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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 29, 2023

OR

 

☐

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)

 

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

 

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

 

☒

 

 

 

 

As of October 27, 2023, the latest practicable date, the registrant had 50,622,438 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 September 29, 2023 and December 30, 2022

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 29, 2023 and September 30, 2022

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 29, 2023 and September 30, 2022

 

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

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

PART II – OTHER INFORMATION

 

31

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

31

 

 

 

 

 

Item 1A.

 

Risk Factors

 

31

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

31

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

31

 

 

 

 

 

Item 5.

 

Other Information

 

31

 

 

 

 

 

Item 6.

 

Exhibits

 

32

 

 

 

 

 

 

 

Signatures

 

33

 

- 2 -

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

September 29, 2023 and December 30, 2022

(in thousands, except par value)

(unaudited)

 

 

September 29,
2023

 

 

December 30,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

137,099

 

 

$

161,458

 

Accounts receivable, net of allowance for contract losses and doubtful accounts
   of $6,400 and $6,193 at September 29, 2023 and December 30, 2022, respectively

 

 

181,754

 

 

 

170,114

 

Prepaid expenses and other current assets

 

 

24,463

 

 

 

17,585

 

Total current assets

 

 

343,316

 

 

 

349,157

 

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $109,435 and $103,034 at September 29, 2023 and December 30, 2022, respectively

 

 

76,246

 

 

 

65,539

 

Operating lease right-of-use assets

 

 

24,302

 

 

 

18,007

 

Goodwill

 

 

8,607

 

 

 

8,607

 

Deferred income taxes

 

 

54,448

 

 

 

53,909

 

Deferred compensation plan assets

 

 

90,727

 

 

 

89,437

 

Other assets

 

 

4,816

 

 

 

2,006

 

Total assets

 

$

602,462

 

 

$

586,662

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

19,640

 

 

$

29,115

 

Accrued payroll and employee benefits

 

 

93,828

 

 

 

105,822

 

Deferred revenues

 

 

10,489

 

 

 

18,834

 

Operating lease liabilities

 

 

5,700

 

 

 

5,258

 

Total current liabilities

 

 

129,657

 

 

 

159,029

 

 

 

 

 

 

 

 

Other liabilities

 

 

4,136

 

 

 

2,355

 

Deferred compensation plan liabilities

 

 

93,070

 

 

 

91,183

 

Operating lease liabilities

 

 

21,964

 

 

 

13,343

 

Total liabilities

 

 

248,827

 

 

 

265,910

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued
   at September 29, 2023 and December 30, 2022

 

 

66

 

 

 

66

 

Additional paid-in capital

 

 

320,152

 

 

 

301,002

 

Accumulated other comprehensive loss

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(3,775

)

 

 

(3,587

)

Retained earnings

 

 

566,518

 

 

 

528,810

 

Treasury stock, at cost; 15,040 and 15,064 shares held at September 29, 2023
   and December 30, 2022, respectively

 

 

(529,326

)

 

 

(505,539

)

Total stockholders’ equity

 

 

353,635

 

 

 

320,752

 

Total liabilities and stockholders’ equity

 

$

602,462

 

 

$

586,662

 

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 29, 2023 and September 30, 2022

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursements

 

$

124,959

 

 

$

115,143

 

 

$

383,317

 

 

$

351,231

 

Reimbursements

 

 

8,377

 

 

 

12,036

 

 

 

30,549

 

 

 

34,707

 

Revenues

 

 

133,336

 

 

 

127,179

 

 

 

413,866

 

 

 

385,938

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and related expenses

 

 

74,011

 

 

 

62,779

 

 

 

241,028

 

 

 

189,982

 

Other operating expenses

 

 

10,997

 

 

 

8,822

 

 

 

30,863

 

 

 

25,742

 

Reimbursable expenses

 

 

8,377

 

 

 

12,036

 

 

 

30,549

 

 

 

34,707

 

General and administrative expenses

 

 

6,018

 

 

 

6,729

 

 

 

18,498

 

 

 

16,700

 

Total operating expenses

 

 

99,403

 

 

 

90,366

 

 

 

320,938

 

 

 

267,131

 

Operating income

 

 

33,933

 

 

 

36,813

 

 

 

92,928

 

 

 

118,807

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

1,858

 

 

 

638

 

 

 

5,221

 

 

 

834

 

Miscellaneous income (expense), net

 

 

(1,774

)

 

 

(3,975

)

 

 

7,659

 

 

 

(17,926

)

Total other income (expense), net

 

 

84

 

 

 

(3,337

)

 

 

12,880

 

 

 

(17,092

)

Income before income taxes

 

 

34,017

 

 

 

33,476

 

 

 

105,808

 

 

 

101,715

 

Income taxes

 

 

9,479

 

 

 

9,034

 

 

 

26,398

 

 

 

21,909

 

Net income

 

$

24,538

 

 

$

24,442

 

 

$

79,410

 

 

$

79,806

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.47

 

 

$

1.55

 

 

$

1.54

 

Diluted

 

$

0.48

 

 

$

0.47

 

 

$

1.54

 

 

$

1.52

 

Shares used in per share computations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,203

 

 

 

51,492

 

 

 

51,197

 

 

 

51,934

 

Diluted

 

 

51,645

 

 

 

52,008

 

 

 

51,680

 

 

 

52,489

 

Cash dividends declared per common share

 

$

0.26

 

 

$

0.24

 

 

$

0.78

 

 

$

0.72

 

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Net income

 

$

24,538

 

 

$

24,442

 

 

$

79,410

 

 

$

79,806

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
   adjustments, net of tax

 

 

(515

)

 

 

(1,493

)

 

 

(188

)

 

 

(3,153

)

Comprehensive income

 

$

24,023

 

 

$

22,949

 

 

$

79,222

 

 

$

76,653

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three and Nine Months Ended September 29, 2023

 

 

 

Common Stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

earnings

 

 

Shares

 

 

Amount

 

 

Total

 

Balance at December 30, 2022

 

 

65,707

 

 

$

66

 

 

$

301,002

 

 

$

(3,587

)

 

$

528,810

 

 

 

15,064

 

 

$

(505,539

)

 

$

320,752

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

1,015

 

 

 

-

 

 

 

-

 

 

 

(12

)

 

 

128

 

 

 

1,143

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

6,627

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,627

 

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

327

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

327

 

Grant of restricted stock units to settle accrued bonus

 

 

-

 

 

 

-

 

 

 

10,497

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,497

 

Settlement of restricted stock units

 

 

-

 

 

 

-

 

 

 

(1,817

)

 

 

-

 

 

 

(1,009

)

 

 

(186

)

 

 

(7,094

)

 

 

(9,920

)

Exercise of stock options

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

(8

)

 

 

78

 

 

 

100

 

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(27,319

)

 

 

-

 

 

 

-

 

 

 

(27,319

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

54,872

 

 

 

-

 

 

 

-

 

 

 

54,872

 

Balance at June 30, 2023

 

 

65,707

 

 

$

66

 

 

$

317,346

 

 

$

(3,260

)

 

$

555,354

 

 

 

14,858

 

 

$

(512,427

)

 

$

357,079

 

Employee stock purchase plan

 

 

-

 

 

 

-

 

 

 

498

 

 

 

-

 

 

 

-

 

 

 

(7

)

 

 

71

 

 

 

569

 

Amortization of unrecognized stock-based
   compensation

 

 

-

 

 

 

-

 

 

 

2,308

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,308

 

Purchase of treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

189

 

 

 

(16,970

)

 

 

(16,970

)

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(515

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(515

)

Dividends and dividend equivalent rights

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,374

)

 

 

-

 

 

 

-

 

 

 

(13,374

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,538

 

 

 

-

 

 

 

-

 

 

 

24,538

 

Balance at September 29, 2023

 

 

65,707

 

 

$

66

 

 

$

320,152

 

 

$

(3,775

)

 

$

566,518

 

 

 

15,040

 

 

$

(529,326

)

 

$

353,635

 

 

 

 

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 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

Common Stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (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

)

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

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.

- 7 -

 

EXPONENT, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 29, 2023 and September 30, 2022

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

79,410

 

 

$

79,806

 

Adjustments to reconcile net income to net cash provided by
   operating activities:

 

 

 

 

 

 

Depreciation and amortization of property, equipment and
   leasehold improvements

 

 

6,535

 

 

 

5,224

 

Provision for contract losses and doubtful accounts

 

 

1,911

 

 

 

2,112

 

Stock-based compensation

 

 

17,177

 

 

 

16,072

 

Deferred income tax provision

 

 

(539

)

 

 

(3,955

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(13,551

)

 

 

(28,265

)

Prepaid expenses and other current assets

 

 

(5,886

)

 

 

(7,583

)

Change in operating leases

 

 

(451

)

 

 

(132

)

Accounts payable and accrued liabilities

 

 

(7,094

)

 

 

5,140

 

Accrued payroll and employee benefits

 

 

(13,124

)

 

 

(11,211

)

Deferred revenues

 

 

(8,345

)

 

 

(3,971

)

Net cash provided by operating activities

 

 

56,043

 

 

 

53,237

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(14,422

)

 

 

(9,108

)

Net cash used in investing activities

 

 

(14,422

)

 

 

(9,108

)

Cash flows from financing activities:

 

 

 

 

 

 

Payroll taxes for restricted stock units

 

 

(9,920

)

 

 

(12,904

)

Repurchase of common stock

 

 

(16,970

)

 

 

(142,195

)

Exercise of stock-based payment awards

 

 

1,812

 

 

 

1,627

 

Dividends and dividend equivalents rights

 

 

(40,894

)

 

 

(37,084

)

Net cash used in financing activities

 

 

(65,972

)

 

 

(190,556

)

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

(8

)

 

 

(2,817

)

Net change in cash and cash equivalents

 

 

(24,359

)

 

 

(149,244

)

Cash and cash equivalents at beginning of period

 

 

161,458

 

 

 

297,687

 

Cash and cash equivalents at end of period

 

$

137,099

 

 

$

148,443

 

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

 

- 8 -

 

EXPONENT, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three and nine months ended September 29, 2023 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2022, which was filed with the U.S. Securities and Exchange Commission on February 24, 2023.

The unaudited condensed consolidated financial statements include the accounts of Exponent and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates.

Note 2: Revenue Recognition

Substantially all of the Company’s engagements are performed under time and materials or fixed-price arrangements. For time and materials contracts, the Company utilizes the practical expedient under Accounting Standards Codification 606 – Revenue from Contracts with Customers, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided) then the entity may recognize revenue in the amount to which the entity has a right to invoice.

The following table discloses the percentage of the Company’s revenue generated from time and materials contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

61

%

 

 

64

%

 

 

63

%

 

 

63

%

Environmental and Health

 

 

15

%

 

 

14

%

 

 

15

%

 

 

16

%

Total time and materials revenues

 

 

76

%

 

 

78

%

 

 

78

%

 

 

79

%

For fixed-price contracts, the Company recognizes revenue over time because of the continuous transfer of control to the customer. The customer typically controls the work in process as evidenced either by contractual termination clauses or by the Company’s rights to payment for work performed to date to deliver services that do not have an alternative use to the Company. Revenue for fixed-price contracts is recognized based on the relationship of incurred labor hours at standard rates to the Company’s estimate of the total labor hours at standard rates it expects to incur over the term of the contract. The Company believes this methodology achieves a reliable measure of the revenue

- 9 -

 

from the consulting services it provides to its customers under fixed-price contracts given the nature of the consulting services the Company provides.

The following table discloses the percentage of the Company’s revenue generated from fixed price contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

23

%

 

 

21

%

 

 

20

%

 

 

20

%

Environmental and Health

 

 

1

%

 

 

1

%

 

 

2

%

 

 

1

%

Total fixed price revenues

 

 

24

%

 

 

22

%

 

 

22

%

 

 

21

%

Deferred revenues represent amounts billed to clients in advance of services provided. During the third quarter of 2023, $4,045,000 of revenues were recognized that were included in the deferred revenue balance at June 30, 2023. During the first nine months of 2023, $13,393,000 of revenues were recognized that were included in the deferred revenue balance at December 30, 2022.

Reimbursements, including those related to travel and other out-of-pocket expenses, and other similar third- party costs such as the cost of materials and certain subcontracts, are included in revenues, and an equivalent amount of reimbursable expenses are included in operating expenses. Any mark-up on reimbursable expenses is included in revenues before reimbursements. The Company reports revenues net of subcontractor fees for certain subcontracts where the Company has determined that it is acting as an agent because its performance obligation is to arrange for the provision of goods or services by another party. The total amount of subcontractor fees not included in revenues because the Company was acting as an agent were $2,379,000 and $6,996,000 during the third quarter of 2023 and 2022, respectively, and $10,727,000 and $18,040,000 during the first nine months of 2023 and 2022, respectively.

- 10 -

 

Note 3: Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including money market securities, trading fixed income and equity securities held in its deferred compensation plan and the liability associated with its deferred compensation plan. There were no transfers between fair value measurement levels during the three and nine months ended September 29, 2023 and September 30, 2022. Any transfers between fair value measurement levels would be recorded on the actual date of the event or change in circumstances that caused the transfer. The fair value of these certain financial assets and liabilities was determined using the following inputs at September 29, 2023:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

53,978

 

 

$

53,978

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

33,928

 

 

 

33,928

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

71,921

 

 

 

71,921

 

 

 

-

 

 

 

-

 

Total

 

$

159,827

 

 

$

159,827

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

107,223

 

 

 

107,223

 

 

 

-

 

 

 

-

 

Total

 

$

107,223

 

 

$

107,223

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
(3)
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

- 11 -

 

The fair value of these certain financial assets and liabilities was determined using the following inputs at December 30, 2022:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

52,159

 

 

$

52,159

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

32,851

 

 

 

32,851

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

67,880

 

 

 

67,880

 

 

 

-

 

 

 

-

 

Total

 

$

152,890

 

 

$

152,890

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

101,354

 

 

 

101,354

 

 

 

-

 

 

 

-

 

Total

 

$

101,354

 

 

$

101,354

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
(3)
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

Money market securities as of September 29, 2023 and December 30, 2022 represent obligations of the United States Treasury. Fixed income and equity trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 6 for additional information about the Company’s deferred compensation plan.

