Exponent Earnings 2019-06-28

EXPO 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

expo-10q_20190628.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 June 28, 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 July 26, 2019, the latest practicable date, the registrant had 51,919,297 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 June 28, 2019 and December 28, 2018	3

	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 28, 2019 and June 29, 2018	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 28, 2019 and June 29, 2018	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 28, 2019 and June 29, 2018	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 28, 2019 and June 29, 2018	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II – OTHER INFORMATION		30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

	Signatures	38

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

June 28, 2019 and December 28, 2018

(in thousands, except par value)

(unaudited)

	June 28, 2019			December 28, 2018
Assets
Current assets:
Cash and cash equivalents	$	104,452		$	127,059
Short-term investments		90,022			81,495
Accounts receivable, net of allowance for contract losses and doubtful accounts of $5,342 and $4,066 at June 28, 2019 and December 28, 2018, respectively		129,735			105,814
Prepaid expenses and other current assets		10,452			12,244
Total current assets		334,661			326,612
Property, equipment and leasehold improvements, net		56,112			46,103
Operating lease right-of-use assets		22,729			-
Goodwill		8,607			8,607
Deferred income taxes		34,099			34,090
Deferred compensation plan assets		63,484			52,286
Other assets		949			1,238
Total assets	$	520,641		$	468,936
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	19,678		$	12,283
Accrued payroll and employee benefits		58,910			76,855
Deferred revenues		8,550			9,166
Operating lease liabilities		5,746			-
Total current liabilities		92,884			98,304
Other liabilities		2,846			2,548
Deferred compensation plan liabilities		63,391			52,708
Deferred rent		-			1,467
Operating lease liabilities		17,668			-
Total liabilities		176,789			155,027
Stockholders’ equity:
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at June 28, 2019 and December 28, 2018		66			66
Additional paid-in capital		240,930			227,283
Accumulated other comprehensive income (loss)
Investment securities, available-for-sale		358			(45	)
Foreign currency translation adjustments		(2,932	)		(2,808	)
		(2,574	)		(2,853	)
Retained earnings		362,959			342,024
Treasury stock, at cost; 13,788 and 14,208 shares held at June 28, 2019 and December 28, 2018, respectively		(257,529	)		(252,611	)
Total stockholders’ equity		343,852			313,909
Total liabilities and stockholders’ equity	$	520,641		$	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 Six Months Ended June 28, 2019 and June 29, 2018

(in thousands, except per share data)

(unaudited)

	Three Months Ended				Six Months Ended
	June 28, 2019		June 29, 2018		June 28, 2019		June 29, 2018
Revenues:
Revenues before reimbursements	$	100,263	$	89,972	$	193,664	$	180,656
Reimbursements		6,243		5,649		11,873		11,422
Revenues		106,506		95,621		205,537		192,078
Operating expenses:
Compensation and related expenses		61,997		55,458		127,090		113,037
Other operating expenses		8,095		7,566		16,103		15,031
Reimbursable expenses		6,243		5,649		11,873		11,422
General and administrative expenses		5,348		4,470		9,894		8,512
Total operating expenses		81,683		73,143		164,960		148,002
Operating income		24,823		22,478		40,577		44,076
Other income, net:
Interest income, net		924		543		1,979		1,073
Miscellaneous income, net		3,104		1,898		9,617		2,220
Total other income, net		4,028		2,441		11,596		3,293
Income before income taxes		28,851		24,919		52,173		47,369
Income taxes		7,857		6,494		8,467		8,604
Net income	$	20,994	$	18,425	$	43,706	$	38,765
Net income per share:
Basic	$	0.40	$	0.35	$	0.83	$	0.73
Diluted	$	0.39	$	0.34	$	0.81	$	0.72
Shares used in per share computations:
Basic		52,745		53,008		52,641		52,876
Diluted		53,872		54,195		53,849		54,111
Cash dividends declared per common share	$	0.16	$	0.13	$	0.32	$	0.26

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 Six Months Ended June 28, 2019 and June 29, 2018

(in thousands)

(unaudited)

