Exponent Earnings 2019-09-27

EXPO 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
NSP	4,976	1,317	1,182	4,088	728	166	241	4,590	18%	19.0	13%
FCN	3,214	2,571	1,152	2,175	763	195	335	3,361	35%	10.0	8%
EXPO	3,146	521	177	393	0	77	108	3,041	0%	28.0	15%
ASGN	3,071	2,799	1,515	3,732	1,091	173	380	4,057	29%	10.7	6%
AMN	2,650	1,856	1,176	2,123	704	127	225	3,018	33%	13.4	7%
KFRC	2,646	426	211	1,379	405	134	160	2,581	29%	16.2	31%
TTEC	2,120	1,179	789	1,571	285	61	190	2,033	18%	10.7	5%
ICFI	1,393	1,414	747	1,419	506	65	122	1,675	36%	13.8	5%
HURN	1,117	1,115	546	916	284	25	73	1,415	31%	19.3	2%
KELYA	999	2,542	1,274	5,507	989	115	149	957	18%	6.4	5%

expo-10q_20190927.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 September 27, 2019

☐	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

☒

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

☒

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 25, 2019, the latest practicable date, the registrant had 51,828,903 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 27, 2019 and December 28, 2018	3

	Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 27, 2019 and September 28, 2018	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 27, 2019 and September 28, 2018	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 27, 2019 and September 28, 2018	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 27, 2019 and September 28, 2018	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

PART II – OTHER INFORMATION		32

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

	Signatures	39

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

September 27, 2019 and December 28, 2018

(in thousands, except par value)

(unaudited)

	September 27, 2019			December 28, 2018
Assets
Current assets:
Cash and cash equivalents	$	132,843		$	127,059
Short-term investments		77,125			81,495
Accounts receivable, net of allowance for contract losses and doubtful accounts of $5,218 and $4,066 at September 27, 2019 and December 28, 2018, respectively		128,333			105,814
Prepaid expenses and other current assets		13,231			12,244
Total current assets		351,532			326,612
Property, equipment and leasehold improvements, net		59,318			46,103
Operating lease right-of-use assets		23,715			-
Goodwill		8,607			8,607
Deferred income taxes		35,639			34,090
Deferred compensation plan assets		64,841			52,286
Other assets		839			1,238
Total assets	$	544,491		$	468,936
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	16,526		$	12,283
Accrued payroll and employee benefits		69,552			76,855
Deferred revenues		8,900			9,166
Operating lease liabilities		6,056			-
Total current liabilities		101,034			98,304
Other liabilities		2,793			2,548
Deferred compensation plan liabilities		64,808			52,708
Deferred rent		-			1,467
Operating lease liabilities		18,577			-
Total liabilities		187,212			155,027
Stockholders’ equity:
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at September 27, 2019 and December 28, 2018		66			66
Additional paid-in capital		242,756			227,283
Accumulated other comprehensive income (loss)
Investment securities, available-for-sale		328			(45	)
Foreign currency translation adjustments		(3,465	)		(2,808	)
		(3,137	)		(2,853	)
Retained earnings		374,033			342,024
Treasury stock, at cost; 13,682 and 14,208 shares held at September 27, 2019 and December 28, 2018, respectively		(256,439	)		(252,611	)
Total stockholders’ equity		357,279			313,909
Total liabilities and stockholders’ equity	$	544,491		$	468,936

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 27, 2019 and September 28, 2018

(in thousands, except per share data)

(unaudited)

	Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018
Revenues:
Revenues before reimbursements	$	95,506	$	88,714	$	289,170	$	269,370
Reimbursements		6,042		6,588		17,915		18,010
Revenues		101,548		95,302		307,085		287,380
Operating expenses:
Compensation and related expenses		58,526		55,639		185,616		168,676
Other operating expenses		8,345		7,826		24,448		22,857
Reimbursable expenses		6,042		6,588		17,915		18,010
General and administrative expenses		5,451		4,655		15,345		13,167
Total operating expenses		78,364		74,708		243,324		222,710
Operating income		23,184		20,594		63,761		64,670
Other income, net:
Interest income, net		915		740		2,894		1,813
Miscellaneous income, net		1,112		2,655		10,729		4,875
Total other income, net		2,027		3,395		13,623		6,688
Income before income taxes		25,211		23,989		77,384		71,358
Income taxes		5,578		6,536		14,045		15,140
Net income	$	19,633	$	17,453	$	63,339	$	56,218
Net income per share:
Basic	$	0.37	$	0.33	$	1.20	$	1.06
Diluted	$	0.36	$	0.32	$	1.17	$	1.04
Shares used in per share computations:
Basic		52,802		53,032		52,694		52,928
Diluted		54,002		54,302		53,906		54,181
Cash dividends declared per common share	$	0.160	$	0.130	$	0.480	$	0.390

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 27, 2019 and September 28, 2018

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018
Net income	$	19,633		$	17,453		$	63,339		$	56,218
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		(533	)		(304	)		(657	)		(933	)
Unrealized gains (losses) on available- for-sale investment securities arising during the period, net of tax		(30	)		(31	)		373			(52	)
Comprehensive income	$	19,070		$	17,118		$	63,055		$	55,233