Cash and cash equivalents consisted of the following as of September 29, 2023:

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

83,121

 

 

$

-

 

 

$

-

 

 

$

83,121

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash equivalents

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash and cash equivalents

 

 

137,099

 

 

 

-

 

 

 

-

 

 

 

137,099

 

 

Cash and cash equivalents consisted of the following as of December 30, 2022:

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

109,299

 

 

$

-

 

 

$

-

 

 

$

109,299

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash equivalents

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash and cash equivalents

 

$

161,458

 

 

$

-

 

 

$

-

 

 

$

161,458

 

 

- 12 -

 

At September 29, 2023 and December 30, 2022, the Company did not have any assets or liabilities valued using significant unobservable inputs.

The following financial instruments are not measured at fair value on the Company's unaudited condensed consolidated balance sheet at September 29, 2023 and December 30, 2022, but require disclosure of their fair values: accounts receivable, other assets and accounts payable. The estimated fair value of such instruments at September 29, 2023 and December 30, 2022 approximates their carrying value as reported on the Company’s unaudited condensed consolidated balance sheet.

Note 4: Net Income Per Share

Basic per share amounts are computed using the weighted-average number of common shares outstanding during the period. Diluted per share amounts are calculated using the weighted-average number of common shares outstanding during the period and, when dilutive, the weighted-average number of potential common shares from the issuance of common stock to satisfy outstanding restricted stock units and the exercise of outstanding options to purchase common stock using the treasury stock method.

The following schedule reconciles the shares used to calculate basic and diluted net income per share:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Shares used in basic per share computation

 

 

51,203

 

 

 

51,492

 

 

 

51,197

 

 

 

51,934

 

Effect of dilutive common stock options
   outstanding

 

 

183

 

 

 

202

 

 

 

195

 

 

 

202

 

Effect of dilutive restricted stock units
   outstanding

 

 

259

 

 

 

314

 

 

 

288

 

 

 

353

 

Shares used in diluted per share
   computation

 

 

51,645

 

 

 

52,008

 

 

 

51,680

 

 

 

52,489

 

Common stock options to purchase 63,333 shares were excluded from the diluted per share calculation for the three months ended September 29, 2023 due to their anti-dilutive effect. Common stock options to purchase 24,835 shares were excluded from the diluted per share calculation for the nine months ended September 29, 2023, due to their anti-dilutive effect. There were no equity awards excluded from the diluted per share calculation for the three and nine months ended September 30, 2022.

Note 5: Stock-Based Compensation

Restricted Stock Units

Restricted stock unit grants are designed to attract and retain employees, and to better align employee interests with those of the Company’s stockholders. For a select group of employees, up to 40% of their annual bonus is settled with fully vested restricted stock unit awards. Under these fully vested restricted stock unit awards, the holder of each award has the right to receive one share of the Company’s common stock for each fully vested restricted stock unit four years from the date of grant. Each individual who receives a fully vested restricted stock unit award is also granted a matching number of unvested restricted stock unit awards. Unvested restricted stock unit awards are also granted for select new hires and promotions. These unvested restricted stock unit awards generally cliff vest four years from the date of grant, at which time the holder of each award will have the right to receive one share of the Company’s common stock for each restricted stock unit award provided the holder of each award has met certain employment conditions. In the case of retirement at 59½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company.

The value of these restricted stock unit awards is determined based on the market price of the Company’s common stock on the date of grant. The value of fully vested restricted stock unit awards issued is recorded as a reduction to accrued bonuses. The portion of bonus expense that the Company expects to settle with fully vested restricted stock unit awards is recorded as stock-based compensation during the period the bonus is earned. The

- 13 -

 

Company recorded stock-based compensation expense associated with accrued bonus awards of $2,583,000 and $2,606,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. For the nine months ended September 29, 2023 and September 30, 2022, the Company recorded stock-based compensation expense associated with accrued bonus awards of $8,242,000 and $8,133,000, respectively. The value of the unvested restricted stock unit awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $2,038,000 and $1,787,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $8,124,000 and $7,315,000 during the nine months ended September 29, 2023 and September 30, 2022, respectively.

Stock Options

Stock options are granted for terms of ten years and generally vest 25% per year over a four-year period from the grant date. Unvested stock option awards will continue to vest in the case of retirement at 59½ years or older, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company. The value of the unvested stock option awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with stock option grants of $270,000 and $212,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. The Company recorded stock-based compensation expense associated with stock option grants of $811,000 and $623,000 during the nine months ended September 29, 2023 and September 30, 2022, respectively.

The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted. The determination of the fair value of stock option awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.

The Company used historical exercise, forfeiture, and post-vesting expiration data to estimate the expected term of options granted. The historical volatility of the Company’s common stock over a period of time equal to the expected term of the options granted was used to estimate expected volatility. The risk-free interest rate used in the option-pricing model was based on United States Treasury zero-coupon issues with remaining terms similar to the expected term of the options. The dividend yield assumption considers the expectation of continued declaration of dividends, offset by option holders’ dividend equivalent rights.

The Company accounts for forfeitures of stock-based awards when they occur. All stock-based payment awards are recognized on a straight-line basis over the requisite service periods of the awards.

Note 6: Deferred Compensation Plans

The Company maintains nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of the Company’s creditors. As of September 29, 2023 and December 30, 2022, the invested amounts under the plans totaled $105,849,000 and $100,731,000, respectively, and are recorded in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet. These assets are classified as trading securities and are recorded at fair value with changes recorded as adjustments to miscellaneous income (loss), net.

As of September 29, 2023 and December 30, 2022, vested amounts due under the plans totaled $107,223,000 and $101,354,000, respectively, and are recorded within accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheets. Changes in the liability are recorded as adjustments to compensation expense. During the three months ended September 29, 2023,

- 14 -

 

the Company recognized a reduction to compensation expense of $2,769,000 as a result of changes in the market value of the trust assets with the same amount being recorded as gain in miscellaneous income (loss), net. During the three months ended September 30, 2022, the Company recognized a reduction to compensation expense of $4,925,000 as a result of changes in the market value of the trust assets with the same amount being recorded as a loss in miscellaneous income (loss), net. During the nine months ended September 29, 2023, the Company recognized additional compensation expense of $5,271,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income, net. During the nine months ended September 30, 2022, the Company recognized a reduction in compensation expense of $20,884,000 as a result of changes in the market value of the trust assets with the same amount being recorded as a loss in miscellaneous income (loss), net.

Note 7: Supplemental Cash Flow Information

The following is supplemental disclosure of cash flow information:

 

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

Cash paid during period:

 

 

 

 

 

 

Income taxes

 

$

27,753

 

 

$

24,349

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Vested stock unit awards issued to settle accrued bonuses

 

 

10,497

 

 

 

10,200

 

Right-of-use asset obtained in exchange for operating lease obligations

 

 

13,803

 

 

 

8,090

 

Leasehold improvements obtained in exchange for right-of-use asset

 

 

3,219

 

 

 

-

 

Accrual for capital expenditures as of period end

 

 

618

 

 

 

846

 

 

 

Note 8: Accounts Receivable, Net

At September 29, 2023 and December 30, 2022, accounts receivable, net, was comprised of the following:

 

 

 

September 29,

 

 

December 30,

 

(In thousands)

 

2023

 

 

2022

 

Billed accounts receivable

 

$

135,076

 

 

$

120,212

 

Unbilled accounts receivable

 

 

53,078

 

 

 

56,095

 

Allowance for contract losses and doubtful accounts

 

 

(6,400

)

 

 

(6,193

)

Total accounts receivable, net

 

$

181,754

 

 

$

170,114

 

 

 

The Company maintains allowances for estimated losses over the remaining contractual life of its receivables resulting from the inability of customers to meet their financial obligations or for disputes that affect the Company’s ability to fully collect amounts due. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations or aware of a dispute with a specific customer, a specific allowance is recorded to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers the Company recognizes allowances for doubtful accounts based upon historical write-offs, customer concentration, customer creditworthiness, current economic conditions, aging of amounts due and future expectations.

 

A reconciliation of the beginning and ending amount of the allowance for contract losses and doubtful accounts is as follows (in thousands):

 

Balance at December 30, 2022

 

$

6,193

 

Provision for contract losses and doubtful accounts

 

 

1,911

 

Write-offs

 

 

(1,704

)

Balance at September 29, 2023

 

$

6,400

 

 

 

- 15 -

 

Note 9: Segment Reporting

The Company has two reportable operating segments based on two primary areas of service. The Engineering and Other Scientific segment is a broad service group providing technical consulting in different practices primarily in engineering. The Environmental and Health segment provides services in the areas of environmental, epidemiology and health risk analysis. This segment provides a wide range of consulting services relating to environmental hazards and risks and the impact on both human health and the environment. Our Chief Executive Officer, the chief operating decision maker, reviews revenues and operating income for each of our reportable segments, but does not review total assets in evaluating segment performance and capital allocation.

Segment information for the three and nine months ended September 29, 2023 and September 30, 2022 follows:

Revenues

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

110,857

 

 

$

107,403

 

 

$

344,552

 

 

$

321,168

 

Environmental and Health

 

 

22,479

 

 

 

19,776

 

 

 

69,314

 

 

 

64,770

 

Total revenues

 

$

133,336

 

 

$

127,179

 

 

$

413,866

 

 

$

385,938

 

 

 

Operating Income

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

38,734

 

 

$

39,385

 

 

$

121,064

 

 

$

117,907

 

Environmental and Health

 

 

7,475

 

 

 

6,378

 

 

 

22,550

 

 

 

21,059

 

Total segment operating income

 

 

46,209

 

 

 

45,763

 

 

 

143,614

 

 

 

138,966

 

Corporate operating expense

 

 

(12,276

)

 

 

(8,950

)

 

 

(50,686

)

 

 

(20,159

)

Total operating income

 

$

33,933

 

 

$

36,813

 

 

$

92,928

 

 

$

118,807

 

 

 

Certain operating expenses are excluded from the Company’s measure of segment operating income. These expenses include costs associated with its human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with its deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in its allowance for contract losses and doubtful accounts.

Capital Expenditures

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

541

 

 

$

870

 

 

$

3,210

 

 

$

3,050

 

Environmental and Health

 

 

25

 

 

 

48

 

 

 

139

 

 

 

104

 

Total segment capital expenditures

 

 

566

 

 

 

918

 

 

 

3,349

 

 

 

3,154

 

Corporate capital expenditures

 

 

1,248

 

 

 

1,172

 

 

 

13,893

 

 

 

6,387

 

Total capital expenditures

 

$

1,814

 

 

$

2,090

 

 

$

17,242

 

 

$

9,541

 

 

 

Certain capital expenditures associated with the Company’s corporate cost centers and the related depreciation are excluded from the Company’s segment information.

- 16 -

 

 

Depreciation and Amortization

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

1,750

 

 

$

1,108

 

 

$

4,428

 

 

$

3,301

 

Environmental and Health

 

 

53

 

 

 

41

 

 

 

155

 

 

 

124

 

Total segment depreciation and
   amortization

 

 

1,803

 

 

 

1,149

 

 

 

4,583

 

 

 

3,425

 

Corporate depreciation and amortization

 

 

558

 

 

 

574

 

 

 

1,952

 

 

 

1,799

 

Total depreciation and amortization

 

$

2,361

 

 

$

1,723

 

 

$

6,535

 

 

$

5,224

 

 

No single client comprised more than 10% of the Company’s revenues during the three and nine months ended September 29, 2023. One client comprised 16% of the Company’s revenues during the three months ended September 30, 2022. The same client comprised 15% of the Company's revenue during the nine months ended September 30, 2022.

Note 10: Leases

The Company determines if an arrangement is a lease at the inception of the arrangement. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. The Company does not have any finance leases as of September 29, 2023.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The amortization of operating lease ROU assets and the change in operating lease liabilities is disclosed as a single line item in the condensed consolidated statements of cash flows.

The Company leases office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Hong Kong, Singapore, Switzerland, and the United Kingdom. Leases for these office, laboratory, and storage facilities have terms generally ranging between one and ten years. Some of these leases include options to extend or terminate the lease, none of which are currently included in the lease term as the Company has determined that exercise of these options is not reasonably certain.

 

The Company has a Test and Engineering Center on 147 acres of land in Phoenix, Arizona. The Company leases this land from the state of Arizona under a 30-year lease agreement that expires in January of 2028 and has options to renew for two fifteen-year periods. As of September 29, 2023, the Company has determined that exercise of the renewal options is not reasonably certain and thus the extension is not included in the lease term.

The Company’s equipment leases are included in the ROU asset and liability balances, but are not material.

The Company leases excess space in its Silicon Valley and Natick facilities. Rental income of $882,000 and $739,000 was included in other income for the three months ended September 29, 2023 and September 30, 2022, respectively. Rental income of $2,491,000 and $2,157,000 was included in other income for the nine months ended September 29, 2023 and September 30, 2022, respectively.

- 17 -

 

The components of lease expense included in other operating expenses on the condensed consolidated statements of income were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Operating lease cost

 

$

2,094

 

 

$

1,681

 

 

$

5,659

 

 

$

5,247

 

Variable lease cost

 

 

378

 

 

 

274

 

 

 

1,251

 

 

 

913

 

Short-term lease cost

 

 

256

 

 

 

194

 

 

 

937

 

 

 

425

 

 

 

Supplemental cash flow information related to operating leases was as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29, 2023

 

 

September 30, 2022

 

 

September 29, 2023

 

 

September 30, 2022

 

Cash paid for amounts included in the
   measurement of operating lease
   liabilities

 

$

1,715

 

 

$

1,518

 

 

$

5,516

 

 

$

5,083

 

 

 

Supplemental balance sheet information related to operating leases was as follows:

 

 

 

September 29,
2023

 

December 30,
2022

Weighted Average Remaining Lease Term

 

6.4 years

 

4.1 years

Weighted Average Discount Rate

 

5.1%

 

4.3%

 

 

Maturities of operating lease liabilities as of September 29, 2023:

 

 

 

Operating

 

(In thousands)

 

Leases

 

2023 (excluding the nine months ended September 29, 2023)

 

 

1,699

 

2024

 

 

6,669

 

2025

 

 

5,763

 

2026

 

 

4,945

 

2027

 

 

4,336

 

2028

 

 

1,860

 

Thereafter

 

 

8,099

 

Total lease payments

 

$

33,371

 

Less imputed interest

 

 

(5,707

)

Total lease liability

 

$

27,664

 

 

 

Note 11: Contingencies

During the second quarter of 2023, a client requested a concession in the amount of $2 million related to the Company’s performance on a project. The Company disagrees with the basis for this request for concession and has responded to the client as such. At this time the Company is unable to determine the outcome of this issue, but management believes that it is probable that this matter will not have a material adverse effect on the Company’s business or the condensed consolidated financial statements.

