10-Q 1 expo-20230929.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 29, 2023

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 27, 2023, the latest practicable date, the registrant had 50,622,438 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 September 29, 2023 and December 30, 2022

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 29, 2023 and September 30, 2022

 

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

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

PART II – OTHER INFORMATION

 

31

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

31

 

 

 

 

 

Item 1A.

 

Risk Factors

 

31

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

31

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

31

 

 

 

 

 

Item 5.

 

Other Information

 

31

 

 

 

 

 

Item 6.

 

Exhibits

 

32

 

 

 

 

 

 

 

Signatures

 

33

 

- 2 -


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

September 29, 2023 and December 30, 2022

(in thousands, except par value)

(unaudited)

 

 

September 29,
2023

 

 

December 30,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

137,099

 

 

$

161,458

 

Accounts receivable, net of allowance for contract losses and doubtful accounts
   of $
6,400 and $6,193 at September 29, 2023 and December 30, 2022, respectively

 

 

181,754

 

 

 

170,114

 

Prepaid expenses and other current assets

 

 

24,463

 

 

 

17,585

 

Total current assets

 

 

343,316

 

 

 

349,157

 

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $109,435 and $103,034 at September 29, 2023 and December 30, 2022, respectively

 

 

76,246

 

 

 

65,539

 

Operating lease right-of-use assets

 

 

24,302

 

 

 

18,007

 

Goodwill

 

 

8,607

 

 

 

8,607

 

Deferred income taxes

 

 

54,448

 

 

 

53,909

 

Deferred compensation plan assets

 

 

90,727

 

 

 

89,437

 

Other assets

 

 

4,816

 

 

 

2,006

 

Total assets

 

$

602,462

 

 

$

586,662

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

19,640

 

 

$

29,115

 

Accrued payroll and employee benefits

 

 

93,828

 

 

 

105,822

 

Deferred revenues

 

 

10,489

 

 

 

18,834

 

Operating lease liabilities

 

 

5,700

 

 

 

5,258

 

Total current liabilities

 

 

129,657

 

 

 

159,029

 

 

 

 

 

 

 

 

Other liabilities

 

 

4,136

 

 

 

2,355

 

Deferred compensation plan liabilities

 

 

93,070

 

 

 

91,183

 

Operating lease liabilities

 

 

21,964

 

 

 

13,343

 

Total liabilities

 

 

248,827

 

 

 

265,910

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued
   at September 29, 2023 and December 30, 2022

 

 

66

 

 

 

66

 

Additional paid-in capital

 

 

320,152

 

 

 

301,002

 

Accumulated other comprehensive loss

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(3,775

)

 

 

(3,587

)

Retained earnings

 

 

566,518

 

 

 

528,810

 

Treasury stock, at cost; 15,040 and 15,064 shares held at September 29, 2023
   and December 30, 2022, respectively

 

 

(529,326

)

 

 

(505,539

)

Total stockholders’ equity

 

 

353,635

 

 

 

320,752

 

Total liabilities and stockholders’ equity

 

$

602,462

 

 

$

586,662

 

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 29, 2023 and September 30, 2022

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursements

 

$

124,959

 

 

$

115,143

 

 

$

383,317

 

 

$

351,231

 

Reimbursements

 

 

8,377

 

 

 

12,036

 

 

 

30,549

 

 

 

34,707

 

Revenues

 

 

133,336

 

 

 

127,179

 

 

 

413,866

 

 

 

385,938

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and related expenses

 

 

74,011

 

 

 

62,779

 

 

 

241,028

 

 

 

189,982

 

Other operating expenses

 

 

10,997

 

 

 

8,822

 

 

 

30,863

 

 

 

25,742

 

Reimbursable expenses

 

 

8,377

 

 

 

12,036

 

 

 

30,549

 

 

 

34,707

 

General and administrative expenses

 

 

6,018

 

 

 

6,729

 

 

 

18,498

 

 

 

