Form 10-Q - Quarterly report [Sections 13 or 15(d)]
August 02 2024 - 4:05PM
Edgar (US Regulatory)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 28, 2024
OR
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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)
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delaware |
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77-0218904 |
(State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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149 COMMONWEALTH DRIVE, MENLO PARK, California |
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94025 |
(Address of principal executive office) |
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(Zip Code) |
(650) 326-9400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
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EXPO |
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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.
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).
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.
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Large accelerated filer |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
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Emerging growth company |
☐ |
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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).
As of July 26, 2024, the latest practicable date, the registrant had 50,730,675 shares of common stock outstanding.
EXPONENT, INC.
FORM 10-Q
TABLE OF CONTENTS
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Page |
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PART I – FINANCIAL INFORMATION |
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3 |
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Item 1. |
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Financial Statements (unaudited): |
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3 |
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Condensed Consolidated Balance Sheets June 28, 2024 and December 29, 2023 |
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3 |
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Condensed Consolidated Statements of Income For the Three and Six Months Ended June 28, 2024 and June 30, 2023 |
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4 |
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Condensed Consolidated Statements of Comprehensive Income For the Three and Six Months Ended June 28, 2024 and June 30, 2023 |
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5 |
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Condensed Consolidated Statements of Stockholders’ Equity For the Three and Six Months Ended June 28, 2024 and June 30, 2023 |
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6 |
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Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 28, 2024 and June 30, 2023 |
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8 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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9 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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19 |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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29 |
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Item 4. |
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Controls and Procedures |
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29 |
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PART II – OTHER INFORMATION |
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30 |
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Item 1. |
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Legal Proceedings |
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30 |
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Item 1A. |
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Risk Factors |
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30 |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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30 |
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Item 3. |
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Defaults Upon Senior Securities |
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30 |
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Item 4. |
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Mine Safety Disclosures |
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30 |
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Item 5. |
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Other Information |
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30 |
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Item 6. |
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Exhibits |
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31 |
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Signatures |
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32 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
EXPONENT, INC.
Condensed Consolidated Balance Sheets
June 28, 2024 and December 29, 2023
(in thousands, except par value)
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June 28, 2024
(Unaudited) |
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December 29,
2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
203,262 |
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$ |
187,150 |
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Accounts receivable, net of allowance for contract losses and doubtful accounts
of $6,161 and $5,281 at June 28, 2024 and December 29, 2023, respectively |
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165,870 |
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167,360 |
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Prepaid expenses and other current assets |
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22,195 |
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25,022 |
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Total current assets |
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391,327 |
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379,532 |
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Property, equipment and leasehold improvements, net of accumulated depreciation and
amortization of $108,647 and $104,011 at June 28, 2024 and December 29, 2023,
respectively |
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73,025 |
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75,318 |
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Operating lease right-of-use assets |
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71,556 |
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24,600 |
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Goodwill |
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8,607 |
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8,607 |
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Deferred income taxes |
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51,560 |
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53,824 |
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Deferred compensation plan assets |
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106,295 |
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101,169 |
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Other assets |
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6,807 |
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3,727 |
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Total assets |
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$ |
709,177 |
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$ |
646,777 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
22,418 |
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$ |
22,125 |
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Accrued payroll and employee benefits |
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90,728 |
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111,773 |
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Deferred revenues |
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13,775 |
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21,709 |
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Operating lease liabilities |
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4,903 |
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6,302 |
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Total current liabilities |
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131,824 |
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161,909 |
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|
|
|
|
Other liabilities |
|
|
5,159 |
|
|
|
3,426 |
|
Deferred compensation plan liabilities |
|
|
108,588 |
|
|
|
103,398 |
|
Operating lease liabilities |
|
|
70,393 |
|
|
|
21,959 |
|
Total liabilities |
|
|
315,964 |
|
|
|
290,692 |
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued
at June 28, 2024 and December 29, 2023 |
|
|
66 |
|
|
|
66 |
|
Additional paid-in capital |
|
|
338,734 |
|
|
|
321,448 |
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
(3,173 |
) |
|
|
(2,977 |
) |
Retained earnings |
|
|
603,373 |
|
|
|
574,082 |
|
Treasury stock, at cost; 14,976 and 15,134 shares held at June 28, 2024
and December 29, 2023, respectively |
|
|
(545,787 |
) |
|
|
(536,534 |
) |
Total stockholders’ equity |
|
|
393,213 |
|
|
|
356,085 |
|
Total liabilities and stockholders’ equity |
|
$ |
709,177 |
|
|
$ |
646,777 |
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
EXPONENT, INC.