The Company is a party to various legal actions from time to time and may be contingently liable in connection with claims and contracts arising in the normal course of business, the outcome of which the Company believes, after consultation with legal counsel, will not have a material adverse effect on its financial condition, results

- 18 -

 

of operations or liquidity. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results. All legal costs associated with litigation are expensed as incurred.

Note 12: Subsequent Events

On October 26, 2023, the Company’s Board of Directors announced a cash dividend of $0.26 per share of the Company’s common stock, payable December 22, 2023, to stockholders of record as of December 8, 2023.

- 19 -

 

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

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein and with our audited consolidated financial statements and notes thereto for the fiscal year ended December 30, 2022, which are contained in our fiscal 2022 Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February 24, 2023 (our “2022 Annual Report”).

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains 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 our management, as well as assumptions made by and information currently available to our management. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. When used in this document, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to us or our management, identify such forward-looking statements. Such statements reflect the current views of us or our 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, our 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 2022 Annual Report under the heading “Risk Factors”. The inclusion of such forward-looking information should not be regarded as a representation by the us or any other person that the future events, plans, or expectations we contemplated will be achieved. Due to such uncertainties and risks, you are warned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. We do not intend to release publicly any updates or revisions to any such forward-looking statements.

Business Overview

Exponent, Inc., is an engineering and scientific consulting firm that provides solutions to complex problems. Our multidisciplinary team of scientists, engineers and business consultants brings together more than 90 different technical disciplines to solve complicated issues facing industry and business today. Our services include analysis of product development, product recall, regulatory compliance, and the discovery of potential problems related to products, people, property and impending litigation.

CRITICAL ACCOUNTING ESTIMATES

There have been no significant changes in our critical accounting estimates during the nine months ended September 29, 2023, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2022 Annual Report.

RESULTS OF CONSOLIDATED OPERATIONS

Executive Summary

Revenues for the third quarter of 2023 increased 5% to $133,336,000 as compared to $127,179,000 during the same period last year. Revenues before reimbursements for the third quarter of 2023 increased 9% to $124,959,000 as compared to $115,143,000 during the same period last year.

During the third quarter, strong demand for our reactive services drove increased domestic and international disputes-related work across multiple industries. Our proactive services were bolstered by strong year-over-year growth for regulatory consulting services in the chemicals sector, offset by continued moderation in the consumer electronics sector.

- 20 -

 

Net income increased slightly to $24,538,000 during the third quarter of 2023 as compared to $24,442,000 during the same period last year. Diluted earnings per share increased to $0.48 per share as compared to $0.47 in the same period last year.

We remain focused on selectively adding top talent and developing the skills necessary to expand our market position and providing clients with in-depth scientific research and analysis to determine what happened and how to prevent failures or exposures in the future. We also remain focused on capitalizing on emerging growth areas, managing other operating expenses, generating cash from operations, maintaining a strong balance sheet and undertaking activities such as share repurchases and dividends to enhance shareholder value.

Overview of the Three Months Ended September 29, 2023

During the third quarter of 2023, billable hours increased 4% to 380,000 as compared to 365,000 during the same period last year. Our utilization decreased to 70% during the third quarter of 2023 as compared to 73% during the same period last year. Technical full-time equivalent employees increased 10% to 1,050 during the third quarter of 2023 as compared to 958 during the same period last year. Our accelerated recruiting efforts over the last year combined with lower-than-expected turnover drove a 10% increase in headcount compared to a year ago, highlighting the strength of our employee value proposition. While these investments in our future are critical, we are focused on strategically aligning our resources with the growth of the business and our pursuit of future opportunities over the long-term.

Three Months Ended September 29, 2023 compared to Three Months Ended September 30, 2022

Revenues

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Engineering and Other Scientific

 

$

110,857

 

 

$

107,403

 

 

 

3.2

%

Percentage of total revenues

 

 

83.1

%

 

 

84.5

%

 

 

 

Environmental and Health

 

 

22,479

 

 

 

19,776

 

 

 

13.7

%

Percentage of total revenues

 

 

16.9

%

 

 

15.5

%

 

 

 

Total revenues

 

$

133,336

 

 

$

127,179

 

 

 

4.8

%

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours and an increase in billing rates. During the third quarter of 2023, billable hours for this segment increased by 3% to 301,000 as compared to 291,000 during the same period last year. Utilization for this segment decreased to 71% during the third quarter of 2023 as compared to 76% during the same period last year. The increase in billable hours was driven by broad-based growth, with continued strong demand for our services across the transportation, energy, and construction sectors. Technical full-time equivalent employees in this segment increased 11% to 821 during the third quarter of 2023 as compared to 742 for the same period last year due to our recruiting and retention efforts. The decrease in utilization was due to the 11% increase in technical full-time equivalent employees and historically strong utilization during the third quarter of 2022.

 

The increase in revenues for our Environmental and Health segment was due to an increase in billable hours and an increase in billing rates. During the third quarter of 2023, billable hours for this segment increased by 7% to 79,000 as compared to 74,000 during the same period last year. Utilization for this segment was 66% during the third quarter of 2023 and 2022. The increase in billable hours was due to evolving regulatory requirements which drove safety-related engagements evaluating the impacts of chemicals on human health and the environment. Technical full-time equivalent employees in this segment increased 6% to 229 as compared to 216 during the same period last year due to our recruiting and retention efforts.

- 21 -

 

Compensation and Related Expenses

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Compensation and related expenses

 

$

74,011

 

 

$

62,779

 

 

 

17.9

%

Percentage of total revenues

 

 

55.5

%

 

 

49.4

%

 

 

 

The increase in compensation and related expenses during the third quarter of 2023 was due to a change in the value of assets associated with our deferred compensation plan, an increase in payroll expense, an increase in fringe benefits and an increase in stock-based compensation. During the third quarter of 2023, deferred compensation expense increased by $2,156,000 with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of a decrease in the value of plan assets of $2,769,000 during the third quarter of 2023 as compared to a decrease in the value of plan assets of $4,925,000 during the same period last year. Payroll expense increased by $6,382,000 and fringe benefits increased by $2,033,000 during the third quarter of 2023 due to the impact of our annual salary adjustments and an increase in technical full-time equivalent employees. Stock-based compensation expense increased $287,000 during the third quarter of 2023 due to an increase in unvested restricted stock unit grants.

Other Operating Expenses

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Other operating expenses

 

$

10,997

 

 

$

8,822

 

 

 

24.7

%

Percentage of total revenues

 

 

8.2

%

 

 

6.9

%

 

 

 

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the third quarter of 2023 was primarily due to an increase in occupancy expense of $719,000 an increase in depreciation expense of $638,000, and an increase in information technology related expenses of $467,000. The increase in occupancy expenses was due to growth in technical full-time equivalent employees and the transition back to our offices from a remote work environment. The increases in depreciation and information technology related expenses were due to continued investment in our corporate infrastructure. We expect other operating expenses to grow as we make investments in our corporate infrastructure.

Reimbursable Expenses

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Reimbursable expenses

 

$

8,377

 

 

$

12,036

 

 

 

-30.4

%

Percentage of total revenues

 

 

6.3

%

 

 

9.5

%

 

 

 

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. The decrease in reimbursable expenses during the third quarter of 2023 as compared to the same period last year was due to a decrease in proactive projects for the consumer electronics sector.

General and Administrative Expenses

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

General and administrative expenses

 

$

6,018

 

 

$

6,729

 

 

 

-10.6

%

Percentage of total revenues

 

 

4.5

%

 

 

5.3

%

 

 

 

The decrease in general and administrative expenses was primarily due to a decrease in outside consulting expenses of $484,000 and a decrease in travel and meals of $165,000. The decrease in outside consulting expenses was due to a lower level of activity associated with content creation for our external website. The decrease in travel

- 22 -

 

and meals was due to a firm-wide managers' meeting held during the third quarter of 2022. We expect general and administrative expenses to increase as we expand our business development and staff development initiatives.

Operating Income

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Engineering and Other Scientific

 

$

38,734

 

 

$

39,385

 

 

 

-1.7

%

Environmental and Health

 

 

7,475

 

 

 

6,378

 

 

 

17.2

%

Total segment operating income

 

 

46,209

 

 

 

45,763

 

 

 

1.0

%

Corporate operating expense

 

 

(12,276

)

 

 

(8,950

)

 

 

37.2

%

Total operating income

 

$

33,933

 

 

$

36,813

 

 

 

-7.8

%

The decrease in operating income for our Engineering and Other Scientific segment during the third quarter of 2023 as compared to the same period last year was due to an increase in technical full-time equivalent employees partially offset by an increase in revenues. The increase in operating income for our Environmental and Health segment was due to an increase in revenues partially offset by an increase in technical full-time equivalent employees.

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

The increase in corporate operating expenses during the third quarter of 2023 as compared to the same period last year was primarily due to an increase in deferred compensation expense and an increase in the costs associated with our human resources, finance, information technology and business development groups. During the third quarter of 2023, deferred compensation expense increased $2,156,000, with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of a decrease in the value of plan assets of $2,769,000 during the third quarter of 2023 as compared to a decrease in the value of plan assets of $4,925,000 during the same period last year.

Other Income, Net

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Other income (expense), net

 

$

84

 

 

$

(3,337

)

 

 

102.5

%

Percentage of total revenues

 

 

0.1

%

 

 

-2.6

%

 

 

 

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The increase in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and an increase in interest income. During the third quarter of 2023, other income, net, increased by $2,156,000 with a corresponding increase to deferred compensation expense, as compared to the same period last year, due to a change in the value of assets associated with our deferred compensation plan. This increase consisted of a decrease in the value of the plan assets of $2,769,000 during the third quarter of 2023 as compared to a decrease in the value of the plan assets of $4,925,000 during the same period last year. The increase in interest income of $1,220,000 was due to an increase in interest rates.

Income Taxes

 

 

Three Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Income taxes

 

$

9,479

 

 

$

9,034

 

 

 

4.9

%

Percentage of total revenues

 

 

7.1

%

 

 

7.1

%

 

 

 

Effective tax rate

 

 

27.9

%

 

 

27.0

%

 

 

 

 

- 23 -

 

The increase in income tax expense was due to an increase in pre-tax income and an increase in our effective tax rate. The increase in our effective tax rate was due primarily to a decrease in our foreign rate benefit and an increase in non-deductible expenses.

 

Nine Months Ended September 29, 2023 compared to Nine Months Ended September 30, 2022

Revenues

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Engineering and Other Scientific

 

$

344,552

 

 

$

321,168

 

 

 

7.3

%

Percentage of total revenues

 

 

83.3

%

 

 

83.2

%

 

 

 

Environmental and Health

 

 

69,314

 

 

 

64,770

 

 

 

7.0

%

Percentage of total revenues

 

 

16.7

%

 

 

16.8

%

 

 

 

Total revenues

 

$

413,866

 

 

$

385,938

 

 

 

7.2

%

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours and an increase in billing rates. During the first nine months of 2023, billable hours for this segment increased by 5% to 916,000 as compared to 874,000 during the same period last year. Utilization for this segment decreased to 71% during the first nine months of 2023 as compared to 77% during the same period last year. The increase in billable hours was driven by broad-based growth with continued strong demand for our services across the transportation, energy, and construction sectors. Technical full-time equivalent employees in this segment increased 14% to 827 during the first nine months of 2023 as compared to 725 for the same period last year due to our recruiting and retention efforts. The decrease in utilization was due to the 14% increase in technical full-time equivalent employees and historically strong utilization during the first nine months of 2022.

 

The increase in revenues for our Environmental and Health segment was due to an increase in billable hours and an increase in billing rates. During the first nine months of 2023, billable hours for this segment increased by 1% to 238,000 as compared to 236,000 during the same period last year. Utilization in this segment decreased to 66% during the first nine months of 2023 as compared to 69% during the same period last year. The increase in billable hours was due to evolving regulatory requirements which drove safety-related engagements evaluating the impacts of chemicals on human health and the environment. Technical full-time equivalent employees in this segment increased by 6% to 232 during the first nine months of 2023 as compared to 219 during the same period last year due to our recruiting and retention efforts. The decrease in utilization was due to the 6% increase in technical full-time equivalent employees.

Compensation and Related Expenses

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Compensation and related expenses

 

$

241,028

 

 

$

189,982

 

 

 

26.9

%

Percentage of total revenues

 

 

58.2

%

 

 

49.2

%

 

 

 

The increase in compensation and related expenses during the first nine months of 2023 was due to a change in the value of assets associated with our deferred compensation plan, an increase in payroll expense, an increase in fringe benefits, an increase in bonus expense and an increase in stock-based compensation. During the first nine months of 2023, deferred compensation expense increased $26,155,000 with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of $5,271,000 during the first nine months of 2023 as compared to a decrease in the value of plan assets of $20,884,000 during the same period last year. Payroll expense increased $17,772,000 during the first nine months of 2023 due to the increase in technical full-time equivalent employees and the impact of our annual salary adjustments. Fringe benefits increased by $4,104,000 during the first nine months of 2023 due to the increase in technical full-time equivalent employees and the impact of our annual salary adjustments. Bonus expense increased by $1,608,000 during the first nine months of 2023 due to a corresponding increase to our bonus pool which is equal to 33% of income before income taxes, interest income,

- 24 -

 

bonus expense, and stock-based compensation. Stock-based compensation expense increased $1,002,000 during the first nine months of 2023 due to an increase in unvested restricted stock unit grants.

Other Operating Expenses

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Other operating expenses

 

$

30,863

 

 

$

25,742

 

 

 

19.9

%

Percentage of total revenues

 

 

7.5

%

 

 

6.7

%

 

 

 

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the first nine months of 2023 was primarily due to an increase in occupancy expense of $1,667,000, an increase in information technology related expenses of $1,352,000 and an increase in depreciation expense of $1,311,000. The increase in occupancy expenses was due to growth in technical full-time equivalent employees and the transition back to our offices from a remote work environment. The increases in information technology related expenses and depreciation expense were due to continued investment in our corporate infrastructure. We expect other operating expenses to grow as we make investments in our corporate infrastructure.

