Exponent Reports Fourth Quarter and Fiscal Year 2023 Financial Results
- 7% increase in net revenues in 2023
- Increase in quarterly cash dividend and stock repurchase program
- Growth in the engineering and other scientific segment
- 3.5% decrease in total revenues in the fourth quarter of 2023
- Flat to down revenues before reimbursements anticipated for 2024
- Decrease in EBITDA1 for 2024
Insights
The reported decrease in net income and diluted earnings per share (EPS) from Exponent, Inc. for Q4 2023, alongside a slight increase in revenues before reimbursements, indicates a contraction in profitability. This contraction could be attributed to the increased consolidated tax rate from 26.2% to 30.4%, which is a significant jump and impacts the bottom line. The reduction in net income despite revenue growth suggests operational inefficiencies or increased costs that investors should monitor.
Furthermore, the company's EBITDA margin slightly decreased, which could raise concerns about cost management and profitability trends. However, the increase in the quarterly cash dividend and the expansion of the stock repurchase program signal management's confidence in the company's financial health and commitment to returning value to shareholders. These actions can often be viewed positively in the market, potentially offsetting concerns about the decreased profitability in the short term.
Exponent's performance in the engineering and scientific segment, which is the company's primary revenue driver, reflects a positive trajectory with an 8% increase in annual revenues. This growth, particularly in transportation and energy sectors, suggests robust demand for Exponent's services in these industries. The environmental and health segment's revenue decrease in Q4 due to client budget constraints could be a signal of broader economic pressures that may affect future business performance.
Despite the company's proactive approach to addressing industry headwinds, such as the decline in the consumer electronics sector, the guidance for 2024 indicates potential stagnation or a modest decline in revenues. This cautious outlook, likely influenced by macroeconomic uncertainty, could temper investor expectations for growth and may require strategic adjustments to maintain profitability.
The macroeconomic uncertainty referenced by Exponent's CFO could be indicative of broader economic trends affecting the business environment. Factors such as inflation, supply chain disruptions, or shifts in regulatory landscapes can lead to constrained budgets and project delays, directly impacting companies like Exponent that rely on corporate and legal sector engagements.
The company's strategic focus on new business development and cost alignment suggests a proactive response to these economic challenges. The ability to adapt to changing market conditions is vital for long-term success and Exponent's emphasis on innovation and talent development positions it to capitalize on future market opportunities when economic conditions stabilize.
MENLO PARK, Calif., Feb. 01, 2024 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the fourth quarter and fiscal year 2023 ended December 29, 2023.
“Exponent’s world class team of experts delivered a
“As reactive work expanded, our team also continued to address clients’ critical needs throughout the product lifecycle. While proactive revenues for the consumer electronics sector declined due to ongoing industry headwinds and product lifecycle timing, the remainder of our proactive portfolio grew in the mid-single digits for the full year.”
“Looking ahead, we expect 2024 demand for our reactive services to remain on pace with 2023 levels as a result of the high hurdle rate for year-over-year comparisons. Constrained budgets and project delays stemming from ongoing macroeconomic uncertainty are impacting litigation as well as proactive work, and we will continue to face headwinds in the consumer electronics sector,” continued Dr. Corrigan. “In this dynamic environment, we remain keenly focused on new business development and strategic investments in growth opportunities, as well as aligning our resources and costs with anticipated demand. We will continue to position Exponent on the cutting edge of innovation supported by our world class team and differentiated capabilities, and remain confident in our ability to deliver long-term profitable growth and value for our shareholders.”
Fourth Quarter Financial Results
Total revenues decreased
Net income decreased to
EBITDA1 decreased to
Fiscal Year 2023 Financial Results
Total revenues increased
Net income was
EBITDA1 increased to
In a separate press release today, Exponent announced an increase in its quarterly cash dividend from
During fiscal year 2023, Exponent paid
Business Overview
Exponent’s engineering and other scientific segment represented
Exponent’s environmental and health segment represented
Business Outlook
“With a challenging comparison in our reactive business, as well as ongoing headwinds in the consumer electronics industry and macro-related uncertainty, we expect revenue before reimbursements to be flat to down modestly in 2024,” commented Richard Schlenker, Executive Vice President and Chief Financial Officer. “Our confidence in the long-term growth trajectory of the business is unwavering, underscored by our Board of Directors’ recent approval of an increase in the Company’s quarterly dividend and increase to our share repurchase authorization.”
