EXPONENT INC [EXPO] Filings

10-Q 1 expo-20220930.htm 10-Q 10-Q

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


☐	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

EXPONENT INC [EXPO] Filings
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-25]
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]