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Exponent Reports Fourth Quarter and Fiscal Year 2019 Financial Results

MENLO PARK, Calif., Feb. 06, 2020 (GLOBE NEWSWIRE) -- Exponent, Inc. (EXPO) today reported financial results for the fourth quarter and fiscal year 2019 ended January 3, 2020.

“The fourth quarter was exceptional and concluded a strong 2019 for Exponent. For the quarter and year we achieved double digit revenue growth and increased our EBITDA margin as compared to 2018,” commented Dr. Catherine Corrigan, President and Chief Executive Officer. “We capitalized on increased demand for proactive and reactive services related to energy storage and battery technology; we continued our integrity management assessments for the utilities industry; and we expanded our portfolio of international arbitration engagements. We diversified the scope of our human factors and product studies as we provided unique insights into the operability, usability and safety of human-machine systems.”

“Whether it’s the risk associated with the integrity of an electrical transmission line, the reliability of an automated vehicle, or the health and safety of the public, our inter-disciplinary teams of subject matter experts leverage data analytics to deliver valuable insight. We are well-positioned for continued expansion based on our world-class team of engineers and scientists, the scientific rigor underlying our conclusions and our 50 years of experience,” continued Dr. Corrigan.

Fourth Quarter Financial Results

For the 14-week fourth quarter of 2019, total revenues and revenues before reimbursements grew 20% to $110.1 million and $102.2 million, respectively, as compared to $92.1 million and $85.3 million, respectively, in the 13-week fourth quarter of 2018.

Net income increased to $19.1 million, or $0.36 per diluted share, in the fourth quarter of 2019, as compared to $16.0 million, or $0.30 per diluted share, in the same period of 2018.

EBITDA1 increased to $27.7 million, as compared to $22.6 million in the fourth quarter of 2018.

Fiscal Year 2019 Financial Results

For the 53-week fiscal year 2019, total revenues and revenues before reimbursements increased 10% to $417.2 million and $391.4 million, respectively, as compared to $379.5 million and $354.6 million in the 52-week fiscal year 2018.

Net income was $82.5 million, or $1.53 per diluted share, as compared to $72.3 million, or $1.33 per diluted share, in 2018. The tax benefit for the classification of tax adjustments associated with share-based awards realized for fiscal 2019 was $8.1 million as compared to $4.2 million last year. 

Inclusive of the tax benefit, Exponent’s consolidated tax rate was 20.9% in 2019, as compared to 22.6% last year.

EBITDA1 increased to $107.1 million, as compared to $96.9 million the prior year.

For 2019 net cash generated from operating activities was $108 million. During the year, Exponent distributed $34 million in dividends, repurchased $22 million of common stock and ended the year with $232 million in cash, cash equivalents and short-term investments.

In a separate press release today, Exponent announced an increase in its quarterly cash dividend from $0.16 to $0.19 to be distributed on March 27, 2020 and reiterated its intent to continue to pay quarterly dividends.

Business Overview

Exponent’s engineering and other scientific segment represented 81% of the Company’s 14-week fourth quarter and 53-week 2019 net revenues. Net revenues in this segment grew approximately 21% in the fourth quarter and 11% in fiscal year 2019, as compared to 2018. This segment experienced broad-based strength during the year with notable performances in its human factors, thermal sciences, structural engineering, biomedical, materials sciences, polymer sciences and construction consulting practices. An array of multinational companies across industries sought our scientific expertise and sound advice for their products. For example, safety concerns regarding energy storage systems drove increased demand for risk assessments in the consumer products, transportation, utility and medical device industries.  Our multidisciplinary battery team also performed substantial analysis related to a complex international trade secret dispute. Our scientists addressed reliability concerns with an in-depth design review of a new liquefied natural gas containment vessel. Our biomedical team is advising a client as it navigates the evolving European regulatory framework for medical devices.

Exponent’s environmental and health segment represented approximately 19% of the Company’s 14-week fourth quarter and 53-week 2019 net revenues. Net revenues in this segment increased 14% in the fourth quarter and 6% in fiscal year 2019, as compared to 2018. Within this segment, the chemical regulation and food safety practice continued to grow as Exponent’s scientists evaluated the effects of chemicals and new products on human health and the environment.

Business Outlook

“Our 2019 results benefitted from an extra week and a large engagement for an electric utility related to wildfires and integrity management, which is expected to step down in 2020. We are also in the process of divesting our German entity, with annual revenues of approximately $4 million, as its structural design and inspection services are not a strategic fit. The combination of these factors will create a challenging year over year comparison for 2020.  As a result, we expect revenues before reimbursements for the full year 2020 to grow in the mid-single digits as compared to 2019.  2020 EBITDA1 margin is expected to expand 25 to 50 basis points, as compared to 2019,” commented Richard Schlenker, Executive Vice President and Chief Financial Officer.