Reimbursable Expenses

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Reimbursable expenses

 

$

30,549

 

 

$

34,707

 

 

 

-12.0

%

Percentage of total revenues

 

 

7.4

%

 

 

9.0

%

 

 

 

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. The decrease in reimbursable expenses during the first nine months of 2023 as compared to the same period last year was due to a decrease in proactive projects for the consumer electronics sector.

General and Administrative Expenses

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

General and administrative expenses

 

$

18,498

 

 

$

16,700

 

 

 

10.8

%

Percentage of total revenues

 

 

4.5

%

 

 

4.3

%

 

 

 

The increase in general and administrative expenses was primarily due to an increase in travel and meals of $1,197,000, an increase in bad debt of $339,000, and an increase in marketing and business development expenses of $288,000. The increase in travel and meals was due to the easing of COVID-19 pandemic-related business and travel restrictions. The increase in bad debt was due to an increase in write-offs. The increase in marketing and business development was due to an increase in our business development activities. We expect general and administrative expenses to increase as we expand our business development and staff development initiatives.

 

- 25 -

 

Operating Income

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Engineering and Other Scientific

 

$

121,064

 

 

$

117,907

 

 

 

2.7

%

Environmental and Health

 

 

22,550

 

 

 

21,059

 

 

 

7.1

%

Total segment operating income

 

 

143,614

 

 

 

138,966

 

 

 

3.3

%

Corporate operating expense

 

 

(50,686

)

 

 

(20,159

)

 

 

151.4

%

Total operating income

 

$

92,928

 

 

$

118,807

 

 

 

-21.8

%

The increase in operating income for our Engineering and Other Scientific segment during the first nine months of 2023 as compared to the same period last year was due to an increase in revenues. The increase in revenues was due to an increase in billable hours and an increase in billing rates. Growth was driven by strong demand for our services across the transportation, energy, and construction sectors. The increase in operating income for our Environmental and Health segment was due to an increase in revenues. The increase in revenues was due to an increase in billable hours and an increase in billing rates. Growth was driven by evolving regulatory requirements which drove safety-related engagements evaluating the impacts of chemicals on human health and the environment.

 

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

 

The increase in corporate operating expenses during the first nine months of 2023 as compared to the same period last year was primarily due to an increase in deferred compensation expense and an increase in the costs associated with our human resources, finance, information technology and business development groups. During the first nine months of 2023, deferred compensation expense increased $26,155,000, with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of $5,271,000 during the first nine months of 2023 as compared to a decrease in the value of plan assets of $20,884,000 during the same period last year.

 

Other Income, Net

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Other income (expense), net

 

$

12,880

 

 

$

(17,092

)

 

 

175.4

%

Percentage of total revenues

 

 

3.1

%

 

 

-4.4

%

 

 

 

 

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The increase in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and an increase in interest income. During the first nine months of 2023, other income, net, increased $26,155,000 with a corresponding increase to deferred compensation expense, as compared to the same period last year, due to a change in the value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of the plan assets of $5,271,000 during the first nine months of 2023 as compared to a decrease in the value of the plan assets of $20,884,000 during the same period last year. During the first nine months of 2023, interest income increased by $4,387,000 as compared to the same period last year due to an increase in interest rates.

- 26 -

 

Income Taxes

 

 

Nine Months Ended

 

 

 

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

Percent
Change

 

Income taxes

 

$

26,398

 

 

$

21,909

 

 

 

20.5

%

Percentage of total revenues

 

 

6.4

%

 

 

5.7

%

 

 

 

Effective tax rate

 

 

24.9

%

 

 

21.5

%

 

 

 

The excess tax benefit associated with stock-based awards was $3,639,000 during the first nine months of 2023 as compared to $6,040,000 during the same period last year. Excluding the impact of the excess tax benefit, the effective tax rate would have been 28.4% during the first nine months of 2023 as compared to 27.5% during the same period last year. The increase in our effective tax rate, excluding the impact of the excess tax benefit, was due primarily to a decrease in our foreign rate benefit and an increase in non-deductible expenses.

LIQUIDITY AND CAPITAL RESOURCES

 

We believe our existing balances of cash, cash equivalents, and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next twelve months.

 

 

Nine Months Ended

 

(in thousands)

 

September 29,
2023

 

 

September 30,
2022

 

Net cash provided by operating activities

 

$

56,043

 

 

$

53,237

 

Net cash (used in) / provided by investing activities

 

 

(14,422

)

 

 

(9,108

)

Net cash used in financing activities

 

 

(65,972

)

 

 

(190,556

)

 

 

We financed our business during the first nine months of 2023 through available cash. As of September 29, 2023, our cash and cash equivalents were $137,099,000 as compared to $161,458,000 at December 30, 2022.

Generally, our net cash provided by operating activities is used to fund our day to day operating activities. First quarter operating cash requirements are generally higher due to payment in the first quarter of our annual bonuses accrued during the prior year. Our largest source of operating cash flows is collections from our clients. Our primary uses of cash from operating activities are for employee related expenditures, leased facilities, taxes, and general operating expenses including marketing and travel.

The increase in net cash used in investing activities during the first nine months of 2023, as compared to the same period last year, was due to an increase in capital expenditures primarily due to leasehold improvements associated with our new operating lease for office and lab space in Philadelphia.

The decrease in net cash used in financing activities during the first nine months of 2023, as compared to the same period last year, was due to a decrease in repurchases of our common stock and a reduction in payroll taxes for restricted stock units partially offset by an increase in dividends.

We expect to continue our investing activities, including capital expenditures. Furthermore, cash reserves may be used to repurchase shares of common stock under our stock repurchase programs, pay dividends, or strategically acquire professional service firms that are complementary to our business.

We maintain a nonqualified deferred compensation plan for the benefit of a select group of highly compensated employees. Vested amounts due under the plan of $93,070,000 were recorded as a long-term liability on our unaudited condensed consolidated balance sheet at September 29, 2023. Vested amounts due under the plan of $14,153,000 were recorded as a current liability on our unaudited condensed consolidated balance sheet at September 29, 2023. Our assets that are earmarked to pay benefits under the plan are held in a rabbi trust and are subject to the claims of our creditors. As of September 29, 2023, invested amounts under the plan of $90,727,000 were recorded as a long-term asset on our unaudited condensed consolidated balance sheet. As of September 29, 2023, invested amounts

- 27 -

 

under the plan of $15,122,000 were recorded as a current asset on our unaudited condensed consolidated balance sheet.

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid.

Non-GAAP Financial Measures

Regulation G, Conditions for Use of Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures, and other U.S. Securities and Exchange Commission (“SEC”) rules and regulations define and prescribe the conditions for use of Non-GAAP financial information. 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. We closely monitor two financial measures, EBITDA and EBITDAS, which meet the definition of Non-GAAP financial measures. We define EBITDA as net income before income taxes, net interest income, depreciation and amortization. We define EBITDAS as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance 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. These measures are used to evaluate our financial results, develop budgets and determine employee compensation. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the Non-GAAP measures to the nearest comparable GAAP measure is set forth below.

The following table shows EBITDA (determined as shown in the reconciliation table below) as a percentage of revenues before reimbursements for the three months ended September 29, 2023 and September 30, 2022:

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in thousands, except percentages)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Revenues before reimbursements

 

$

124,959

 

 

$

115,143

 

 

$

383,317

 

 

$

351,231

 

EBITDA

 

$

34,520

 

 

$

34,561

 

 

$

107,122

 

 

$

106,105

 

EBITDA as a % of revenues before
   reimbursements

 

 

27.6

%

 

 

30.0

%

 

 

27.9

%

 

 

30.2

%

The decrease in EBITDA as a percentage of revenues before reimbursements during the third quarter of 2023 as compared to the same period last year was primarily due to the decrease in utilization and an increase in other operating expenses. Our utilization decreased to 70% during the third quarter of 2023 as compared to 73% during the same period last year. The decrease in utilization was due to a 10% increase in technical full-time equivalent employees and historically strong utilization during the third quarter of 2022. Other operating expenses increased during the third quarter of 2023 due to an increase in technical full-time equivalent employees and investments in our corporate infrastructure.

 

The decrease in EBITDA as a percentage of revenues before reimbursements during the first nine months of 2023 as compared to the same period last year was primarily due to the decrease in utilization and an increase in other operating and general and administrative expenses. Our utilization decreased to 70% during the first nine months of 2023 as compared to 75% during the same period last year. The decrease in utilization was due to a 12% increase in technical full-time equivalent employees and historically strong utilization during the first nine months of 2022. Other operating and general and administrative expenses increased during the first nine months of 2023 due to an increase in travel and meals associated with the easing of COVID-19 pandemic-related business and travel restrictions, an increase in technical full-time equivalent employees, investments in our corporate infrastructure, and an increase in marketing and business development activities.

- 28 -

 

 

The following table is a reconciliation of EBITDA and EBITDAS to the most comparable GAAP measure, net income, for the three and nine months ended September 29, 2023 and September 30, 2022:

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Net income

 

$

24,538

 

 

$

24,442

 

 

$

79,410

 

 

$

79,806

 

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

9,479

 

 

 

9,034

 

 

 

26,398

 

 

 

21,909

 

Interest income, net

 

 

(1,858

)

 

 

(638

)

 

 

(5,221

)

 

 

(834

)

Depreciation and amortization

 

 

2,361

 

 

 

1,723

 

 

 

6,535

 

 

 

5,224

 

EBITDA

 

 

34,520

 

 

 

34,561

 

 

 

107,122

 

 

 

106,105

 

Stock-based compensation

 

 

4,891

 

 

 

4,605

 

 

 

17,177

 

 

 

16,072

 

EBITDAS

 

$

39,411

 

 

$

39,166

 

 

$

124,299

 

 

$

122,177

 

 

- 29 -

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate risk associated with our balances of cash and cash equivalents. We manage our interest rate risk by maintaining an investment portfolio primarily consisting of debt instruments with high credit quality and relatively short average effective maturities in accordance with our investment policy. The maximum effective maturity of any issue in our portfolio is 3 years and the maximum average effective maturity of the portfolio cannot exceed 12 months. If interest rates were to instantaneously increase or decrease by 100 basis points, the change in the fair market value of our portfolio of cash equivalents would not have a material impact on our financial statements. We do not use derivative financial instruments in our portfolio. There have not been any material changes during the period covered by this Quarterly Report on Form 10-Q to our interest rate risk exposures, or how these exposures are managed. Notwithstanding our efforts to manage interest rate risk, there can be no assurances that we will be adequately protected against the risks associated with interest rate fluctuations.

We have foreign currency risk related to our revenues and expenses denominated in currencies other than the U.S. dollar, primarily the British Pound, the Singapore Dollar, the Chinese Yuan, and the Hong Kong Dollar. Accordingly, changes in exchange rates may negatively affect the revenues and net income of our foreign subsidiaries as expressed in U.S. dollars.

At September 29, 2023, we had net assets of approximately $14.3 million with a functional currency of the British Pound, net assets of approximately $2.8 million with a functional currency of the Hong Kong Dollar, net assets of approximately $2.3 million with a functional currency of the Chinese Yuan, and net assets of approximately $2.2 million with a functional currency of the Singapore Dollar associated with our operations in the United Kingdom, Hong Kong, China, and Singapore, respectively.

We also have foreign currency risk related to foreign currency transactions and monetary assets and liabilities denominated in currencies that are not the functional currency. We have experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on these foreign currency transactions and the remeasurement of monetary assets and liabilities. At September 29, 2023, we had net assets denominated in the non-functional currency of approximately $8.4 million.

We do not use foreign exchange contracts to hedge any foreign currency exposures. To date, the impacts of foreign currency exchange rate changes on our consolidated revenues and consolidated net income have not been significant. However, our continued international growth increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

Item 4. Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of September 29, 2023, the Company’s disclosure controls and procedures were effective.

We review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis, to improve our controls and procedures over time and to correct any deficiencies that we may discover in the future. Our goal is to ensure that our senior management has timely access to all material financial and non-financial information concerning our business. While we believe the present design of our disclosure controls and procedures is effective to achieve our goal, future events affecting our business may cause us to significantly modify our disclosure controls and procedures.

(b)
Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three-month period ended September 29, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 30 -

 

PART II - OTHER INFORMATION

Exponent is not engaged in any material legal proceedings.

Item 1A. Risk Factors

There have been no material changes from risk factors as previously discussed under the heading “Risk Factors” in the Company’s 2022 Annual Report.

 

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

The following table provides information on the Company’s repurchases of the Company’s common stock for the three months ended September 29, 2023 (in thousands, except price per share):

 

 

Total
Number
of Shares
Purchased

 

 

Average
Price
Paid Per
Share

 

 

Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Programs

 

 

Approximate
Dollar Value
of Shares That
May Yet Be
Purchased
Under the
Programs (1)

 

July 1 to July 28

 

 

22

 

 

$

87.83

 

 

 

22

 

 

$

60,628

 

July 29 to August 25

 

 

-

 

 

 

-

 

 

 

-

 

 

$

60,628

 

August 26 to September 29

 

 

167

 

 

 

89.65

 

 

 

167

 

 

$

45,628

 

Total

 

 

189

 

 

$

89.43

 

 

 

189

 

 

$

45,628

 

 

(1)
On February 22, 2022, the Company’s Board of Directors announced an additional $150,000,000 for repurchase of the Company’s common stock. This repurchase program does not have an expiration date.

Repurchases of the Company’s common stock were affected pursuant to a repurchase program authorized by the Company’s Board of Directors.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Plans None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended September 29, 2023.

- 31 -

 

Item 6. Exhibits

(a)
Exhibit Index

 

  31.1

Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.

 

 

  31.2

Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.

 

 

  32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

 

 

  32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

 

 

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

 

101.SCH

Inline XBRL Taxonomy Extension Schema Document

 

 

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

Exhibit 104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

- 32 -

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

EXPONENT, INC.

 

 

(Registrant)

 

 

 

Date: November 3, 2023

 

 

 

 

/s/ Catherine Ford Corrigan

 

 

Catherine Ford Corrigan, Ph.D., Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ Richard L. Schlenker

 

 

Richard L. Schlenker, Chief Financial Officer

 

- 33 -

Exhibit 31.1

CERTIFICATION

I, Catherine Ford Corrigan, Ph.D., certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Exponent, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2023

 

/s/ Catherine Ford Corrigan

Catherine Ford Corrigan, Ph.D.

