10-Q 1 expo-20220930.htm 10-Q 10-Q
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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 September 30, 2022

OR

 

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)

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

 

 

No

 

 

 

 

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

 

 

 

No

 

 

 

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

 

 

 

No

 

 

 

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

 

As of October 28, 2022, the latest practicable date, the registrant had 50,638,229 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 September 30, 2022 and December 31, 2021

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2022 and October 1, 2021

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2022 and October 1, 2021

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 30, 2022 and October 1, 2021

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2022 and October 1, 2021

 

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

 

32

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

32

 

 

 

 

 

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

September 30, 2022 and December 31, 2021

(in thousands, except par value)

(unaudited)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

148,443

 

 

$

297,687

 

Accounts receivable, net of allowance for contract losses and doubtful accounts
   of $
6,157 and $4,423 at September 30, 2022 and December 31, 2021, respectively

 

 

166,014

 

 

 

139,861

 

Prepaid expenses and other current assets

 

 

18,055

 

 

 

15,214

 

Total current assets

 

 

332,512

 

 

 

452,762

 

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

64,289

 

 

 

59,971

 

Operating lease right-of-use assets

 

 

18,088

 

 

 

14,370

 

Goodwill

 

 

8,607

 

 

 

8,607

 

Deferred income taxes

 

 

50,501

 

 

 

46,546

 

Deferred compensation plan assets

 

 

83,722

 

 

 

99,962

 

Other assets

 

 

1,284

 

 

 

1,521

 

Total assets

 

$

559,003

 

 

$

683,739

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

31,825

 

 

$

24,504

 

Accrued payroll and employee benefits

 

 

84,938

 

 

 

103,552

 

Deferred revenues

 

 

15,791

 

 

 

19,762

 

Operating lease liabilities

 

 

5,363

 

 

 

5,164

 

Total current liabilities

 

 

137,917

 

 

 

152,982

 

 

 

 

 

 

 

 

Other liabilities

 

 

2,639

 

 

 

2,886

 

Deferred compensation plan liabilities

 

 

85,453

 

 

 

100,999

 

Operating lease liabilities

 

 

13,194

 

 

 

9,807

 

Total liabilities

 

 

239,203

 

 

 

266,674

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued
   at September 30, 2022 and December 31, 2021

 

 

66

 

 

 

66

 

Additional paid-in capital

 

 

298,589

 

 

 

281,419

 

Accumulated other comprehensive loss

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(5,136

)

 

 

(1,983

)

Retained earnings

 

 

518,631

 

 

 

478,370

 

Treasury stock, at cost; 14,918 and 13,591 shares held at September 30, 2022
   and December 31, 2021, respectively

 

 

(492,350

)

 

 

(340,807

)

Total stockholders’ equity

 

 

319,800

 

 

 

417,065

 

Total liabilities and stockholders’ equity

 

$

559,003

 

 

$

683,739

 

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 September 30, 2022 and October 1, 2021

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

October 1,
2021

 

 

September 30,
2022

 

 

October 1,
2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursements

 

$

115,143

 

 

$

108,467

 

 

$

351,231

 

 

$

330,514

 

Reimbursements

 

 

12,036

 

 

 

7,938

 

 

 

34,707

 

 

 

22,249

 

Revenues

 

 

127,179

 

 

 

116,405

 

 

 

385,938

 

 

 

352,763

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and related expenses

 

 

62,779

 

 

 

64,138

 

 

 

189,982

 

 

 

210,491

 

Other operating expenses

 

 

8,822

 

 

 

8,017

 

 

 

25,742

 

 

 

23,848

 

Reimbursable expenses

 

 

12,036

 

 

 

7,938

 

 

 

34,707

 

 

 

22,249

 

General and administrative expenses

 

 

6,729

 

 

 

4,193

 

 

 

16,700

 

 

 

10,626

 

Total operating expenses

 

 

90,366

 

 

 

84,286

 

 

 

267,131

 

 

 

267,214

 

Operating income

 

 

36,813

 

 

 

32,119

 

 

 

118,807

 

 

 

85,549

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

638

 

 

 

