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

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

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

Fourth Quarter Financial Results

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

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

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

Fiscal Year 2019 Financial Results

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

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

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

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

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

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

Business Overview

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

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

Business Outlook

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

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

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, Thursday, February 6, 2020, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (800) 367-2403 or (334) 777-6978. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing (888) 203­1112 or (719) 457-0820 and entering passcode 4507569#.

Footnotes

¹ EBITDA is a non-­GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-­GAAP financial measure defined by the Company as EBITDA before stock-­based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non­-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.  A reconciliation of the measures to GAAP is set forth below.

About Exponent

Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's interdisciplinary organization of scientists, physicians, engineers, and business consultants draws from more than 90 technical disciplines to solve the most pressing and complicated challenges facing stakeholders today. The firm leverages over 50 years of experience in analyzing accidents and failures to advise clients as they innovate their technologically complex products and processes, ensure the safety and health of their users, and address the challenges of sustainability.

Exponent may be reached at (888) 656­EXPO, info@exponent.com, or www.exponent.com.

Forward Looking Statements

This news release contains, and incorporates by reference, certain "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. When used in this document and in the documents incorporated herein by reference, the words “intend,” "anticipate," "believe," "estimate," "expect" and similar expressions, as they relate to the Company or its management, identify such forward-­looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10­K under the heading "Risk Factors" and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements.

Source: Exponent, Inc.

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

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

EXPONENT, INC.
EBITDA and EBITDAS (1)
For the Quarters Ended January 3, 2020 and December 28, 2018
(unaudited)
(in thousands)
							Quarter Ended								Years Ended
							January 3,				December 28,				January 3,				December 28,
								2020				2018				2020				2018
							(14 weeks)				(13 weeks)				(53 weeks)				(52 weeks)
Net Income							$	19,121			$	16,036			$	82,460			$	72,254
Add back (subtract):
	Income taxes							7,685				5,923				21,730				21,063
	Interest income, net							(1,018	)			(938	)			(3,912	)			(2,751	)
	Depreciation and amortization							1,902				1,582				6,806				6,292
		EBITDA (1)						27,690				22,603				107,084				96,858
	Stock-based compensation							3,881				3,388				17,466				16,993
		EBITDAS (1)					$	31,571			$	25,991			$	124,550			$	113,851
(1) EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.