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 September 27, 2019
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at December 28, 2018		65,707	$	66	$	227,283		$	(2,853	)	$	342,024			14,208		$	(252,611	)	$	313,909
Employee stock purchase plan		-		-		687			-			-			(15	)		158			845
Amortization of unrecognized stock-based compensation		-		-		5,348			-			-			-			-			5,348
Foreign currency translation adjustments		-		-		-			(124	)		-			-			-			(124	)
Grant of restricted stock units to settle accrued bonus		-		-		7,947			-			-			-			-			7,947
Settlement of restricted stock units		-		-		(961	)		-			(5,146	)		(405	)		(5,076	)		(11,183	)
Unrealized gain on investments		-		-		-			403			-			-			-			403
Dividends and dividend equivalent rights		-		-		626			-			(17,625	)		-			-			(16,999	)
Net income		-		-		-			-			43,706			-			-			43,706
Balance at June 28, 2019		65,707	$	66	$	240,930		$	(2,574	)	$	362,959			13,788		$	(257,529	)	$	343,852
Employee stock purchase plan		-		-		328									(6	)		61			389
Exercise of stock options						(294	)								(100	)		1,029			735
Amortization of unrecognized stock-based compensation		-		-		1,748															1,748
Foreign currency translation adjustments		-		-					(533	)											(533	)
Unrealized loss on investments		-		-					(30	)											(30	)
Dividends and dividend equivalent rights		-		-		44						(8,559	)								(8,515	)
Net income		-		-								19,633									19,633
Balance at September 27, 2019		65,707	$	66	$	242,756		$	(3,137	)	$	374,033			13,682		$	(256,439	)	$	357,279

- 6 -

	Three and Nine Months Ended September 28, 2018
	Common Stock				Additional paid-in		Accumulated other comprehensive			Retained		Treasury Stock
(In thousands)	Shares		Amount		capital		income (loss)			earnings		Shares			Amount			Total
Balance at December 29, 2017		65,707	$	66	$	210,230	$	(2,029	)	$	303,990		14,169		$	(223,169	)	$	289,088
Employee stock purchase plan		-		-		532		-			-		(16	)		160			692
Amortization of unrecognized stock-based compensation		-		-		5,633		-			-		-			-			5,633
Foreign currency translation adjustments		-		-		-		(629	)		-		-			-

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	54	$3,146

10-Q	2019-11-01	Quarter: 2019-09-27
10-Q	2019-08-02	Quarter: 2019-06-28
10-Q	2019-05-03	Quarter: 2019-03-29
10-K	2019-02-22	Annual: 2018-12-28
10-Q	2018-11-02	Quarter: 2018-09-28
10-Q	2018-08-03	Quarter: 2018-06-29
10-Q	2018-05-04	Quarter: 2018-03-30
10-K	2018-02-23	Annual: 2017-12-29
10-Q	2017-11-03	Quarter: 2017-09-29
10-Q	2017-08-04	Quarter: 2017-06-30
10-Q	2017-05-05	Quarter: 2017-03-31
10-K	2017-02-24	Annual: 2016-12-30
10-Q	2016-11-04	Quarter: 2016-09-30
10-Q	2016-08-05	Quarter: 2016-07-01
10-Q	2016-05-06	Quarter: 2016-04-01
10-K	2016-02-26	Annual: 2016-01-01
10-Q	2015-11-06	Quarter: 2015-10-02
10-Q	2015-08-07	Quarter: 2015-07-03
10-Q	2015-05-08	Quarter: 2015-04-03
10-K	2015-03-02	Annual: 2015-01-02
10-Q	2014-11-07	Quarter: 2014-10-03
10-Q	2014-08-08	Quarter: 2014-07-04
10-Q	2014-05-09	Quarter: 2014-04-04
10-K	2014-03-03	Annual: 2014-01-03
10-Q	2013-11-01	Quarter: 2013-09-27
10-Q	2013-08-02	Quarter: 2013-06-28
10-Q	2013-05-03	Quarter: 2013-03-29
10-K	2013-02-28	Annual: 2012-12-28
10-Q	2012-11-05	Quarter: 2012-09-28
10-Q	2012-08-03	Quarter: 2012-06-29
10-Q	2012-05-04	Quarter: 2012-03-30
10-K	2012-02-27	Annual: 2011-12-30
10-Q	2011-11-04	Quarter: 2011-09-30
10-Q	2011-08-05	Quarter: 2011-07-01
10-Q	2011-05-09	Quarter: 2011-04-01
10-K	2011-02-28	Annual: 2010-12-31
10-Q	2010-11-05	Quarter: 2010-10-01
10-Q	2010-08-06	Quarter: 2010-07-02
10-Q	2010-05-05	Quarter: 2010-04-02
10-K	2010-02-24	Annual: 2010-01-01

8-K	2020-02-06	Earnings, Regulation FD, Exhibits
8-K	2019-10-17
8-K	2019-07-18	Earnings, Regulation FD, Exhibits
8-K	2019-05-30	Officers, Shareholder Vote
8-K	2019-04-18	Earnings, Regulation FD, Exhibits
8-K	2019-01-31	Earnings, Regulation FD, Exhibits
8-K	2018-10-18	Earnings, Regulation FD, Exhibits
8-K	2018-07-19	Earnings, Regulation FD, Exhibits
8-K	2018-05-31	Shareholder Rights, Amend Bylaw, Officers, Shareholder Vote, Exhibits
8-K	2018-05-15	Regulation FD, Exhibits
8-K	2018-04-19	Earnings, Regulation FD, Exhibits
8-K	2018-02-01	Earnings, Regulation FD, Exhibits

EX-31.1	expo-ex311_128.htm
EX-31.2	expo-ex312_127.htm
EX-32.1	expo-ex321_126.htm
EX-32.2	expo-ex322_125.htm