Chief Executive Officer

 

Exhibit 31.2

CERTIFICATION

I, Richard L. Schlenker, Jr. certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Exponent, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2023

 

/s/ Richard L. Schlenker, Jr.

Richard L. Schlenker, Jr.

Chief Financial Officer

 

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Exponent, Inc. (the "Company") on Form 10-Q for the fiscal period ending September 29, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Catherine Ford Corrigan, Ph.D., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 3, 2023

 

/s/ Catherine Ford Corrigan

Catherine Ford Corrigan, Ph.D.

Chief Executive Officer

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section. Such certification will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Exponent, Inc. (the "Company") on Form 10-Q for the fiscal period ending September 29, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard L. Schlenker, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 3, 2023

 

/s/ Richard L. Schlenker, Jr.

Richard L. Schlenker, Jr.

Chief Financial Officer

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section. Such certification will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

v3.23.3
Document and Entity Information - shares
 9 Months Ended
Sep. 29, 2023
Oct. 27, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 29, 2023  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Entity Registrant Name EXPONENT, INC.  
Entity Central Index Key 0000851520  
Current Fiscal Year End Date --12-29  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Trading Symbol EXPO  
Entity Common Stock, Shares Outstanding   50,622,438
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Shell Company false  
Entity File Number 0-18655  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 77-0218904  
Entity Address, Address Line One 149 COMMONWEALTH DRIVE  
Entity Address, City or Town MENLO PARK  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 94025  
City Area Code 650  
Local Phone Number 326-9400  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
Title of each class Common Stock, par value $0.001 per share  
Name of each exchange on which registered NASDAQ  
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 30, 2022
Current assets:    
Cash and cash equivalents $ 137,099 $ 161,458
Accounts receivable, net of allowance for contract losses and doubtful accounts of $6,400 and $6,193 at September 29, 2023 and December 30, 2022, respectively 181,754 170,114
Prepaid expenses and other current assets 24,463 17,585
Total current assets 343,316 349,157
Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $109,435 and $103,034 at September 29, 2023 and December 30, 2022, respectively 76,246 65,539
Operating lease right-of-use assets 24,302 18,007
Goodwill 8,607 8,607
Deferred income taxes 54,448 53,909
Deferred compensation plan assets 90,727 89,437
Other assets 4,816 2,006
Total assets 602,462 586,662
Current liabilities:    
Accounts payable and accrued liabilities 19,640 29,115
Accrued payroll and employee benefits 93,828 105,822
Deferred revenues 10,489 18,834
Operating lease liabilities 5,700 5,258
Total current liabilities 129,657 159,029
Other liabilities 4,136 2,355
Deferred compensation plan liabilities 93,070 91,183
Operating lease liabilities 21,964 13,343
Total liabilities 248,827 265,910
Stockholders’ equity:    
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at September 29, 2023 and December 30, 2022 66 66
Additional paid-in capital 320,152 301,002
Accumulated other comprehensive loss    
Foreign currency translation adjustments (3,775) (3,587)
Retained earnings 566,518 528,810
Treasury stock, at cost; 15,040 and 15,064 shares held at September 29, 2023 and December 30, 2022, respectively (529,326) (505,539)
Total stockholders’ equity 353,635 320,752
Total liabilities and stockholders’ equity $ 602,462 $ 586,662
v3.23.3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 30, 2022
Statement of Financial Position [Abstract]    
Accounts receivable, net of allowance for contract losses and doubtful accounts $ 6,400 $ 6,193
Property, equipment and leasehold improvements, net of accumulated depreciation and amortization $ 109,435 $ 103,034
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 120,000,000 120,000,000
Common stock, shares issued 65,707,000 65,707,000
Treasury stock, shares 15,040,000 15,064,000
v3.23.3
Condensed Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Revenues:        
Revenues before reimbursements $ 124,959 $ 115,143 $ 383,317 $ 351,231
Reimbursements 8,377 12,036 30,549 34,707
Revenues 133,336 127,179 413,866 385,938
Operating expenses:        
Compensation and related expenses 74,011 62,779 241,028 189,982
Other operating expenses 10,997 8,822 30,863 25,742
Reimbursable expenses 8,377 12,036 30,549 34,707
General and administrative expenses 6,018 6,729 18,498 16,700
Total operating expenses 99,403 90,366 320,938 267,131
Operating income 33,933 36,813 92,928 118,807
Other income, net:        
Interest income, net 1,858 638 5,221 834
Miscellaneous income (expense), net (1,774) (3,975) 7,659 (17,926)
Total other income (expense), net 84 (3,337) 12,880 (17,092)
Income before income taxes 34,017 33,476 105,808 101,715
Income taxes 9,479 9,034 26,398 21,909
Net income $ 24,538 $ 24,442 $ 79,410 $ 79,806
Net income per share:        
Basic (in dollars per share) $ 0.48 $ 0.47 $ 1.55 $ 1.54
Diluted (in dollars per share) $ 0.48 $ 0.47 $ 1.54 $ 1.52
Shares used in per share computations:        
Basic (in shares) 51,203 51,492 51,197 51,934
Diluted (in shares) 51,645 52,008 51,680 52,489
Cash dividends declared per common share (in dollars per share) $ 0.26 $ 0.24 $ 0.78 $ 0.72
v3.23.3
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Statement of Comprehensive Income [Abstract]        
Net income $ 24,538 $ 24,442 $ 79,410 $ 79,806
Other comprehensive income (loss):        
Foreign currency translation adjustments, net of tax (515) (1,493) (188) (3,153)
Comprehensive income $ 24,023 $ 22,949 $ 79,222 $ 76,653
v3.23.3
Condensed Consolidated Statements of Stockholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Balance at Dec. 31, 2021 $ 417,065 $ 66 $ 281,419 $ (1,983) $ 478,370 $ (340,807)
Balances (in shares) at Dec. 31, 2021   65,707       13,591
Employee stock purchase plan 1,070   961     $ 109
Employee stock purchase plan (in shares)           (12)
Amortization of unrecognized stock-based compensation 5,939   5,939      
Purchase of treasury stock (111,843)         $ (111,843)
Purchase of treasury stock (in shares)           1,273
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 (12,904)   (2,421)   (1,392) $ (9,091)
Settlement of restricted stock units (in shares)           (262)
Dividends and dividend equivalent rights (25,737)       (25,737)  
Net income 55,364       55,364  
Balance at Jul. 01, 2022 337,494 $ 66 296,098 (3,643) 506,605 $ (461,632)
Balances (in shares) at Jul. 01, 2022   65,707       14,590
Balance at Dec. 31, 2021 417,065 $ 66 281,419 (1,983) 478,370 $ (340,807)
Balances (in shares) at Dec. 31, 2021   65,707       13,591
Net income 79,806          
Balance at Sep. 30, 2022 319,800 $ 66 298,589 (5,136) 518,631 $ (492,350)
Balances (in shares) at Sep. 30, 2022   65,707       14,918
Balance at Jul. 01, 2022 337,494 $ 66 296,098 (3,643) 506,605 $ (461,632)
Balances (in shares) at Jul. 01, 2022   65,707       14,590
Employee stock purchase plan 557   492     $ 65
Employee stock purchase plan (in shares)           (7)
Amortization of unrecognized stock-based compensation 1,999   1,999      
Purchase of treasury stock (30,783)         $ (30,783)
Purchase of treasury stock (in shares)           335
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 Sep. 30, 2022 319,800 $ 66 298,589 (5,136) 518,631 $ (492,350)
Balances (in shares) at Sep. 30, 2022   65,707       14,918
Balance at Dec. 30, 2022 320,752 $ 66 301,002 (3,587) 528,810 $ (505,539)
Balances (in shares) at Dec. 30, 2022   65,707       15,064
Employee stock purchase plan 1,143   1,015     $ 128
Employee stock purchase plan (in shares)           (12)
Amortization of unrecognized stock-based compensation 6,627   6,627      
Foreign currency translation adjustments 327     327    
Grant of restricted stock units to settle accrued bonus 10,497   10,497      
Settlement of restricted stock units (9,920)   (1,817)   (1,009) $ (7,094)
Settlement of restricted stock units (in shares)           (186)
Exercise of stock options 100   22     $ 78
Exercise of stock options (in shares)           (8)
Dividends and dividend equivalent rights (27,319)       (27,319)  
Net income 54,872       54,872  
Balance at Jun. 30, 2023 357,079 $ 66 317,346 (3,260) 555,354 $ (512,427)
Balances (in shares) at Jun. 30, 2023   65,707       14,858
Balance at Dec. 30, 2022 320,752 $ 66 301,002 (3,587) 528,810 $ (505,539)
Balances (in shares) at Dec. 30, 2022   65,707       15,064
Net income 79,410          
Balance at Sep. 29, 2023 353,635 $ 66 320,152 (3,775) 566,518 $ (529,326)
Balances (in shares) at Sep. 29, 2023   65,707       15,040
Balance at Jun. 30, 2023 357,079 $ 66 317,346 (3,260) 555,354 $ (512,427)
Balances (in shares) at Jun. 30, 2023   65,707       14,858
Employee stock purchase plan 569   498     $ 71
Employee stock purchase plan (in shares)           (7)
Amortization of unrecognized stock-based compensation 2,308   2,308      
Purchase of treasury stock (16,970)         $ (16,970)
Purchase of treasury stock (in shares)           189
Foreign currency translation adjustments (515)     (515)    
Dividends and dividend equivalent rights (13,374)       (13,374)  
Net income 24,538       24,538  
Balance at Sep. 29, 2023 $ 353,635 $ 66 $ 320,152 $ (3,775) $ 566,518 $ (529,326)
Balances (in shares) at Sep. 29, 2023   65,707       15,040
v3.23.3
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Cash flows from operating activities:    
Net income $ 79,410 $ 79,806
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization of property, equipment and leasehold improvements 6,535 5,224
Provision for contract losses and doubtful accounts 1,911 2,112
Stock-based compensation 17,177 16,072
Deferred income tax provision (539) (3,955)
Changes in operating assets and liabilities:    
Accounts receivable (13,551) (28,265)
Prepaid expenses and other current assets (5,886) (7,583)
Change in operating leases (451) (132)
Accounts payable and accrued liabilities (7,094) 5,140
Accrued payroll and employee benefits (13,124) (11,211)
Deferred revenues (8,345) (3,971)
Net cash provided by operating activities 56,043 53,237
Cash flows from investing activities:    
Capital expenditures (14,422) (9,108)
Net cash used in investing activities (14,422) (9,108)
Cash flows from financing activities:    
Payroll taxes for restricted stock units (9,920) (12,904)
Repurchase of common stock (16,970) (142,195)
Exercise of stock-based payment awards 1,812 1,627
Dividends and dividend equivalents rights (40,894) (37,084)
Net cash used in financing activities (65,972) (190,556)
Effect of foreign currency exchange rates on cash and cash equivalents (8) (2,817)
Net change in cash and cash equivalents (24,359) (149,244)
Cash and cash equivalents at beginning of period 161,458 297,687
Cash and cash equivalents at end of period $ 137,099 $ 148,443
v3.23.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Jun. 30, 2023
Jul. 01, 2022
Sep. 29, 2023
Sep. 30, 2022
Pay vs Performance Disclosure            
Net Income (Loss) $ 24,538 $ 24,442 $ 54,872 $ 55,364 $ 79,410 $ 79,806
v3.23.3
Insider Trading Arrangements
 9 Months Ended
Sep. 29, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.23.3
Basis of Presentation
 9 Months Ended
Sep. 29, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

Note 1: Basis of Presentation

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three and nine months ended September 29, 2023 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2022, which was filed with the U.S. Securities and Exchange Commission on February 24, 2023.

The unaudited condensed consolidated financial statements include the accounts of Exponent and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates.

v3.23.3
Revenue Recognition
 9 Months Ended
Sep. 29, 2023
Revenue Recognition [Abstract]  
Revenue Recognition

Note 2: Revenue Recognition

Substantially all of the Company’s engagements are performed under time and materials or fixed-price arrangements. For time and materials contracts, the Company utilizes the practical expedient under Accounting Standards Codification 606 – Revenue from Contracts with Customers, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided) then the entity may recognize revenue in the amount to which the entity has a right to invoice.

The following table discloses the percentage of the Company’s revenue generated from time and materials contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

61

%

 

 

64

%

 

 

63

%

 

 

63

%

Environmental and Health

 

 

15

%

 

 

14

%

 

 

15

%

 

 

16

%

Total time and materials revenues

 

 

76

%

 

 

78

%

 

 

78

%

 

 

79

%

For fixed-price contracts, the Company recognizes revenue over time because of the continuous transfer of control to the customer. The customer typically controls the work in process as evidenced either by contractual termination clauses or by the Company’s rights to payment for work performed to date to deliver services that do not have an alternative use to the Company. Revenue for fixed-price contracts is recognized based on the relationship of incurred labor hours at standard rates to the Company’s estimate of the total labor hours at standard rates it expects to incur over the term of the contract. The Company believes this methodology achieves a reliable measure of the revenue

from the consulting services it provides to its customers under fixed-price contracts given the nature of the consulting services the Company provides.

The following table discloses the percentage of the Company’s revenue generated from fixed price contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

23

%

 

 

21

%

 

 

20

%

 

 

20

%

Environmental and Health

 

 

1

%

 

 

1

%

 

 

2

%

 

 

1

%

Total fixed price revenues

 

 

24

%

 

 

22

%

 

 

22

%

 

 

21

%

Deferred revenues represent amounts billed to clients in advance of services provided. During the third quarter of 2023, $4,045,000 of revenues were recognized that were included in the deferred revenue balance at June 30, 2023. During the first nine months of 2023, $13,393,000 of revenues were recognized that were included in the deferred revenue balance at December 30, 2022.

