EXPO - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Exponent’s Fourth Quarter and Fiscal Year 2018 Earnings Call.

As a reminder today’s conference is being recorded. At this time, I would like to turn the call over to Ms. Whitney Kukulka. Please go ahead.

Whitney Kukulka

operator. you, Thank and ladies Good gentlemen. afternoon, Thank you and Exponent’s quarter us year joining XXXX on fiscal financial fourth call. for results conference Please be will Relations Company’s this on website that corporate Investor the section simultaneously www.exponent.com/investors. at the of note webcast call the without conference prohibited and any is written consent. of taping This property Exponent other or is reproduction call prior expressly

Officer; Johnston, Executive Catherine Chief Executive and Chairman. me the Vice and Joining President President on Paul call Corrigan, today and Chief Financial Rich Executive are Schlenker, Dr. Dr. Officer;

Before but those to may following that involve we discussed here. and remind you discussion contains that I would from uncertainties start, like to, cause opportunities that actual forward-looking not market results and the statements, Exponent’s results financial including, to future risks materially limited differ

call results Operating could discussed differ Price and are based be no filings, or of Executive assumes that statements And can development Exponent or of will conference periodic to actual risks I and Affecting Catherine? in factors Stock the including The Exponent’s call those recent information in Factors forward-looking Results result cause found caption Form Dr. from expectations turn Exponent’s to XX-K. Catherine current now, SEC most Corrigan, forward-looking Market update a and them, obligation today revise otherwise. as new over Officer. whether on statements as in the this to Chief under Additional

Catherine Corrigan

afternoon everyone. good and you Thank

$XXX another market with several of solid review the revenues our XX.X% expanded delivered Rich business In for million, diluted of to $X.XX business and our grew to the of net portion and results us provide EBITDA net financial grew through discussion we of geographies. growth fourth revenues also XX detailed margin XXXX the per points expansion and call. question-and-answer X% share. Paul as year Following the basis of in strategic XXXX, is for outlook. was of will my Exponent year quarter and full a industries more Exponent, earnings for XXXX, performance

pleased quarterly a of are addition we believe to and in $X.XX our execution, repurchase our $XX to increasing performance, our value sheet $X.XX. and the this our to increase in stock demonstrate increased XX% strength actions our $XX In long-term confidence from our million quarter, were We announce our program. to and shareholders. diluted the Following these per $X.XX balance net per million share financial deliver earnings X% commitment to fourth to share revenues dividend

partially project, a comparison offset reflect large due during year-over-year XXXX. human results quarter the the of Our strong by in business areas, a several to challenging factors performance which concluded third

consumer this is the While as interactivity XXXX, clients in want not industry. the anticipate in expanded practice a of our the variety year area with better strong a another of to human mining energy claims. issues between products to and the electronics and demand infrastructure capital services challenges. had to and Exponent innovate for consumer projects with evaluate on consulting their these construction the teams as sectors interdisciplinary technical manufacturability do clients and we growth strategic are clients and Increasingly strong scale factors engaged design industry currently understand large engaged project management we This with face sophisticated also our during products demand users. continued from

environment. of the and chemicals the highly on the engaged assess human to health our the increasing were During regarding concerns year Scientists credentialed impact

compared year quarter move Net the net other and these Company’s continued in we XXXX. expect to strength X% approximately X% quarter grew and fourth revenue. and XXXX represented as Exponent We through XX% in areas XXXX engineering segment in revenues scientific fiscal the XXXX. as of fourth

the to failure failure components. occurs. analysis infrastructure The noteworthy year on science practices. and the firm science, happened of failures disaster material leadership reputation was factors, compared and it creating battery in upon use approximately major was grew technology. science, processes. net food thermal and Exponent’s significant practice quarter For flat and evaluations work the in from by the in year quarter and represented mechanical area world when as the XXXX segment and in products, Company’s These called nanoscale of human determine a engineering Net to environmental performances segment regulation and human had for X% safety chemical health go-to year especially as fiscal driven polymer approximately segment the safety year quarter and in this range were environment. more and the maintained, throughout Exponent the for are revenues its and to of revenue. production subject events fourth XXXX reliable Growth as also to of Chemical advice XX% regulatory as on the XXXX. health structural functional fourth the consultant in what expanded focuses complicated this its its