13

 

 

 

834

 

 

 

54

 

Miscellaneous income (expense), net

 

 

(3,975

)

 

 

257

 

 

 

(17,926

)

 

 

11,579

 

Total other income, net

 

 

(3,337

)

 

 

270

 

 

 

(17,092

)

 

 

11,633

 

Income before income taxes

 

 

33,476

 

 

 

32,389

 

 

 

101,715

 

 

 

97,182

 

Income taxes

 

 

9,034

 

 

 

7,815

 

 

 

21,909

 

 

 

16,360

 

Net income

 

$

24,442

 

 

$

24,574

 

 

$

79,806

 

 

$

80,822

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.47

 

 

$

0.47

 

 

$

1.54

 

 

$

1.54

 

Diluted

 

$

0.47

 

 

$

0.46

 

 

$

1.52

 

 

$

1.52

 

Shares used in per share computations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,492

 

 

 

52,618

 

 

 

51,934

 

 

 

52,597

 

Diluted

 

 

52,008

 

 

 

53,312

 

 

 

52,489

 

 

 

53,316

 

Cash dividends declared per common share

 

$

0.24

 

 

$

0.20

 

 

$

0.72

 

 

$

0.60

 

 

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 September 30, 2022 and October 1, 2021

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

October 1,
2021

 

 

September 30,
2022

 

 

October 1,
2021

 

Net income

 

$

24,442

 

 

$

24,574

 

 

$

79,806

 

 

$

80,822

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
   adjustments, net of tax

 

 

(1,493

)

 

 

(266

)

 

 

(3,153

)

 

 

(55

)

Unrealized losses on available-
   for-sale investment securities arising
   during the period, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(65

)

Comprehensive income

 

$

22,949

 

 

$

24,308

 

 

$

76,653

 

 

$

80,702

 

 

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

- 5 -


 

EXPONENT, INC

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022 and October 1, 2021

(in thousands)

(unaudited)

 

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

Common Stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained

 

 

Treasury Stock

 

 

 

 

(In thousands)

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

earnings

 

 

Shares

 

 

Amount

 

 

Total

 

Balance at December 31, 2021

 

 

65,707

 

 

$

66

 

 

$

281,419

 

 

$

(1,983

)

 

$

478,370

 

 

 

13,591

 

 

$

(340,807

)

 

$

417,065

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

961

 

 

 

-

 

 

 

-

 

 

 

(12

)

 

 

109

 

 

 

1,070

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

5,939

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,939

 

Purchase of treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,273

 

 

 

(111,843

)

 

 

(111,843

)

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,660

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,660

)

Grant of restricted stock units to settle accrued bonus

 

 

-

 

 

 

-

 

 

 

10,200

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,200

 

Settlement of restricted stock units

 

 

-

 

 

 

-

 

 

 

(2,421

)

 

 

-

 

 

 

(1,392

)

 

 

(262

)

 

 

(9,091

)

 

 

(12,904

)

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(25,737

)

 

 

-

 

 

 

-

 

 

 

(25,737

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

55,364

 

 

 

-

 

 

 

-

 

 

 

55,364

 

Balance at July 1, 2022

 

 

65,707

 

 

$

66

 

 

$

296,098

 

 

$

(3,643

)

 

$

506,605

 

 

 

14,590

 

 

$

(461,632

)

 

$

337,494

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

492

 

 

 

-

 

 

 

-

 

 

 

(7

)

 

 

65

 

 

 

557

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

1,999

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,999

 

Purchase of treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

335

 

 

 

(30,783

)

 

 

(30,783

)

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,493

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,493

)

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,416

)

 

 

-

 

 

 

-

 

 

 

(12,416

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,442

 

 

 

-

 

 

 

-

 

 

 

24,442

 

Balance at September 30, 2022

 

 

65,707

 

 

$

66

 

 

$

298,589

 

 

$

(5,136

)

 

$

518,631

 

 

 

14,918

 

 

$

(492,350

)

 

$

319,800

 

 

 

 

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

 

 

- 6 -


 

EXPONENT, INC

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022 and October 1, 2021

(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