Reimbursements, including those related to travel and other out-of-pocket expenses, and other similar third- party costs such as the cost of materials and certain subcontracts, are included in revenues, and an equivalent amount of reimbursable expenses are included in operating expenses. Any mark-up on reimbursable expenses is included in revenues before reimbursements. The Company reports revenues net of subcontractor fees for certain subcontracts where the Company has determined that it is acting as an agent because its performance obligation is to arrange for the provision of goods or services by another party. The total amount of subcontractor fees not included in revenues because the Company was acting as an agent were $2,379,000 and $6,996,000 during the third quarter of 2023 and 2022, respectively, and $10,727,000 and $18,040,000 during the first nine months of 2023 and 2022, respectively.

v3.23.3
Fair Value Measurements
 9 Months Ended
Sep. 29, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 3: Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including money market securities, trading fixed income and equity securities held in its deferred compensation plan and the liability associated with its deferred compensation plan. There were no transfers between fair value measurement levels during the three and nine months ended September 29, 2023 and September 30, 2022. Any transfers between fair value measurement levels would be recorded on the actual date of the event or change in circumstances that caused the transfer. The fair value of these certain financial assets and liabilities was determined using the following inputs at September 29, 2023:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

53,978

 

 

$

53,978

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

33,928

 

 

 

33,928

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

71,921

 

 

 

71,921

 

 

 

-

 

 

 

-

 

Total

 

$

159,827

 

 

$

159,827

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

107,223

 

 

 

107,223

 

 

 

-

 

 

 

-

 

Total

 

$

107,223

 

 

$

107,223

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
(3)
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

The fair value of these certain financial assets and liabilities was determined using the following inputs at December 30, 2022:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

52,159

 

 

$

52,159

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

32,851

 

 

 

32,851

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

67,880

 

 

 

67,880

 

 

 

-

 

 

 

-

 

Total

 

$

152,890

 

 

$

152,890

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

101,354

 

 

 

101,354

 

 

 

-

 

 

 

-

 

Total

 

$

101,354

 

 

$

101,354

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
(3)
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

Money market securities as of September 29, 2023 and December 30, 2022 represent obligations of the United States Treasury. Fixed income and equity trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 6 for additional information about the Company’s deferred compensation plan.

Cash and cash equivalents consisted of the following as of September 29, 2023:

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

83,121

 

 

$

-

 

 

$

-

 

 

$

83,121

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash equivalents

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash and cash equivalents

 

 

137,099

 

 

 

-

 

 

 

-

 

 

 

137,099

 

 

Cash and cash equivalents consisted of the following as of December 30, 2022:

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

109,299

 

 

$

-

 

 

$

-

 

 

$

109,299

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash equivalents

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash and cash equivalents

 

$

161,458

 

 

$

-

 

 

$

-

 

 

$

161,458

 

 

At September 29, 2023 and December 30, 2022, the Company did not have any assets or liabilities valued using significant unobservable inputs.

The following financial instruments are not measured at fair value on the Company's unaudited condensed consolidated balance sheet at September 29, 2023 and December 30, 2022, but require disclosure of their fair values: accounts receivable, other assets and accounts payable. The estimated fair value of such instruments at September 29, 2023 and December 30, 2022 approximates their carrying value as reported on the Company’s unaudited condensed consolidated balance sheet.
v3.23.3
Net Income Per Share
 9 Months Ended
Sep. 29, 2023
Earnings Per Share [Abstract]  
Net Income Per Share

Note 4: Net Income Per Share

Basic per share amounts are computed using the weighted-average number of common shares outstanding during the period. Diluted per share amounts are calculated using the weighted-average number of common shares outstanding during the period and, when dilutive, the weighted-average number of potential common shares from the issuance of common stock to satisfy outstanding restricted stock units and the exercise of outstanding options to purchase common stock using the treasury stock method.

The following schedule reconciles the shares used to calculate basic and diluted net income per share:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Shares used in basic per share computation

 

 

51,203

 

 

 

51,492

 

 

 

51,197

 

 

 

51,934

 

Effect of dilutive common stock options
   outstanding

 

 

183

 

 

 

202

 

 

 

195

 

 

 

202

 

Effect of dilutive restricted stock units
   outstanding

 

 

259

 

 

 

314

 

 

 

288

 

 

 

353

 

Shares used in diluted per share
   computation

 

 

51,645

 

 

 

52,008

 

 

 

51,680

 

 

 

52,489

 

Common stock options to purchase 63,333 shares were excluded from the diluted per share calculation for the three months ended September 29, 2023 due to their anti-dilutive effect. Common stock options to purchase 24,835 shares were excluded from the diluted per share calculation for the nine months ended September 29, 2023, due to their anti-dilutive effect. There were no equity awards excluded from the diluted per share calculation for the three and nine months ended September 30, 2022.

v3.23.3
Stock-Based Compensation
 9 Months Ended
Sep. 29, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 5: Stock-Based Compensation

Restricted Stock Units

Restricted stock unit grants are designed to attract and retain employees, and to better align employee interests with those of the Company’s stockholders. For a select group of employees, up to 40% of their annual bonus is settled with fully vested restricted stock unit awards. Under these fully vested restricted stock unit awards, the holder of each award has the right to receive one share of the Company’s common stock for each fully vested restricted stock unit four years from the date of grant. Each individual who receives a fully vested restricted stock unit award is also granted a matching number of unvested restricted stock unit awards. Unvested restricted stock unit awards are also granted for select new hires and promotions. These unvested restricted stock unit awards generally cliff vest four years from the date of grant, at which time the holder of each award will have the right to receive one share of the Company’s common stock for each restricted stock unit award provided the holder of each award has met certain employment conditions. In the case of retirement at 59½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company.

The value of these restricted stock unit awards is determined based on the market price of the Company’s common stock on the date of grant. The value of fully vested restricted stock unit awards issued is recorded as a reduction to accrued bonuses. The portion of bonus expense that the Company expects to settle with fully vested restricted stock unit awards is recorded as stock-based compensation during the period the bonus is earned. The

Company recorded stock-based compensation expense associated with accrued bonus awards of $2,583,000 and $2,606,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. For the nine months ended September 29, 2023 and September 30, 2022, the Company recorded stock-based compensation expense associated with accrued bonus awards of $8,242,000 and $8,133,000, respectively. The value of the unvested restricted stock unit awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $2,038,000 and $1,787,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $8,124,000 and $7,315,000 during the nine months ended September 29, 2023 and September 30, 2022, respectively.

Stock Options

Stock options are granted for terms of ten years and generally vest 25% per year over a four-year period from the grant date. Unvested stock option awards will continue to vest in the case of retirement at 59½ years or older, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company. The value of the unvested stock option awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with stock option grants of $270,000 and $212,000 during the three months ended September 29, 2023 and September 30, 2022, respectively. The Company recorded stock-based compensation expense associated with stock option grants of $811,000 and $623,000 during the nine months ended September 29, 2023 and September 30, 2022, respectively.

The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted. The determination of the fair value of stock option awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.

The Company used historical exercise, forfeiture, and post-vesting expiration data to estimate the expected term of options granted. The historical volatility of the Company’s common stock over a period of time equal to the expected term of the options granted was used to estimate expected volatility. The risk-free interest rate used in the option-pricing model was based on United States Treasury zero-coupon issues with remaining terms similar to the expected term of the options. The dividend yield assumption considers the expectation of continued declaration of dividends, offset by option holders’ dividend equivalent rights.

The Company accounts for forfeitures of stock-based awards when they occur. All stock-based payment awards are recognized on a straight-line basis over the requisite service periods of the awards.
v3.23.3
Deferred Compensation Plans
 9 Months Ended
Sep. 29, 2023
Deferred Compensation Arrangements [Abstract]  
Deferred Compensation Plans

Note 6: Deferred Compensation Plans

The Company maintains nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of the Company’s creditors. As of September 29, 2023 and December 30, 2022, the invested amounts under the plans totaled $105,849,000 and $100,731,000, respectively, and are recorded in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet. These assets are classified as trading securities and are recorded at fair value with changes recorded as adjustments to miscellaneous income (loss), net.

As of September 29, 2023 and December 30, 2022, vested amounts due under the plans totaled $107,223,000 and $101,354,000, respectively, and are recorded within accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheets. Changes in the liability are recorded as adjustments to compensation expense. During the three months ended September 29, 2023,

the Company recognized a reduction to compensation expense of $2,769,000 as a result of changes in the market value of the trust assets with the same amount being recorded as gain in miscellaneous income (loss), net. During the three months ended September 30, 2022, the Company recognized a reduction to compensation expense of $4,925,000 as a result of changes in the market value of the trust assets with the same amount being recorded as a loss in miscellaneous income (loss), net. During the nine months ended September 29, 2023, the Company recognized additional compensation expense of $5,271,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income, net. During the nine months ended September 30, 2022, the Company recognized a reduction in compensation expense of $20,884,000 as a result of changes in the market value of the trust assets with the same amount being recorded as a loss in miscellaneous income (loss), net.

v3.23.3
Supplemental Cash Flow Information
 9 Months Ended
Sep. 29, 2023
Supplemental Cash Flow Information [Abstract]  
Supplemental Cash Flow Information

Note 7: Supplemental Cash Flow Information

The following is supplemental disclosure of cash flow information:

 

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

Cash paid during period:

 

 

 

 

 

 

Income taxes

 

$

27,753

 

 

$

24,349

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Vested stock unit awards issued to settle accrued bonuses

 

 

10,497

 

 

 

10,200

 

Right-of-use asset obtained in exchange for operating lease obligations

 

 

13,803

 

 

 

8,090

 

Leasehold improvements obtained in exchange for right-of-use asset

 

 

3,219

 

 

 

-

 

Accrual for capital expenditures as of period end

 

 

618

 

 

 

846

 
v3.23.3
Accounts Receivable, Net
 9 Months Ended
Sep. 29, 2023
Receivables [Abstract]  
Accounts Receivable, Net

Note 8: Accounts Receivable, Net

At September 29, 2023 and December 30, 2022, accounts receivable, net, was comprised of the following:

 

 

 

September 29,

 

 

December 30,

 

(In thousands)

 

2023

 

 

2022

 

Billed accounts receivable

 

$

135,076

 

 

$

120,212

 

Unbilled accounts receivable

 

 

53,078

 

 

 

56,095

 

Allowance for contract losses and doubtful accounts

 

 

(6,400

)

 

 

(6,193

)

Total accounts receivable, net

 

$

181,754

 

 

$

170,114

 

 

 

The Company maintains allowances for estimated losses over the remaining contractual life of its receivables resulting from the inability of customers to meet their financial obligations or for disputes that affect the Company’s ability to fully collect amounts due. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations or aware of a dispute with a specific customer, a specific allowance is recorded to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers the Company recognizes allowances for doubtful accounts based upon historical write-offs, customer concentration, customer creditworthiness, current economic conditions, aging of amounts due and future expectations.

 

A reconciliation of the beginning and ending amount of the allowance for contract losses and doubtful accounts is as follows (in thousands):

 

Balance at December 30, 2022

 

$

6,193

 

Provision for contract losses and doubtful accounts

 

 

1,911

 

Write-offs

 

 

(1,704

)

Balance at September 29, 2023

 

$

6,400

 
v3.23.3
Segment Reporting
 9 Months Ended
Sep. 29, 2023
Segment Reporting [Abstract]  
Segment Reporting

Note 9: Segment Reporting

The Company has two reportable operating segments based on two primary areas of service. The Engineering and Other Scientific segment is a broad service group providing technical consulting in different practices primarily in engineering. The Environmental and Health segment provides services in the areas of environmental, epidemiology and health risk analysis. This segment provides a wide range of consulting services relating to environmental hazards and risks and the impact on both human health and the environment. Our Chief Executive Officer, the chief operating decision maker, reviews revenues and operating income for each of our reportable segments, but does not review total assets in evaluating segment performance and capital allocation.

Segment information for the three and nine months ended September 29, 2023 and September 30, 2022 follows:

Revenues

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

110,857

 

 

$

107,403

 

 

$

344,552

 

 

$

321,168

 

Environmental and Health

 

 

22,479

 

 

 

19,776

 

 

 

69,314

 

 

 

64,770

 

Total revenues

 

$

133,336

 

 

$

127,179

 

 

$

413,866

 

 

$

385,938

 

 

 

Operating Income

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

38,734

 

 

$

39,385

 

 

$

121,064

 

 

$

117,907

 

Environmental and Health

 

 

7,475

 

 

 

6,378

 

 

 

22,550

 

 

 

21,059

 

Total segment operating income

 

 

46,209

 

 

 

45,763

 

 

 

143,614

 

 

 

138,966

 

Corporate operating expense

 

 

(12,276

)

 

 

(8,950

)

 

 

(50,686

)

 

 

(20,159

)

Total operating income

 

$

33,933

 

 

$

36,813

 

 

$

92,928

 

 

$

118,807

 

 

 

Certain operating expenses are excluded from the Company’s measure of segment operating income. These expenses include costs associated with its human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with its deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in its allowance for contract losses and doubtful accounts.

Capital Expenditures

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

541

 

 

$

870

 

 

$

3,210

 

 

$

3,050

 

Environmental and Health

 

 

25

 

 

 

48

 

 

 

139

 

 

 

104

 

Total segment capital expenditures

 

 

566

 

 

 

918

 

 

 

3,349

 

 

 

3,154

 

Corporate capital expenditures

 

 

1,248

 

 

 

1,172

 

 

 

13,893

 

 

 

6,387

 

Total capital expenditures

 

$

1,814

 

 

$

2,090

 

 

$

17,242

 

 

$

9,541

 

 

 

Certain capital expenditures associated with the Company’s corporate cost centers and the related depreciation are excluded from the Company’s segment information.

 

Depreciation and Amortization

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

1,750

 

 

$

1,108

 

 

$

4,428

 

 

$

3,301

 

Environmental and Health

 

 

53

 

 

 

41

 

 

 

155

 

 

 

124

 

Total segment depreciation and
   amortization

 

 

1,803

 

 

 

1,149

 

 

 

4,583

 

 

 

3,425

 

Corporate depreciation and amortization

 

 

558

 

 

 

574

 

 

 

1,952

 

 

 

1,799

 

Total depreciation and amortization

 

$

2,361

 

 

$

1,723

 

 

$

6,535

 

 

$

5,224

 

 

No single client comprised more than 10% of the Company’s revenues during the three and nine months ended September 29, 2023. One client comprised 16% of the Company’s revenues during the three months ended September 30, 2022. The same client comprised 15% of the Company's revenue during the nine months ended September 30, 2022.

v3.23.3
Leases
 9 Months Ended
Sep. 29, 2023
Leases [Abstract]  
Leases

Note 10: Leases

The Company determines if an arrangement is a lease at the inception of the arrangement. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. The Company does not have any finance leases as of September 29, 2023.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The amortization of operating lease ROU assets and the change in operating lease liabilities is disclosed as a single line item in the condensed consolidated statements of cash flows.

