341,377	)	$	387,767
Employee stock purchase plan		-		-		471			-			-			(5	)		47			518
Exercise of stock options		-		-		658			-			-			(48	)		477			1,135
Amortization of unrecognized stock-based compensation		-		-		1,840			-			-			-			-			1,840
Foreign currency translation adjustments		-		-		-			(266	)		-			-			-			(266	)
Dividends and dividend equivalent rights		-		-		-			-			(10,579	)		-			-			(10,579	)
Net income		-		-		-			-			24,574			-			-			24,574
Balance at October 1, 2021		65,707	$	66	$	279,250		$	(2,052	)	$	468,578			13,595		$	(340,853	)	$	404,989

- 6 -

EXPONENT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)

	Three and Nine Months Ended October 2, 2020
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 3, 2020		65,707	$	66	$	244,935		$	(1,760	)	$	384,668			13,951		$	(277,658	)	$	350,251
Employee stock purchase plan		-		-		774			-			-			(13	)		131			905
Exercise of stock options		-		-		454			-			-			(114	)		1,174			1,628
Amortization of unrecognized stock-based compensation		-		-		5,758			-			-			-			-			5,758
Purchase of treasury stock		-		-		-			-			-			636			(40,049	)		(40,049	)
Foreign currency translation adjustments		-		-		-			(1,602	)		-			-			-			(1,602	)
Grant of restricted stock units to settle accrued bonus		-		-		8,645			-			-			-			-			8,645
Settlement of restricted stock units		-		-		(1,460	)		-			(4,538	)		(376	)		(9,265	)		(15,263	)
Unrealized loss on investments		-		-		-

EXPONENT INC [EXPO] Filings
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-02-28]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-03]
10-K	[2019-02-22]
10-Q	[2018-11-02]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-24]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-03-02]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-03-03]
10-Q	[2013-11-01]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-02-28]
10-Q	[2012-11-05]
10-Q	[2012-08-03]
10-Q	[2012-05-04]
10-K	[2012-02-27]