EXPONENT, INC. “Our differentiated capabilities, which marry high-quality data analytics with deep subject matter expertise, drove continued outperformance in the third quarter of 2021. For the quarter, net revenue grew 16%, while EBITDA1 margin expanded more than 350 basis points from the prior year period,” commented Dr.
“During the third quarter, our reactive business further benefitted from the post-COVID acceleration of litigation throughput in our court systems, and at the same time, our proactive engagements, such as user and machine learning data studies, remained a key driver of growth. Our work continued to be robust and diverse, with climate vulnerability assessments with utilities, risk assessments in chemicals, ongoing energy storage-related work, and projects in the automotive and consumer products industries further demonstrating the strength of our long-term strategy,” continued
Third Quarter Financial Results
Total revenues and revenues before reimbursements for the third quarter of 2021 increased 18% to
Net income increased to
EBITDA1 increased to
Year to Date Financial Results
Total revenues and revenues before reimbursements for the first three quarters of 2021 increased 19% to
Net income increased to
EBITDA1 increased to
During the first three quarters of 2021, Exponent paid
Business Overview
Exponent’s engineering and other scientific segment represented 83% of the Company’s net revenues in the third quarter 2021. Net revenues in this segment increased 20% in the third quarter as compared to the prior year period. Growth during the quarter was broad-based, with continued strong demand for Exponent's services across a number of industries and use cases, which includes a steady increase in litigation support, human participant studies for the consumer products segment, work with wearable technologies, as well as asset integrity and risk management engagements for utilities. On the automotive side, Exponent has further progressed its work supporting advanced driver assistance systems and the implementation of safety frameworks for advanced vehicles and energy storage.
Exponent’s environmental and health segment represented 17% of the Company’s net revenues in the third quarter. Net revenues in this segment were approximately flat in the third quarter of 2021 as compared to the prior year period. Exponent’s focused efforts in the pharmaceutical industry continue to materialize through its emphasis on recruitment and development, which has supported new client engagements. The pharmaceutical industry remains a significant opportunity for the Company as it leverages its multidisciplinary approach across the full product life cycle.
Business Outlook
“As we finish out 2021, demand for our multidisciplinary services continues to grow as our offerings and markets expand. However, as we add headcount, we do anticipate a moderation in utilization as we have discussed over the last two quarters,” commented
For the fourth quarter of 2021 as compared to the same period one year prior, Exponent anticipates:
- Revenues before reimbursements to grow in the mid-single digits; and,
- EBITDA1 margin to decrease 175 to 225 basis points.
For the full year 2021 as compared to the same period one year prior, Exponent anticipates:
- Revenues before reimbursements to grow in the mid-teens; and,
- EBITDA1 margin to increase 290 to 310 basis points.
“Through our highly specialized offering, we are partnering with clients to address their most complex challenges, and the increased level of new engagements across our broad-based portfolio has continued to support consistent, profitable growth. Exponent remains well-positioned to help unravel the complexities of innovations as they become reality, and as society continues to raise expectations for safety, health, sustainability, and reliability, which ultimately will drive long-term value for our shareholders,” concluded
Today's Conference Call Information
Exponent will discuss its financial results in more detail on a conference call today,
Footnotes
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. A reconciliation of the measures to GAAP is set forth below.
About Exponent
Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's interdisciplinary organization of scientists, physicians, engineers, and business consultants draws from more than 90 technical disciplines to solve the most pressing and complicated challenges facing stakeholders today. The firm leverages over 50 years of experience in analyzing accidents and failures to advise clients as they innovate their technologically complex products and processes, ensure the safety and health of their users, and address the challenges of sustainability.
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 COVID-19 pandemic (including factors relating to measures implemented by governmental authorities or by us to promote the safety of our employees, vendors and clients; other direct and indirect impacts on our business and the businesses of our clients, vendors and other partners; impacts which may, among other things, adversely affect our clients’ ability to utilize our services at the levels they have previously; disruptions of access to our facilities or those of our clients or third parties; and increased and potentially significant economic uncertainty and volatility, including credit and collectability risks and potential disruptions of capital and credit markets), 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:
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
| For the Quarters Ended | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||
| 2021 | 2020 | 2021 | 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 | |||||||||||||
| 84,286 | 78,256 | 267,214 | 231,146 | ||||||||||||||
| Operating income | 32,119 | 20,407 | 85,549 | 65,515 | |||||||||||||
| Other income (expense), net | |||||||||||||||||
| Interest income, net | 13 | 316 | 54 | 1,496 | |||||||||||||
| Miscellaneous income, net | 257 | 3,915 | 11,579 | 3,096 | |||||||||||||
| 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 | |||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (unaudited) | ||||||||||
| (in thousands) | ||||||||||
| 2021 | 2021 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 229,785 | $ | 197,525 | ||||||
| Short-term investments | 24,998 | 45,001 | ||||||||
| Accounts receivable, net | 144,039 | 111,565 | ||||||||
| Prepaid expenses and other 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 asset | 15,777 | 19,322 | ||||||||
| 8,607 | 8,607 | |||||||||
| Other assets | 136,279 | 125,512 | ||||||||
| $ | 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 liability | 5,604 | 5,987 | ||||||||
| Total current liabilities | 126,418 | 117,308 | ||||||||
| Other liabilities | 96,189 | 86,947 | ||||||||
| Operating lease liability | 10,709 | 14,343 | ||||||||
| Total liabilities | 233,316 | 218,598 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 66 | 66 | ||||||||
| Additional paid-in capital | 279,250 | 265,328 | ||||||||
| Accumulated other comprehensive loss | (2,052 | ) | (1,932 | ) | ||||||
| Retained earnings | 468,578 | 421,809 | ||||||||
| (340,853 | ) | (323,773 | ) | |||||||
| Total stockholders' equity | 404,989 | 361,498 | ||||||||
| $ | 638,305 | $ | 580,096 | |||||||
| EBITDA and EBITDAS (1) | |||||||||||||||||
| For the Quarters Ended | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Net Income | $ | 24,574 | $ | 18,084 | $ | 80,822 | $ | 60,712 | |||||||||
| Add back (subtract): | |||||||||||||||||
| Income taxes | 7,815 | 6,554 | 16,360 | 9,395 | |||||||||||||
| Interest income, net | (13 | ) | (316 | ) | (54 | ) | (1,496 | ) | |||||||||
| Depreciation and amortization | 1,645 | 1,689 | 4,943 | 5,176 | |||||||||||||
| EBITDA (1) | 34,021 | 26,011 | 102,071 | 73,787 | |||||||||||||
| Stock-based compensation | 4,365 | 3,726 | 15,239 | 13,326 | |||||||||||||
| EBITDAS (1) | $ | 38,386 | $ | 29,737 | $ | 117,310 | $ | 87,113 | |||||||||
| (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. | |||||||||||||||||
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