16,700

 

Total operating expenses

 

 

99,403

 

 

 

90,366

 

 

 

320,938

 

 

 

267,131

 

Operating income

 

 

33,933

 

 

 

36,813

 

 

 

92,928

 

 

 

118,807

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

1,858

 

 

 

638

 

 

 

5,221

 

 

 

834

 

Miscellaneous income (expense), net

 

 

(1,774

)

 

 

(3,975

)

 

 

7,659

 

 

 

(17,926

)

Total other income (expense), net

 

 

84

 

 

 

(3,337

)

 

 

12,880

 

 

 

(17,092

)

Income before income taxes

 

 

34,017

 

 

 

33,476

 

 

 

105,808

 

 

 

101,715

 

Income taxes

 

 

9,479

 

 

 

9,034

 

 

 

26,398

 

 

 

21,909

 

Net income

 

$

24,538

 

 

$

24,442

 

 

$

79,410

 

 

$

79,806

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.47

 

 

$

1.55

 

 

$

1.54

 

Diluted

 

$

0.48

 

 

$

0.47

 

 

$

1.54

 

 

$

1.52

 

Shares used in per share computations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,203

 

 

 

51,492

 

 

 

51,197

 

 

 

51,934

 

Diluted

 

 

51,645

 

 

 

52,008

 

 

 

51,680

 

 

 

52,489

 

Cash dividends declared per common share

 

$

0.26

 

 

$

0.24

 

 

$

0.78

 

 

$

0.72

 

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Net income

 

$

24,538

 

 

$

24,442

 

 

$

79,410

 

 

$

79,806

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
   adjustments, net of tax

 

 

(515

)

 

 

(1,493

)

 

 

(188

)

 

 

(3,153

)

Comprehensive income

 

$

24,023

 

 

$

22,949

 

 

$

79,222

 

 

$

76,653

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three and Nine Months Ended September 29, 2023

 

 

 

Common Stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

earnings

 

 

Shares

 

 

Amount

 

 

Total

 

Balance at December 30, 2022

 

 

65,707

 

 

$

66

 

 

$

301,002

 

 

$

(3,587

)

 

$

528,810

 

 

 

15,064

 

 

$

(505,539

)

 

$

320,752

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

1,015

 

 

 

-

 

 

 

-

 

 

 

(12

)

 

 

128

 

 

 

1,143

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

6,627

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,627

 

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

327

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

327

 

Grant of restricted stock units to settle accrued bonus

 

 

-

 

 

 

-

 

 

 

10,497

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,497

 

Settlement of restricted stock units

 

 

-

 

 

 

-

 

 

 

(1,817

)

 

 

-

 

 

 

(1,009

)

 

 

(186

)

 

 

(7,094

)

 

 

(9,920

)

Exercise of stock options

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

(8

)

 

 

78

 

 

 

100

 

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(27,319

)

 

 

-

 

 

 

-

 

 

 

(27,319

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

54,872

 

 

 

-

 

 

 

-

 

 

 

54,872

 

Balance at June 30, 2023

 

 

65,707

 

 

$

66

 

 

$

317,346

 

 

$

(3,260

)

 

$

555,354

 

 

 

14,858

 

 

$

(512,427

)

 

$

357,079

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

498

 

 

 

-

 

 

 

-

 

 

 

(7

)

 

 

71

 

 

 

569

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

2,308

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,308

 

Purchase of treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

189

 

 

 

(16,970

)

 

 

(16,970

)

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(515

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(515

)

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,374

)

 

 

-

 

 

 

-

 

 

 

(13,374

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,538

 

 

 

-

 

 

 

-

 

 

 

24,538

 

Balance at September 29, 2023

 

 

65,707

 

 

$

66

 

 

$

320,152

 

 

$

(3,775

)

 

$

566,518

 

 

 

15,040

 

 

$

(529,326

)

 

$

353,635

 

 

 

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

Common Stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (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

)

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

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

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-