agricultural of yielded in employees. Exponent equivalent growth hired scientists In they as and effects products often substances an and engineers full-time from changing the We and for exposure engages and the the regulatory enter health we market. navigate required landscape range of X% In consumer work the increased saw products. reactive involving XXXX, a found in incredible to addition, brightest disciplines. advising of questions which complex XXX consultants, clients in to U.S.

summary, pleased healthy areas. Exponent in commitments XXXX. has results we a the growth backlog leverage lengthy for in same our attract the is hired our hires us a with and XXXX. at to of process, talent knowledge technology. for new as These best Ph.D.s serve newest year vast the Our the of with ability practice time concentrated Recruitment and high are thought historical are and entered to allows retain In top leaders our

the adaptable Our business financials of model, unique position, strength market strong relationships. our client and demonstrate

our business our and about will outlook. enthusiastic and for long-term strategy and performance in creation are We provide in detailed us Rich to the more opportunities of achieve review our XXXX financial growth a our value shareholders. confident now before

Rich Schlenker

Thanks, Catherine.

otherwise will me a basis saying Let by all unless that comparisons start year-over-year specified. be on

XXXX, from X% up revenues to fourth or refer to up revenues total Revenues $XX.X were as million. reimbursements $XX.X were of to will net hereon X% I before For quarter the million. them

in Our underlying a quarter $X.XX the a was by of project our which the in growth share Net million the was the $XX of diluted was revenues in digits, or million XXXX. project, of quarter. fourth income high-single the was as per for large to $X.XX fourth X% offset $X.X the ago. but per or year This net quarter completed human third fourth was compared quarter share factors loss in

tax tax a During the fourth recorded Company expense $XX.X to legislation. million the of income quarter related one-time of the XXXX, new

per quarter of income net the $XX.X fourth or $X.XX share Excluding in million was expense, XXXX. this

more our new income on rate. which reduced rates tax a our shortly. the benefited quarter As reminder, net XXXX tax for will from provide consolidated $XX.X I our tax details EBITDA increased the X% million. legislation, to

increased and share, to XXXX net X% diluted revenues X% in income year, million. revenues $X.XX or as share million $XX.X to grew the million, compared year. $XX.X the total $XXX.X for Net per $XXX.X was $X.XX to diluted per XXXX million For or prior

net the $X.XX Excluding income income XXXX one-time per tax share. was $XX.X or million expense,

$X.XX share, XXXX, in realized to per million, diluted new associated with tax the adopted XXXX. in adjustments of for reminder awards. benefit a for as or a share-based million share The compared $X.X per accounting tax standard was or As Exponent XXXX classification $X.X $X.XX

million. third project, concluded increased the EBITDA year revenues hurdle compared in XX% The the $XX.X first, X% net in in full the to of for year accounted third XXXX in large human in quarterly factors the the which second for in The XXXX, to X% For X% in of X.X% quarter, fiscal XXXX. net and a This half as XXXX, the revenues significant from XXXX. X% this the first fourth. project create were and will X%

equal the were prior year. quarter, XXX,XXX, which For billable to the is fourth hours

to For X.X% billable the X.XXX year, hours increased million.