For the first quarter of 2024 as compared to the same period one year prior, Exponent anticipates:
- Revenues before reimbursements to be flat to down in the low-single digits; and,
- EBITDA1 to be
26.0% to27.0% of revenues before reimbursements.
For fiscal year 2024 as compared to fiscal year 2023, Exponent anticipates:
- Revenues before reimbursements to be flat to down in the low-single digits; and,
- EBITDA1 to be
25.75% to26.5% of revenues before reimbursements.
“While our fourth quarter results and 2024 guidance reflect the realities and uncertainties of today’s marketplace, our fundamental market drivers and long-term value proposition remain strong. As innovation drives complexity and safety expectations to new heights, the consequences of failure will continue to escalate and our breakthrough insights will illuminate the path forward. The actions we are taking to expand our competitive moat and develop our exceptional talent position us to deliver long-term organic revenue growth, improve utilization and expand margins,” concluded Dr. Corrigan.
Today's Conference Call Information
Exponent will discuss its financial results in more detail on a conference call today, Thursday, February 1, 2024, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (844) 481-2781 or (412) 317-0672. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 4567550.
Use of non-GAAP Financial Measures 1
EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation, and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income, and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present, and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.
Exponent has provided its outlook regarding EBITDA as a percentage of revenues before reimbursements. The Company has not reconciled this non-GAAP financial measure to the corresponding GAAP financial measure because guidance for the various reconciling items is not provided and the Company is unable to estimate with reasonable certainty the effect of these items without unreasonable effort. For example, the Company is unable to estimate with reasonable certainty the impact of equity awards on Exponent’s taxes without unreasonable effort. These items are uncertain, depend on various factors, and may have a material effect on Exponent’s results computed in accordance with GAAP. A reconciliation between the historical GAAP and non-GAAP financial measures presented in this release is provided in the financial tables at the end of this release.
About Exponent
Exponent brings together 90+ technical disciplines and 950+ consultants to help our clients navigate the increasing complexity of more than a dozen industries, connecting decades of pioneering work in failure analysis to develop solutions for a safer, healthier, more sustainable world.
Exponent's consultants deliver the highest value by leveraging multidisciplinary expertise and resources from across Exponent's offices in North America, Asia, and Europe. Exponent's consultants, laboratories, databases, and computing resources work seamlessly together around the globe, enabling us to produce the breakthrough insights needed to help multinational companies, startups, law firms, insurance companies, governments, and society respond to incidents and push their products and processes forward.
Exponent may be reached at (888) 656-EXPO, info@exponent.com, or www.exponent.com.
Forward Looking Statements
This news release contains, and incorporates by reference, certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. When used in this document and in the documents incorporated herein by reference, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the possibility that the demand for our services may decline as a result of changes in generally applicable and industry-specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10-K under the heading “Risk Factors” and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements.
Source: Exponent, Inc.