	Three Months Ended						Six Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Net income	$	20,994		$	18,425		$	43,706		$	38,765
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		(241	)		(1,368	)		(124	)		(629	)
Unrealized gains (losses) on available-for-sale investment securities arising during the period, net of tax		249			19			403			(21	)
Comprehensive income	$	21,002		$	17,076		$	43,985		$	38,115

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 Six Months Ended June 28, 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		-		-		302			-			-			(7	)		70			372
Amortization of unrecognized stock-based compensation		-		-		3,663			-			-			-			-			3,663
Foreign currency translation adjustments		-		-		-			117			-			-			-			117
Grant of restricted stock units to settle accrued bonus		-		-		7,947			-			-			-			-			7,947
Settlement of restricted stock units		-		-		(860	)		-			(5,146	)		(395	)		(5,188	)		(11,194	)
Unrealized gain on investments		-		-		-			154			-			-			-			154
Dividends and dividend equivalent rights		-		-		581			-			(9,084	)		-			-			(8,503	)
Net income		-		-		-			-			22,712			-			-			22,712
Balance at March 29, 2019		65,707	$	66	$	238,916		$	(2,582	)	$	350,506			13,806		$	(257,729	)	$	329,177
Employee stock purchase plan		-		-		385			-			-			(8	)		88			473
Amortization of unrecognized stock-based compensation		-		-		1,685			-			-			-			-			1,685
Foreign currency translation adjustments		-		-		-			(241	)		-			-			-			(241	)
Settlement of restricted stock units		-		-		(101	)		-			-			(10	)		112			11
Unrealized gain on investments		-		-		-			249			-			-			-			249
Dividends and dividend equivalent rights		-		-		45			-			(8,541	)		-			-			(8,496	)
Net income		-		-		-			-			20,994			-			-			20,994
Balance at June 28, 2019		65,707	$	66	$	240,930		$	(2,574	)	$	362,959			13,788		$	(257,529	)	$	343,852

- 6 -

	Three and Six Months Ended June 29, 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		-		-		230		-			-		(8	)		80			310
Amortization of unrecognized stock-based compensation		-		-		4,057		-			-		-			-			4,057
Foreign currency translation adjustments		-		-		-		739			-		-			-			739
Grant of restricted stock units to settle accrued bonus		-		-		7,643		-			-		-			-			7,643
Settlement of restricted stock units		-

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$55.59	52	$2,890

10-Q	2019-06-28	Quarter: 2019-06-28
10-Q	2019-03-29	Quarter: 2019-03-29
10-K	2018-12-28	Annual: 2018-12-28
10-Q	2018-09-28	Quarter: 2018-09-28
10-Q	2018-06-29	Quarter: 2018-06-29
10-Q	2018-03-30	Quarter: 2018-03-30
10-K	2017-12-29	Annual: 2017-12-29
10-Q	2017-09-29	Quarter: 2017-09-29
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-30	Annual: 2016-12-30
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-07-01	Quarter: 2016-07-01
10-Q	2016-04-01	Quarter: 2016-04-01
10-K	2016-01-01	Annual: 2016-01-01
10-Q	2015-10-02	Quarter: 2015-10-02
10-Q	2015-07-03	Quarter: 2015-07-03
10-Q	2015-04-03	Quarter: 2015-04-03
10-K	2015-01-02	Annual: 2015-01-02
10-Q	2014-10-03	Quarter: 2014-10-03
10-Q	2014-07-04	Quarter: 2014-07-04
10-Q	2014-04-04	Quarter: 2014-04-04
10-K	2014-01-03	Annual: 2014-01-03

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

SLB	Schlumberger Limited	55,780
DECK	Deckers Outdoor	4,340
JJSF	J&J Snack Foods	3,020
HI	Hillenbrand	2,490
BEDU	Bright Scholar Education Holdings	1,390
UCTT	Ultra Clean Holdings	534
CLPR	Clipper Realty	232
MICT	MICT	11
STLR	Stellar Acquisition III	0
AIC	Aames Investment	0

EX-31.1	expo-ex311_155.htm
EX-31.2	expo-ex312_154.htm
EX-32.1	expo-ex321_152.htm
EX-32.2	expo-ex322_153.htm