The Company leases office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Hong Kong, Singapore, Switzerland, and the United Kingdom. Leases for these office, laboratory, and storage facilities have terms generally ranging between one and ten years. Some of these leases include options to extend or terminate the lease, none of which are currently included in the lease term as the Company has determined that exercise of these options is not reasonably certain.

 

The Company has a Test and Engineering Center on 147 acres of land in Phoenix, Arizona. The Company leases this land from the state of Arizona under a 30-year lease agreement that expires in January of 2028 and has options to renew for two fifteen-year periods. As of September 29, 2023, the Company has determined that exercise of the renewal options is not reasonably certain and thus the extension is not included in the lease term.

The Company’s equipment leases are included in the ROU asset and liability balances, but are not material.

The Company leases excess space in its Silicon Valley and Natick facilities. Rental income of $882,000 and $739,000 was included in other income for the three months ended September 29, 2023 and September 30, 2022, respectively. Rental income of $2,491,000 and $2,157,000 was included in other income for the nine months ended September 29, 2023 and September 30, 2022, respectively.

The components of lease expense included in other operating expenses on the condensed consolidated statements of income were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Operating lease cost

 

$

2,094

 

 

$

1,681

 

 

$

5,659

 

 

$

5,247

 

Variable lease cost

 

 

378

 

 

 

274

 

 

 

1,251

 

 

 

913

 

Short-term lease cost

 

 

256

 

 

 

194

 

 

 

937

 

 

 

425

 

 

 

Supplemental cash flow information related to operating leases was as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29, 2023

 

 

September 30, 2022

 

 

September 29, 2023

 

 

September 30, 2022

 

Cash paid for amounts included in the
   measurement of operating lease
   liabilities

 

$

1,715

 

 

$

1,518

 

 

$

5,516

 

 

$

5,083

 

 

 

Supplemental balance sheet information related to operating leases was as follows:

 

 

 

September 29,
2023

 

December 30,
2022

Weighted Average Remaining Lease Term

 

6.4 years

 

4.1 years

Weighted Average Discount Rate

 

5.1%

 

4.3%

 

 

Maturities of operating lease liabilities as of September 29, 2023:

 

 

 

Operating

 

(In thousands)

 

Leases

 

2023 (excluding the nine months ended September 29, 2023)

 

 

1,699

 

2024

 

 

6,669

 

2025

 

 

5,763

 

2026

 

 

4,945

 

2027

 

 

4,336

 

2028

 

 

1,860

 

Thereafter

 

 

8,099

 

Total lease payments

 

$

33,371

 

Less imputed interest

 

 

(5,707

)

Total lease liability

 

$

27,664

 
v3.23.3
Contingencies
 9 Months Ended
Sep. 29, 2023
Commitments and Contingencies Disclosure [Abstract]  
Contingencies

Note 11: Contingencies

During the second quarter of 2023, a client requested a concession in the amount of $2 million related to the Company’s performance on a project. The Company disagrees with the basis for this request for concession and has responded to the client as such. At this time the Company is unable to determine the outcome of this issue, but management believes that it is probable that this matter will not have a material adverse effect on the Company’s business or the condensed consolidated financial statements.

The Company is a party to various legal actions from time to time and may be contingently liable in connection with claims and contracts arising in the normal course of business, the outcome of which the Company believes, after consultation with legal counsel, will not have a material adverse effect on its financial condition, results

of operations or liquidity. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results. All legal costs associated with litigation are expensed as incurred.

v3.23.3
Subsequent Events
 9 Months Ended
Sep. 29, 2023
Subsequent Events [Abstract]  
Subsequent Events

Note 12: Subsequent Events

On October 26, 2023, the Company’s Board of Directors announced a cash dividend of $0.26 per share of the Company’s common stock, payable December 22, 2023, to stockholders of record as of December 8, 2023.
v3.23.3
Basis of Presentation (Policies)
 9 Months Ended
Sep. 29, 2023
Accounting Policies [Abstract]  
Basis of Presentation Basis of Presentation

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three and nine months ended September 29, 2023 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2022, which was filed with the U.S. Securities and Exchange Commission on February 24, 2023.

The unaudited condensed consolidated financial statements include the accounts of Exponent and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates.

v3.23.3
Revenue Recognition (Tables)
 9 Months Ended
Sep. 29, 2023
Revenue Recognition [Abstract]  
Summary of Percent of Revenues

The following table discloses the percentage of the Company’s revenue generated from time and materials contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

61

%

 

 

64

%

 

 

63

%

 

 

63

%

Environmental and Health

 

 

15

%

 

 

14

%

 

 

15

%

 

 

16

%

Total time and materials revenues

 

 

76

%

 

 

78

%

 

 

78

%

 

 

79

%

The following table discloses the percentage of the Company’s revenue generated from fixed price contracts:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering & Other Scientific

 

 

23

%

 

 

21

%

 

 

20

%

 

 

20

%

Environmental and Health

 

 

1

%

 

 

1

%

 

 

2

%

 

 

1

%

Total fixed price revenues

 

 

24

%

 

 

22

%

 

 

22

%

 

 

21

%
v3.23.3
Fair Value Measurements (Tables)
 9 Months Ended
Sep. 29, 2023
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis The fair value of these certain financial assets and liabilities was determined using the following inputs at September 29, 2023:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

53,978

 

 

$

53,978

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

33,928

 

 

 

33,928

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

71,921

 

 

 

71,921

 

 

 

-

 

 

 

-

 

Total

 

$

159,827

 

 

$

159,827

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

107,223

 

 

 

107,223

 

 

 

-

 

 

 

-

 

Total

 

$

107,223

 

 

$

107,223

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
(3)
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

The fair value of these certain financial assets and liabilities was determined using the following inputs at December 30, 2022:

 

 

 

Fair Value Measurements at Reporting Date Using

 

(In thousands)

 

Total

 

 

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities (1)

 

$

52,159

 

 

$

52,159

 

 

$

-

 

 

$

-

 

Fixed income trading securities held in deferred
   compensation plan (2)

 

 

32,851

 

 

 

32,851

 

 

 

-

 

 

 

-

 

Equity trading securities held in deferred compensation
   plan (2)

 

 

67,880

 

 

 

67,880

 

 

 

-

 

 

 

-

 

Total

 

$

152,890

 

 

$

152,890

 

 

$

-

 

 

$

-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan (3)

 

 

101,354

 

 

 

101,354

 

 

 

-

 

 

 

-

 

Total

 

$

101,354

 

 

$

101,354

 

 

$

-

 

 

$

-

 

 

(1)
Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
(2)
Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.
Cash and Cash Equivalents

Cash and cash equivalents consisted of the following as of September 29, 2023:

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

83,121

 

 

$

-

 

 

$

-

 

 

$

83,121

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash equivalents

 

 

53,978

 

 

 

-

 

 

 

-

 

 

 

53,978

 

Total cash and cash equivalents

 

 

137,099

 

 

 

-

 

 

 

-

 

 

 

137,099

 

 

Cash and cash equivalents consisted of the following as of December 30, 2022:

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Classified as current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

109,299

 

 

$

-

 

 

$

-

 

 

$

109,299

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market securities

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash equivalents

 

 

52,159

 

 

 

-

 

 

 

-

 

 

 

52,159

 

Total cash and cash equivalents

 

$

161,458

 

 

$

-

 

 

$

-

 

 

$

161,458

 
v3.23.3
Net Income Per Share (Tables)
 9 Months Ended
Sep. 29, 2023
Earnings Per Share [Abstract]  
Reconciles Shares to Calculate Basic and Diluted Net Income Per Share

The following schedule reconciles the shares used to calculate basic and diluted net income per share:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Shares used in basic per share computation

 

 

51,203

 

 

 

51,492

 

 

 

51,197

 

 

 

51,934

 

Effect of dilutive common stock options
   outstanding

 

 

183

 

 

 

202

 

 

 

195

 

 

 

202

 

Effect of dilutive restricted stock units
   outstanding

 

 

259

 

 

 

314

 

 

 

288

 

 

 

353

 

Shares used in diluted per share
   computation

 

 

51,645

 

 

 

52,008

 

 

 

51,680

 

 

 

52,489

 
v3.23.3
Supplemental Cash Flow Information (Tables)
 9 Months Ended
Sep. 29, 2023
Supplemental Cash Flow Information [Abstract]  
Supplemental Disclosure of Cash Flow Information

The following is supplemental disclosure of cash flow information:

 

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

Cash paid during period:

 

 

 

 

 

 

Income taxes

 

$

27,753

 

 

$

24,349

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Vested stock unit awards issued to settle accrued bonuses

 

 

10,497

 

 

 

10,200

 

Right-of-use asset obtained in exchange for operating lease obligations

 

 

13,803

 

 

 

8,090

 

Leasehold improvements obtained in exchange for right-of-use asset

 

 

3,219

 

 

 

-

 

Accrual for capital expenditures as of period end

 

 

618

 

 

 

846

 
v3.23.3
Accounts Receivable, Net (Tables)
 9 Months Ended
Sep. 29, 2023
Receivables [Abstract]  
Accounts Receivable, Net

At September 29, 2023 and December 30, 2022, accounts receivable, net, was comprised of the following:

 

 

 

September 29,

 

 

December 30,

 

(In thousands)

 

2023

 

 

2022

 

Billed accounts receivable

 

$

135,076

 

 

$

120,212

 

Unbilled accounts receivable

 

 

53,078

 

 

 

56,095

 

Allowance for contract losses and doubtful accounts

 

 

(6,400

)

 

 

(6,193

)

Total accounts receivable, net

 

$

181,754

 

 

$

170,114

 
Reconciliation of Beginning and Ending Amount of Allowance for Contract Losses and Doubtful Accounts

A reconciliation of the beginning and ending amount of the allowance for contract losses and doubtful accounts is as follows (in thousands):

 

Balance at December 30, 2022

 

$

6,193

 

Provision for contract losses and doubtful accounts

 

 

1,911

 

Write-offs

 

 

(1,704

)

Balance at September 29, 2023

 

$

6,400

 
v3.23.3
Segment Reporting (Tables)
 9 Months Ended
Sep. 29, 2023
Segment Reporting [Abstract]  
Segment Reporting Information, by Segment

Segment information for the three and nine months ended September 29, 2023 and September 30, 2022 follows:

Revenues

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

110,857

 

 

$

107,403

 

 

$

344,552

 

 

$

321,168

 

Environmental and Health

 

 

22,479

 

 

 

19,776

 

 

 

69,314

 

 

 

64,770

 

Total revenues

 

$

133,336

 

 

$

127,179

 

 

$

413,866

 

 

$

385,938

 

 

 

Operating Income

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

38,734

 

 

$

39,385

 

 

$

121,064

 

 

$

117,907

 

Environmental and Health

 

 

7,475

 

 

 

6,378

 

 

 

22,550

 

 

 

21,059

 

Total segment operating income

 

 

46,209

 

 

 

45,763

 

 

 

143,614

 

 

 

138,966

 

Corporate operating expense

 

 

(12,276

)

 

 

(8,950

)

 

 

(50,686

)

 

 

(20,159

)

Total operating income

 

$

33,933

 

 

$

36,813

 

 

$

92,928

 

 

$

118,807

 

Capital Expenditures

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

541

 

 

$

870

 

 

$

3,210

 

 

$

3,050

 

Environmental and Health

 

 

25

 

 

 

48

 

 

 

139

 

 

 

104

 

Total segment capital expenditures

 

 

566

 

 

 

918

 

 

 

3,349

 

 

 

3,154

 

Corporate capital expenditures

 

 

1,248

 

 

 

1,172

 

 

 

13,893

 

 

 

6,387

 

Total capital expenditures

 

$

1,814

 

 

$

2,090

 

 

$

17,242

 

 

$

9,541

 

Depreciation and Amortization

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Engineering and Other Scientific

 

$

1,750

 

 

$

1,108

 

 

$

4,428

 

 

$

3,301

 

Environmental and Health

 

 

53

 

 

 

41

 

 

 

155

 

 

 

124

 

Total segment depreciation and
   amortization

 

 

1,803

 

 

 

1,149

 

 

 

4,583

 

 

 

3,425

 

Corporate depreciation and amortization

 

 

558

 

 

 

574

 

 

 

1,952

 

 

 

1,799

 

Total depreciation and amortization

 

$

2,361

 

 

$

1,723

 

 

$

6,535

 

 

$

5,224

 
v3.23.3
Leases (Tables)
 9 Months Ended
Sep. 29, 2023
Leases [Abstract]  
Lease, Cost

The components of lease expense included in other operating expenses on the condensed consolidated statements of income were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29,
2023

 

 

September 30,
2022

 

 

September 29,
2023

 

 

September 30,
2022

 

Operating lease cost

 

$

2,094

 

 

$

1,681

 

 

$

5,659

 

 

$

5,247

 

Variable lease cost

 

 

378

 

 

 

274

 

 

 

1,251

 

 

 

913

 

Short-term lease cost

 

 

256

 

 

 

194

 

 

 

937

 

 

 

425

 
Supplemental Cash Flow Information Related to Operating Lease

Supplemental cash flow information related to operating leases was as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

September 29, 2023

 

 

September 30, 2022

 

 

September 29, 2023

 

 

September 30, 2022

 

Cash paid for amounts included in the
   measurement of operating lease
   liabilities

 

$

1,715

 

 

$

1,518

 

 

$

5,516

 

 

$

5,083

 
Supplemental Balance Sheet Information Related to Operating Lease

Supplemental balance sheet information related to operating leases was as follows:

 

 

 

September 29,
2023

 

December 30,
2022

Weighted Average Remaining Lease Term

 

6.4 years

 

4.1 years

Weighted Average Discount Rate

 

5.1%

 

4.3%
Maturities of Lease Liabilities

Maturities of operating lease liabilities as of September 29, 2023:

 

 

 

Operating

 

(In thousands)

 

Leases

 

2023 (excluding the nine months ended September 29, 2023)

 

 

1,699

 

2024

 

 

6,669

 

2025

 

 

5,763

 

2026

 

 