Condensed Consolidated Statements of Income
For the Three and Six Months Ended June 28, 2024 and June 30, 2023
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues before reimbursements |
|
$ |
132,434 |
|
|
$ |
129,653 |
|
|
$ |
269,641 |
|
|
$ |
258,358 |
|
Reimbursements |
|
|
8,102 |
|
|
|
10,568 |
|
|
|
15,828 |
|
|
|
22,172 |
|
Revenues |
|
|
140,536 |
|
|
|
140,221 |
|
|
|
285,469 |
|
|
|
280,530 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses |
|
|
79,466 |
|
|
|
82,836 |
|
|
|
169,793 |
|
|
|
167,017 |
|
Other operating expenses |
|
|
11,185 |
|
|
|
10,305 |
|
|
|
21,716 |
|
|
|
19,866 |
|
Reimbursable expenses |
|
|
8,102 |
|
|
|
10,568 |
|
|
|
15,828 |
|
|
|
22,172 |
|
General and administrative expenses |
|
|
6,039 |
|
|
|
6,637 |
|
|
|
11,675 |
|
|
|
12,480 |
|
Total operating expenses |
|
|
104,792 |
|
|
|
110,346 |
|
|
|
219,012 |
|
|
|
221,535 |
|
Operating income |
|
|
35,744 |
|
|
|
29,875 |
|
|
|
66,457 |
|
|
|
58,995 |
|
Other income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
2,231 |
|
|
|
1,593 |
|
|
|
4,857 |
|
|
|
3,363 |
|
Miscellaneous income (expense), net |
|
|
1,707 |
|
|
|
4,785 |
|
|
|
8,791 |
|
|
|
9,433 |
|
Total other income, net |
|
|
3,938 |
|
|
|
6,378 |
|
|
|
13,648 |
|
|
|
12,796 |
|
Income before income taxes |
|
|
39,682 |
|
|
|
36,253 |
|
|
|
80,105 |
|
|
|
71,791 |
|
Income taxes |
|
|
10,455 |
|
|
|
10,505 |
|
|
|
20,736 |
|
|
|
16,919 |
|
Net income |
|
$ |
29,227 |
|
|
$ |
25,748 |
|
|
$ |
59,369 |
|
|
$ |
54,872 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.57 |
|
|
$ |
0.50 |
|
|
$ |
1.16 |
|
|
$ |
1.07 |
|
Diluted |
|
$ |
0.57 |
|
|
$ |
0.50 |
|
|
$ |
1.15 |
|
|
$ |
1.06 |
|
Shares used in per share computations: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
51,111 |
|
|
|
51,255 |
|
|
|
51,059 |
|
|
|
51,193 |
|
Diluted |
|
|
51,517 |
|
|
|
51,692 |
|
|
|
51,475 |
|
|
|
51,694 |
|
Cash dividends declared per common share |
|
$ |
0.28 |
|
|
$ |
0.26 |
|
|
$ |
0.56 |
|
|
$ |
0.52 |
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
EXPONENT, INC.
Condensed Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended June 28, 2024 and June 30, 2023
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
Net income |
|
$ |
29,227 |
|
|
$ |
25,748 |
|
|
$ |
59,369 |
|
|
$ |
54,872 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustments, net of tax |
|
|
14 |
|
|
|
(133 |
) |
|
|
(196 |
) |
|
|
327 |
|
Comprehensive income |
|
$ |
29,241 |
|
|
$ |
25,615 |
|
|
$ |
59,173 |
|
|
$ |
55,199 |
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
EXPONENT, INC
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended June 28, 2024 and June 30, 2023
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Six Months Ended June 28, 2024 |
|
|
|
Common Stock |
|
|
Additional
paid-in |
|
|
Accumulated
other
comprehensive |
|
|
Retained |
|
|
Treasury Stock |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
loss |
|
|
earnings |
|
|
Shares |
|
|
Amount |
|
|
Total |
|
Balance at December 29, 2023 |
|
|
65,707 |
|
|
$ |
66 |
|
|
$ |
321,448 |
|
|
$ |
(2,977 |
) |
|
$ |
574,082 |
|
|
|
15,134 |
|
|
$ |
(536,534 |
) |
|
$ |
356,085 |
|
Employee stock purchase plan |
|
|
- |
|
|
|
- |
|
|
|
450 |
|
|
|
- |
|
|
|
- |
|
|
|
(7 |
) |
|
|
68 |
|
|
$ |
518 |
|
Amortization of unrecognized stock-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
4,026 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
4,026 |
|
Purchase of treasury shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
71 |
|
|
|
(5,466 |
) |
|
$ |
(5,466 |
) |
Foreign currency translation adjustments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(210 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
(210 |
) |
Grant of restricted stock units to settle accrued
bonus |
|
|
- |
|
|
|
- |
|
|
|
10,846 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
10,846 |
|
Settlement of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
(1,797 |
) |
|
|
- |
|
|
|
(720 |
) |
|
|
(159 |
) |
|
|
(4,279 |
) |
|
$ |
(6,796 |
) |
Exercise of stock options |
|
|
- |
|
|
|
- |
|
|
|
41 |
|
|
|
- |
|
|
|
|
|
|
(6 |
) |
|
|
59 |
|
|
$ |
100 |