| EXPONENT, INC. | ||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| For the Quarters Ended December 29, 2023 and December 30, 2022 | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Quarters Ended | Years Ended | |||||||||||||||||
| December 29, | December 30, | December 29, | December 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Revenues | ||||||||||||||||||
| Revenues before reimbursements | $ | 113,872 | $ | 112,589 | $ | 497,189 | $ | 463,820 | ||||||||||
| Reimbursements | 9,028 | 14,766 | 39,577 | 49,473 | ||||||||||||||
| Revenues | 122,900 | 127,355 | 536,766 | 513,293 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Compensation and related expenses | 78,858 | 74,253 | 319,886 | 264,235 | ||||||||||||||
| Other operating expenses | 10,678 | 9,341 | 41,541 | 35,083 | ||||||||||||||
| Reimbursable expenses | 9,028 | 14,766 | 39,577 | 49,473 | ||||||||||||||
| General and administrative expenses | 5,942 | 6,960 | 24,440 | 23,660 | ||||||||||||||
| Total operating expenses | 104,506 | 105,320 | 425,444 | 372,451 | ||||||||||||||
| Operating income | 18,394 | 22,035 | 111,322 | 140,842 | ||||||||||||||
| Other income (expense), net | ||||||||||||||||||
| Interest income, net | 1,929 | 1,262 | 7,150 | 2,096 | ||||||||||||||
| Miscellaneous income, net | 9,765 | 7,222 | 17,424 | (10,704 | ) | |||||||||||||
| Total other income (expense), net | 11,694 | 8,484 | 24,574 | (8,608 | ) | |||||||||||||
| Income before income taxes | 30,088 | 30,519 | 135,896 | 132,234 | ||||||||||||||
| Income taxes | 9,159 | 7,995 | 35,557 | 29,904 | ||||||||||||||
| Net income | $ | 20,929 | $ | 22,524 | $ | 100,339 | $ | 102,330 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.41 | $ | 0.44 | $ | 1.96 | $ | 1.98 | ||||||||||
| Diluted | $ | 0.41 | $ | 0.44 | $ | 1.94 | $ | 1.96 | ||||||||||
| Shares used in per share computations: | ||||||||||||||||||
| Basic | 51,017 | 51,105 | 51,152 | 51,727 | ||||||||||||||
| Diluted | 51,446 | 51,649 | 51,635 | 52,280 | ||||||||||||||
| EXPONENT, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| December 29, 2023 and December 30, 2022 | ||||||||||
| (unaudited) | ||||||||||
| (in thousands) | ||||||||||
| December 29, | December 30, | |||||||||
| 2023 | 2022 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 187,150 | $ | 161,458 | ||||||
| Accounts receivable, net | 167,360 | 170,114 | ||||||||
| Prepaid expenses and other assets | 25,022 | 17,585 | ||||||||
| Total current assets | 379,532 | 349,157 | ||||||||
| Property, equipment and leasehold improvements, net | 75,318 | 65,539 | ||||||||
| Operating lease right-of-use asset | 24,600 | 18,007 | ||||||||
| Goodwill | 8,607 | 8,607 | ||||||||
| Other assets | 158,720 | 145,352 | ||||||||
| Total Assets | $ | 646,777 | $ | 586,662 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 22,125 | $ | 29,115 | ||||||
| Accrued payroll and employee benefits | 111,773 | 105,822 | ||||||||
| Deferred revenues | 21,709 | 18,834 | ||||||||
| Operating lease liability | 6,302 | 5,258 | ||||||||
| Total current liabilities | 161,909 | 159,029 | ||||||||
| Other liabilities | 106,824 | 93,538 | ||||||||
| Operating lease liability | 21,959 | 13,343 | ||||||||
| Total liabilities | 290,692 | 265,910 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 66 | 66 | ||||||||
| Additional paid-in capital | 321,448 | 301,002 | ||||||||
| Accumulated other comprehensive loss | (2,977 | ) | (3,587 | ) | ||||||
| Retained earnings | 574,082 | 528,810 | ||||||||
| Treasury stock, at cost | (536,534 | ) | (505,539 | ) | ||||||
| Total stockholders' equity | 356,085 | 320,752 | ||||||||
| $ | 646,777 | $ | 586,662 | |||||||
| EXPONENT, INC. | ||||||||||||||||||
| EBITDA and EBITDAS (1) | ||||||||||||||||||
| For the Quarters Ended December 29, 2023 and December 30, 2022 | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||
| Quarter Ended | Years Ended | |||||||||||||||||
| December 29, | December 30, | December 29, | December 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Net Income | $ | 20,929 | $ | 22,524 | $ | 100,339 | $ | 102,330 | ||||||||||
| Add back (subtract): | ||||||||||||||||||
| Income taxes | 9,159 | 7,995 | 35,557 | 29,904 | ||||||||||||||
| Interest income, net | (1,929 | ) | (1,262 | ) | (7,150 | ) | (2,096 | ) | ||||||||||
| Depreciation and amortization | 2,381 | 1,855 | 8,916 | 7,079 | ||||||||||||||
| EBITDA (1) | 30,540 | 31,112 | 137,662 | 137,217 | ||||||||||||||
| Stock-based compensation | 3,180 | 4,292 | 20,357 | 20,364 | ||||||||||||||
| EBITDAS (1) | $ | 33,720 | $ | 35,404 | $ | 158,019 | $ | 157,581 | ||||||||||
| (1) EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. | ||||||||||||||||||
FAQ
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