4,945

 

2027

 

 

4,336

 

2028

 

 

1,860

 

Thereafter

 

 

8,099

 

Total lease payments

 

$

33,371

 

Less imputed interest

 

 

(5,707

)

Total lease liability

 

$

27,664

 
v3.23.3
Revenue Recognition - Summary of Revenues (Detail) - Sales Revenue, Net [Member] - Revenue from Rights Concentration Risk [Member]
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Time And Materials Contracts [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 76.00% 78.00% 78.00% 79.00%
Time And Materials Contracts [Member] | Engineering and Other Scientific [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 61.00% 64.00% 63.00% 63.00%
Time And Materials Contracts [Member] | Environmental and Health [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 15.00% 14.00% 15.00% 16.00%
Fixed Price Contracts [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 24.00% 22.00% 22.00% 21.00%
Fixed Price Contracts [Member] | Engineering and Other Scientific [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 23.00% 21.00% 20.00% 20.00%
Fixed Price Contracts [Member] | Environmental and Health [Member]        
Disaggregation Of Revenue [Line Items]        
Concentration Risk, Percentage 1.00% 1.00% 2.00% 1.00%
v3.23.3
Revenue Recognition - Additional Information (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Revenue Recognition [Abstract]        
Deferred Revenue, Revenue Recognized $ 4,045,000   $ 13,393,000  
Subcontractor Fees Not Included In Revenues $ 2,379,000 $ 6,996,000 $ 10,727,000 $ 18,040,000
v3.23.3
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($)
Sep. 29, 2023
Dec. 30, 2022
Assets    
Trading securities held in deferred compensation plan $ 105,849,000 $ 100,731,000
Total 159,827,000 152,890,000
Liabilities    
Deferred compensation plan 107,223,000 [1] 101,354,000 [2]
Total 107,223,000 101,354,000
Money market securities    
Assets    
Money market securities 53,978,000 [3] 52,159,000 [4]
Fixed income securities    
Assets    
Trading securities held in deferred compensation plan 33,928,000 [5] 32,851,000 [6]
Equity securities    
Assets    
Trading securities held in deferred compensation plan 71,921,000 [5] 67,880,000 [6]
Fair Value, Inputs, Level 1    
Assets    
Total 159,827,000 152,890,000
Liabilities    
Deferred compensation plan 107,223,000 [1] 101,354,000 [2]
Total 107,223,000 101,354,000
Fair Value, Inputs, Level 1 | Money market securities    
Assets    
Money market securities 53,978,000 [3] 52,159,000 [4]
Fair Value, Inputs, Level 1 | Fixed income securities    
Assets    
Trading securities held in deferred compensation plan 33,928,000 [5] 32,851,000 [6]
Fair Value, Inputs, Level 1 | Equity securities    
Assets    
Trading securities held in deferred compensation plan 71,921,000 [5] 67,880,000 [6]
Fair Value, Inputs, Level 2    
Assets    
Total 0 0
Liabilities    
Deferred compensation plan 0 [1] 0 [2]
Total 0 0
Fair Value, Inputs, Level 2 | Money market securities    
Assets    
Money market securities 0 [3] 0 [4]
Fair Value, Inputs, Level 2 | Fixed income securities    
Assets    
Trading securities held in deferred compensation plan 0 [5] 0 [6]
Fair Value, Inputs, Level 2 | Equity securities    
Assets    
Trading securities held in deferred compensation plan 0 [5] 0 [6]
Fair Value, Inputs, Level 3    
Assets    
Total 0 0
Liabilities    
Deferred compensation plan 0 [1] 0 [2]
Total 0 0
Fair Value, Inputs, Level 3 | Money market securities    
Assets    
Money market securities 0 [3] 0 [4]
Fair Value, Inputs, Level 3 | Fixed income securities    
Assets    
Trading securities held in deferred compensation plan 0 [5] 0 [6]
Fair Value, Inputs, Level 3 | Equity securities    
Assets    
Trading securities held in deferred compensation plan $ 0 [5] $ 0 [6]
[1] Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.
[2] Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.
[3] Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
[4] Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.
[5] Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
[6] Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.
v3.23.3
Fair Value Measurements - Cash and Cash Equivalents (Detail) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 30, 2022
Cash    
Fair Value Measurements [Line Items]    
Amortized Cost $ 83,121 $ 109,299
Gross Unrealized Gains 0 0
Gross Unrealized Losses 0 0
Estimated Fair Value 83,121 109,299
Money market securities    
Fair Value Measurements [Line Items]    
Amortized Cost 53,978 52,159
Gross Unrealized Gains 0 0
Gross Unrealized Losses 0 0
Estimated Fair Value 53,978 52,159
Total cash equivalents    
Fair Value Measurements [Line Items]    
Amortized Cost 53,978 52,159
Gross Unrealized Gains 0 0
Gross Unrealized Losses 0 0
Estimated Fair Value 53,978 52,159
Total cash and cash equivalents    
Fair Value Measurements [Line Items]    
Amortized Cost 137,099 161,458
Gross Unrealized Gains 0 0
Gross Unrealized Losses 0 0
Estimated Fair Value $ 137,099 $ 161,458
v3.23.3
Reconciles the Denominators of the Company's Calculation for Basic and Diluted Net Income per Share (Detail) - shares
shares in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Schedule Of Earnings Per Share Basic and Diluted [Line Items]        
Shares used in basic per share computation 51,203 51,492 51,197 51,934
Shares used in diluted per share computation 51,645 52,008 51,680 52,489
Employee Stock Option        
Schedule Of Earnings Per Share Basic and Diluted [Line Items]        
Effect of dilutive stock outstanding 183 202 195 202
Restricted Stock Units (RSUs)        
Schedule Of Earnings Per Share Basic and Diluted [Line Items]        
Effect of dilutive stock outstanding 259 314 288 353
v3.23.3
Net Income Per Share - Additional Information (Detail) - shares
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Earnings Per Share [Abstract]        
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 63,333 0 24,835 0
v3.23.3
Stock-Based Compensation - Additional Information (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Maximum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percentage of annual bonus settled with fully vested restricted stock unit awards     40.00%  
Vested Restricted Stock Awards        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock based compensation, holding period     4 years  
Stock based compensation expense $ 2,583,000 $ 2,606,000 $ 8,242,000 $ 8,133,000
Unvested Restricted Stock        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock based compensation, vesting period     4 years  
Unvested Restricted Stock Awards        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock based compensation expense 2,038,000 1,787,000 $ 8,124,000 7,315,000
Unvested Restricted Stock Awards | Minimum [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Recipient age to expense award on grant date     59 years 6 months  
Employee Stock Option        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock based compensation, vesting period     4 years  
Stock based compensation expense $ 270,000 $ 212,000 $ 811,000 $ 623,000
Share Based Compensation Arrangement By Share Based Payment Award Options Expiration Term     10 years  
Vesting percentage of stock options granted per year     25.00%  
Unvested Stock Options | Minimum [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Recipient age to expense award on grant date     59 years 6 months  
v3.23.3
Deferred Compensation Plans - Additional Information (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Dec. 30, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]          
Trading securities held in deferred compensation plan $ 105,849,000   $ 105,849,000   $ 100,731,000
Deferred compensation plan 107,223,000 [1]   107,223,000 [1]   $ 101,354,000 [2]
Change in market value of trust assets $ (2,769,000) $ (4,925,000) $ 5,271,000 $ (20,884,000)  
Maximum          
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]          
Percentage of compensation deferred     100.00%    
[1] Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.
[2] Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.
v3.23.3
Supplemental Disclosure of Cash Flow Information (Detail) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Cash paid during period:    
Income taxes $ 27,753 $ 24,349
Non-cash investing and financing activities:    
Vested stock unit awards issued to settle accrued bonuses 10,497 10,200
Right-of-use asset obtained in exchange for operating lease obligations 13,803 8,090
Leasehold improvements obtained in exchange for right-of-use asset 3,219  
Accrual for capital expenditures as of period end $ 618 $ 846
v3.23.3
Accounts Receivable, Net (Detail) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 30, 2022
Accounts Notes And Loans Receivable [Line Items]    
Allowance for contract losses and doubtful accounts $ (6,400) $ (6,193)
Total accounts receivable, net 181,754 170,114
Billed accounts receivable    
Accounts Notes And Loans Receivable [Line Items]    
Accounts Receivable 135,076 120,212
Unbilled accounts receivable    
Accounts Notes And Loans Receivable [Line Items]    
Accounts Receivable $ 53,078 $ 56,095
v3.23.3
Accounts Receivable, Net - Reconciliation of Beginning and Ending Amount of Allowance for Contract Losses and Doubtful Accounts (Detail) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Receivables [Abstract]    
Balance at December 30, 2022 $ 6,193  
Provision for contract losses and doubtful accounts 1,911 $ 2,112
Write-offs (1,704)  
Balance at September 29, 2023 $ 6,400  
v3.23.3
Segment Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Segment Reporting Information [Line Items]        
Revenues $ 133,336 $ 127,179 $ 413,866 $ 385,938
Operating Income 33,933 36,813 92,928 118,807
Capital Expenditures 1,814 2,090 17,242 9,541
Depreciation and Amortization 2,361 1,723 6,535 5,224
Operating segments        
Segment Reporting Information [Line Items]        
Operating Income 46,209 45,763 143,614 138,966
Capital Expenditures 566 918 3,349 3,154
Depreciation and Amortization 1,803 1,149 4,583 3,425
Corporate        
Segment Reporting Information [Line Items]        
Operating Income (12,276) (8,950) (50,686) (20,159)
Capital Expenditures 1,248 1,172 13,893 6,387
Depreciation and Amortization 558 574 1,952 1,799
Engineering and Other Scientific | Operating segments        
Segment Reporting Information [Line Items]        
Revenues 110,857 107,403 344,552 321,168
Operating Income 38,734 39,385 121,064 117,907
Capital Expenditures 541 870 3,210 3,050
Depreciation and Amortization 1,750 1,108 4,428 3,301
Environmental and Health | Operating segments        
Segment Reporting Information [Line Items]        
Revenues 22,479 19,776 69,314 64,770
Operating Income 7,475 6,378 22,550 21,059
Capital Expenditures 25 48 139 104
Depreciation and Amortization $ 53 $ 41 $ 155 $ 124
v3.23.3
Segment Reporting - Additional Information (Detail)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Client
Sep. 30, 2022
Client
Sep. 29, 2023
Client
Segment
Sep. 30, 2022
Client
Segment Reporting Information [Line Items]        
Number of reportable operating segments | Segment     2  
Number of clients comprised more than 10% of revenue or accounts receivable 0   0  
Sales Revenue, Net [Member] | Revenue from Rights Concentration Risk [Member] | Minimum [Member]        
Segment Reporting Information [Line Items]        
Concentration Risk, Percentage 10.00%   10.00%  
Sales Revenue, Net [Member] | Revenue from Rights Concentration Risk [Member] | Single Client [Member]        
Segment Reporting Information [Line Items]        
Number of clients comprised more than 10% of revenue or accounts receivable   1   1
Concentration Risk, Percentage   16.00%   15.00%
v3.23.3
Leases - Additional Information (Detail)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
USD ($)
a
Option
State
Sep. 30, 2022
USD ($)
Sep. 29, 2023
USD ($)
a
Option
State
Sep. 30, 2022
USD ($)
Other Income [Member]        
Lessee Lease Description [Line Items]        
Rental Income | $ $ 882,000 $ 739,000 $ 2,491,000 $ 2,157,000
Office, Laboratory, and Storage Space [Member]        
Lessee Lease Description [Line Items]        
Number of States in which Entity Has Lease Arrangements | State 13   13  
Office, Laboratory, and Storage Space [Member] | Minimum        
Lessee Lease Description [Line Items]        
Lessee, Operating Lease, Term of Contract 1 year   1 year  
Office, Laboratory, and Storage Space [Member] | Maximum        
Lessee Lease Description [Line Items]        
Lessee, Operating Lease, Term of Contract 10 years   10 years  
Phoenix Arizona [Member]        
Lessee Lease Description [Line Items]        
Lessee, Operating Lease, Term of Contract 30 years   30 years  
Area of Land | a 147   147  
Number of Options to Renew Lease | Option 2   2  
Lessee, Operating Lease, Renewal Term 15 years   15 years  
v3.23.3
Components of Lease Expense (Detail) - Other Operating Income (Expense) [Member] - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Operating lease cost $ 2,094 $ 1,681 $ 5,659 $ 5,247
Variable lease cost 378 274 1,251 913
Short-term lease cost $ 256 $ 194 $ 937 $ 425
v3.23.3
Supplemental Cash Flow Information Related to Operating Leases (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Leases [Abstract]        
Cash paid for amounts included in the measurement of operating lease liabilities $ 1,715 $ 1,518 $ 5,516 $ 5,083
v3.23.3
Supplemental Balance Sheet Information Related to Operating Leases (Detail)
Sep. 29, 2023
Dec. 30, 2022
Leases [Abstract]    
Weighted Average Remaining Lease Term 6 years 4 months 24 days 4 years 1 month 6 days
Weighted Average Discount Rate 5.10% 4.30%
v3.23.3
Maturities of Lease Liabilities (Detail)
$ in Thousands
Sep. 29, 2023
USD ($)
Leases [Abstract]  
2023 (excluding the nine months ended September 29, 2023) $ 1,699
2024 6,669
2025 5,763
2026 4,945
2027 4,336
2028 1,860
Thereafter 8,099
Total lease payments 33,371
Less imputed interest (5,707)
Total lease liability $ 27,664
v3.23.3
Contingencies - Additional Information (Details)
$ in Millions
 3 Months Ended
Jun. 30, 2023
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Concession amount $ 2
v3.23.3
Subsequent Events - Additional Information (Detail) - $ / shares
 3 Months Ended 9 Months Ended
Oct. 26, 2023
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Subsequent Event [Line Items]          
Cash dividends declared per common share (in dollars per share)   $ 0.26 $ 0.24 $ 0.78 $ 0.72
Subsequent Event          
Subsequent Event [Line Items]          
Cash dividends declared per common share (in dollars per share) $ 0.26        
Dividends Payable, Date Declared Oct. 26, 2023        
Dividends Payable, Date to be Paid Dec. 22, 2023        
Dividends Payable, Date of Record Dec. 08, 2023        
Exponent (NASDAQ:EXPO)
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