10-Q 1 expo-10q_20211001.htm 10-Q expo-10q_20211001.htm
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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 October 1, 2021

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)

 

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    

 

 

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

 

 

 

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

 

 

-

 

 

 

-

 

 

 

-