|
Dividends and dividend equivalent rights |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(14,934 |
) |
|
|
- |
|
|
|
- |
|
|
$ |
(14,934 |
) |
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
30,142 |
|
|
|
- |
|
|
|
- |
|
|
|
30,142 |
|
Balance at March 29, 2024 |
|
|
65,707 |
|
|
$ |
66 |
|
|
$ |
335,014 |
|
|
$ |
(3,187 |
) |
|
$ |
588,570 |
|
|
|
15,033 |
|
|
$ |
(546,152 |
) |
|
$ |
374,311 |
|
Employee stock purchase plan |
|
|
- |
|
|
|
- |
|
|
|
392 |
|
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
48 |
|
|
|
440 |
|
Amortization of unrecognized stock-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
2,495 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,495 |
|
Purchase of treasury shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
(244 |
) |
|
|
(244 |
) |
Foreign currency translation adjustments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
14 |
|
Settlement of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
(78 |
) |
|
|
- |
|
|
|
- |
|
|
|
(7 |
) |
|
|
78 |
|
|
|
- |
|
Exercise of stock options |
|
|
- |
|
|
|
- |
|
|
|
911 |
|
|
|
- |
|
|
|
|
|
|
(48 |
) |
|
|
483 |
|
|
|
1,394 |
|
Dividends and dividend equivalent rights |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(14,424 |
) |
|
|
- |
|
|
|
- |
|
|
|
(14,424 |
) |
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
29,227 |
|
|
|
- |
|
|
|
- |
|
|
|
29,227 |
|
Balance at June 28, 2024 |
|
|
65,707 |
|
|
$ |
66 |
|
|
$ |
338,734 |
|
|
$ |
(3,173 |
) |
|
$ |
603,373 |
|
|
|
14,976 |
|
|
$ |
(545,787 |
) |
|
$ |
393,213 |
|
|
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
EXPONENT, INC
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended June 28, 2024 and June 30, 2023
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Six Months Ended June 30, 2023 |
|
|
|
Common Stock |
|
|
Additional
paid-in |
|
|
Accumulated
other
comprehensive |
|
|
Retained |
|
|
Treasury Stock |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
income (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 |
|
|
- |
|
|
|
- |
|
|
|
517 |
|
|
|
- |
|
|
|
- |
|
|
|
(6 |
) |
|
|
63 |
|
|
|
580 |
|
Amortization of unrecognized stock-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
4,205 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,205 |
|
Foreign currency translation adjustments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
460 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
460 |
|
Grant of restricted stock units to settle accrued bonus |
|
|
- |
|
|
|
- |
|
|
|
10,497 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,497 |
|
Settlement of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
(1,741 |
) |
|
|
- |
|
|
|
(1,009 |
) |
|
|
(178 |
) |
|
|
(7,170 |
) |
|
|
(9,920 |
) |
Exercise of stock options |
|
|
- |
|
|
|
- |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
(8 |
) |
|
|
78 |
|
|
|
100 |
|
Dividends and dividend equivalent rights |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,942 |
) |
|
|
- |
|
|
|
- |
|
|
|
(13,942 |
) |
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
29,124 |
|
|
|
- |
|
|
|
- |
|
|
|
29,124 |
|
Balance at March 31, 2023 |
|
|
65,707 |
|
|
|
66 |
|
|
|
314,502 |
|
|
|
(3,127 |
) |
|
|
542,983 |
|
|
|
14,872 |
|
|
|
(512,568 |
) |
|
|
341,856 |
|
Employee stock purchase plan |
|
|
- |
|
|
|
- |
|
|
|
498 |
|
|
|
- |
|
|
|
- |
|
|
|
(6 |
) |
|
|
65 |
|
|
|
563 |
|
Amortization of unrecognized stock-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
2,422 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,422 |
|
Foreign currency translation adjustments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(133 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(133 |
) |
Settlement of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
(76 |
) |
|
|
- |
|
|
|
- |
|
|
|
(8 |
) |
|
|
76 |
|
|
|
- |
|
Dividends and dividend equivalent rights |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,377 |
) |
|
|
- |
|
|
|
- |
|
|
|
(13,377 |
) |
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,748 |
|
|
|
- |
|
|
|
- |
|
|
|
25,748 |
|
Balance at June 30, 2023 |
|
|
65,707 |
|
|