“Looking ahead, we will continue to leverage our core competencies as we deepen our client relationships, expand our reputation internationally and bring new talent to the firm. We are prepared to deliver in-depth engineering and scientific insight into complex and evolving systems such as automated and electric vehicles, medical devices, consumer electronics and infrastructure. Exponent is well-positioned to advise its clients as society continues to raise the bar on safety, health, sustainability, reliability and performance,” concluded Dr. Corrigan.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, Thursday, February 6, 2020, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (800) 367-2403 or (334) 777-6978. 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 (888) 203­1112 or (719) 457-0820 and entering passcode 4507569#.

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) 656­EXPO, 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 general 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 10­K 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 January 3, 2020 and December 28, 2018  
(unaudited)  
(in thousands, except per share data)  
                             
                     
              Quarters Ended   Years Ended  
              January 3,   December 28,   January 3,   December 28,  
                2020     2018       2020     2018    
              (14 weeks)   (13 weeks)   (53 weeks)   (52 weeks)  
                             
Revenues                        
  Revenues before reimbursements   $ 102,220   $ 85,269     $ 391,390   $ 354,639    
  Reimbursements         7,894     6,874       25,809     24,884    
                             
    Revenues         110,114     92,143       417,199     379,523    
                             
Operating expenses                      
  Compensation and related expenses     66,581     46,376       252,197     215,052    
  Other operating expenses       9,114     7,742       33,562     30,599    
  Reimbursable expenses       7,894     6,874       25,809     24,884    
  General and administrative expenses     5,175     4,365       20,520     17,532    
                             
    Total operating expenses     88,764     65,357       332,088     288,067    
                             
    Operating income       21,350     26,786       85,111     91,456    
                             
Other income (expense), net                    
  Interest income, net       1,018     938       3,912     2,751    
  Miscellaneous income, net       4,438     (5,765 )     15,167     (890 )  
    Total other income (expense), net     5,456     (4,827 )     19,079     1,861    
                             
    Income before income taxes     26,806     21,959       104,190     93,317    
                             
Income taxes           7,685     5,923       21,730     21,063    
                             
                             
    Net income       $ 19,121   $ 16,036     $ 82,460   $ 72,254    
                             
                             
Net income per share:                      
  Basic         $ 0.36   $ 0.30     $ 1.56   $ 1.37    
  Diluted         $ 0.36   $ 0.30     $ 1.53   $ 1.33    
                             
Shares used in per share computations:                  
  Basic           52,681     52,839       52,691     52,906    
  Diluted           53,817     54,119       53,884     54,168    
                             



EXPONENT, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
January 3, 2020 and December 28, 2018  
(unaudited)  
(in thousands)  
                       
                   
              January 3,   December 28,    
                2020       2018      
Assets                    
Current assets:                  
  Cash and cash equivalents     $ 176,436     $ 127,059      
  Short-term investments       55,165       81,495      
  Accounts receivable, net       120,138       105,814      
  Prepaid expenses and other assets     12,305       12,244      
    Total current assets       364,044       326,612      
Property, equipment and leasehold improvements, net     61,587       46,103      
Operating lease right-of-use asset     23,003       -      
Goodwill           8,607       8,607      
Other assets           106,170       87,614      
    Total Assets       $ 563,411     $ 468,936      
                       
Liabilities and Stockholders' Equity            
Current liabilities:                
  Accounts payable and accrued liabilities   $ 18,583     $ 12,283      
  Accrued payroll and employee benefits     86,723       76,855      
  Deferred revenues         12,710       9,166      
  Operating lease liability       5,944       -      
    Total current liabilities     123,960       98,304      
Other liabilities           71,042       55,256      
Deferred rent           -       1,467      
Operating lease liability       18,158       -      
    Total liabilities       213,160       155,027      
                       
Stockholders' equity:                
  Common stock         66       66      
  Additional paid-in capital       244,935       227,283      
  Accumulated other comprehensive loss     (1,760 )     (2,853 )    
  Retained earnings         384,668       342,024      
  Treasury stock, at cost       (277,658 )     (252,611 )    
    Total stockholders' equity     350,251       313,909      
              $ 563,411     $ 468,936      
                       



EXPONENT, INC.
EBITDA and EBITDAS (1)
For the Quarters Ended January 3, 2020 and December 28, 2018
(unaudited)
(in thousands)
                           
                   
              Quarter Ended   Years Ended
              January 3,   December 28,   January 3,   December 28,
                2020       2018       2020       2018  
              (14 weeks)   (13 weeks)   (53 weeks)   (52 weeks)
                           
Net Income         $ 19,121     $ 16,036     $ 82,460     $ 72,254  
                           
Add back (subtract):                    
                           
  Income taxes           7,685       5,923       21,730       21,063  
  Interest income, net       (1,018 )     (938 )     (3,912 )     (2,751 )
  Depreciation and amortization     1,902       1,582       6,806       6,292  
                           
    EBITDA (1)         27,690       22,603       107,084       96,858  
                           
  Stock-based compensation       3,881       3,388       17,466       16,993  
                           
    EBITDAS (1)     $ 31,571     $ 25,991     $ 124,550     $ 113,851  
                           
                           
                           
(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.