|
66 |
|
|
|
317,346 |
|
|
|
(3,260 |
) |
|
|
555,354 |
|
|
|
14,858 |
|
|
|
(512,427 |
) |
|
|
357,079 |
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
EXPONENT, INC.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 28, 2024 and June 30, 2023
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
59,369 |
|
|
$ |
54,872 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization of property, equipment and
leasehold improvements |
|
|
4,810 |
|
|
|
4,174 |
|
Provision for contract losses and doubtful accounts |
|
|
2,359 |
|
|
|
1,286 |
|
Stock-based compensation |
|
|
12,917 |
|
|
|
12,286 |
|
Deferred income tax provision |
|
|
2,264 |
|
|
|
1,697 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(869 |
) |
|
|
(7,002 |
) |
Prepaid expenses and other current assets |
|
|
1,769 |
|
|
|
(21 |
) |
Change in operating leases |
|
|
79 |
|
|
|
(657 |
) |
Accounts payable and accrued liabilities |
|
|
2,555 |
|
|
|
(9,116 |
) |
Accrued payroll and employee benefits |
|
|
(18,548 |
) |
|
|
(16,186 |
) |
Deferred revenues |
|
|
(7,934 |
) |
|
|
(7,491 |
) |
Net cash provided by operating activities |
|
|
58,771 |
|
|
|
33,842 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(2,628 |
) |
|
|
(11,116 |
) |
Net cash used in investing activities |
|
|
(2,628 |
) |
|
|
(11,116 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Payroll taxes for restricted stock units |
|
|
(6,796 |
) |
|
|
(9,920 |
) |
Repurchase of common stock |
|
|
(5,710 |
) |
|
|
- |
|
Exercise of stock-based payment awards |
|
|
2,453 |
|
|
|
1,243 |
|
Dividends and dividend equivalents rights |
|
|
(29,776 |
) |
|
|
(27,717 |
) |
Net cash used in financing activities |
|
|
(39,829 |
) |
|
|
(36,394 |
) |
Effect of foreign currency exchange rates on cash and cash equivalents |
|
|
(202 |
) |
|
|
384 |
|
Net change in cash and cash equivalents |
|
|
16,112 |
|
|
|
(13,284 |
) |
Cash and cash equivalents at beginning of period |
|
|
187,150 |
|
|
|
161,458 |
|
Cash and cash equivalents at end of period |
|
$ |
203,262 |
|
|
$ |
148,174 |
|
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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 six months ended June 28, 2024 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 29, 2023, which was filed with the U.S. Securities and Exchange Commission on February 23, 2024 and amended on April 17, 2024.
The unaudited condensed consolidated financial statements include the accounts of Exponent, Inc. and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.
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 |
|
|
Six Months Ended |
|
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
Engineering & Other Scientific |
|
|
62 |
% |
|
|
64 |
% |
|
|
64 |
% |
|
|
64 |
% |
Environmental and Health |
|
|
15 |
% |
|
|
15 |
% |
|
|
16 |
% |
|
|
15 |
% |
Total time and materials revenues |
|
|
77 |
% |
|
|
79 |
% |
|
|
80 |
% |
|
|
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 |
|
|
Six Months Ended |
|
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
|
June 28,
2024 |
|
|
June 30,
2023 |
|
Engineering & Other Scientific |
|
|
22 |
% |
|
|
19 |
% |
|
|
19 |
% |
|
|
19 |
% |
Environmental and Health |
|
|
1 |
% |
|
|
2 |
% |
|
|
1 |
% |
|
|
2 |
% |
Total fixed price revenues |
|
|
23 |
% |
|
|
21 |
% |
|
|
20 |
% |
|
|
21 |
% |
Deferred revenues represent amounts billed to clients in advance of services provided. During the second quarter of 2024, $4,677,000 of revenues were recognized that were included in the deferred revenue balance at March 29, 2024. During the first six months of 2024, $11,296,000 of revenues were recognized that were included in the deferred revenue balance at December 29, 2023.
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 $3,787,000 and $2,598,000 during the second quarter of 2024 and 2023, respectively, and $6,533,000 and $8,349,000 during the first six months of 2024 and 2023, respectively.
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 six months ended June 28, 2024 and June 30, 2023. 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 June 28, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|