fourth XX.X% year as quarter, the utilization For compared XX.X% was a ago. to

in XXXX, first in for For down first be was a quarter is the in XX.X% of XXs of year to low XX.X% result full conclusion prior the as The quarter the XXXX, the XX.X%, of compared utilization to project. the large utilization as the expected year. of XXXX the from

two start than and fourth associated note points by and took for quarter, which year vacation will we for points. will the fiscal the week have full in XXXX, include X% holidays quarter to extra This are the as an XX a and and basis approximately will slower or Please X.XX% school holiday year. the basis additional extending reduce fourth experienced increase employees the during that into week the as in will we time Additionally, the week year net quarter for year revenues of XXX Year’s further the more the by January. first New vacations, by XXXX normal clients quarter utilization which

impact of week. large XXXX, year be utilization XX% XX%, and to which the full the the to we For includes project expect XXrd the

more continue again offices quarter will Although, in to to full-time mass period utilization the increase expect our we grow we the were our down long-term utilization and same in as build in equivalent and up to critical XXX, Technical proactive practices compared services. be X.X% employees our year, this as XXXX.

X% year, XXX. the full For up FTEs to were

backlog, our the the X.X% approximately headcount X.X% front-loaded of growth sequential with over year. X% result of a As of a to additional hiring we our to first strong an and in then expect quarter recruiting the XXXX remainder be to X%

quarter the continue rate growth. selectively increase approximately to recruit future position meet for company the top was realized and year. demand to will X.XX% and talent We current The for

For expect increase be the XXXX, X% we realized X%. to to rate

XX.X% For the XX basis quarter, points net EBITDA revenue. of margin increased to

year increase we was junior XX.X% because points margin prior full the over basis XX EBITDA greater XXXX, leverage margin EBITDA of utilization For from year. an more although declined increased, staff. got on the

deferred the XXXX. a $X.X for of in loss quarter, is gains a deferred gain Included as adjusting compensation to compared expense of million in X%. compensation compensation losses in grew expense For $X.X million, in total and after compensation

and a are income deferred no miscellaneous losses As impact gains the and line. offset have bottom reminder, in in compensation on

Stock-based as adjusting year, the a the XXXX. deferred quarter $X.X loss increased million was million the $X.X $X.X of for after year X% and of for expense million compensation XXXX. in a compared expense $XX full of to in gain for compensation compensation million For

$X.X stock-based to be $X.X expect million quarters. $X million $X of to we remaining the quarter for million the XXXX, in million and compensation For first to each

million full quarter $XX.X total million quarter in million for year. $X.X fourth $XX.X for Other For million $X.X full expenses million million other increased to of operating X.X% the $X.X Included $XX of is expense X.X% the to operating fourth full and for year. depreciation for the increased year. to in the and the expenses a

XXXX. and million XXXX For the G&A other XXXX, G&A to $X.X range meeting a to expenses million the $X expenses of operating to for in X.X% year. quarter. had to quarter the full million per biannual as we declined managers were $X.X in X.X% $XX.X expenses declined we expect in be million lower

to $X.X expected are expenses be in G&A of XXXX $X.X million the to per For quarter. range million

the million For was quarter. first tax in the awards million benefit from XXXX, share-based $X.X and $X.X

the XXXX, share-based be XXXX is The the value was the shared-based with of price issuance associated XX% quarter tax year. benefit grant we Inclusive awards determined tax awards, $X.X rate and benefit tax dates. the benefit in quarter million awards shares, on that for on of For for for approximately consolidated change stock estimate current share-based for the the year. the of our between will and awards XX.X% Exponent’s full first and share-based from fourth based based the tax

XX.X% the rate of for legislation. For the tax expense tax the year or the new XXXX, was onetime excluding the XX.X% adoption full

XX% for X.X% and we year. rate approximately XXXX, be our For the first the quarter expect tax for to full

quarter flow; and $XX.X $XX.X Boston went million for expenditures Moving million cash to Capital for $XX.X the for $X.X year. flow new for towards which million the the our was and our building. the cash the $XX.X million development full of million operating of quarter area year, were

in be We approximately expect building. complete to to CapEx new in million as million should XXXX XXXX. approximately CapEx the return we $XX $X

an XX% investments. the authorization year, current shares cash we year our equivalents dividend $XXX.X million to a dividends, for our $XX million $XX.X paid additional million. and the repurchased and in for from in increase $X.XX repurchases, $XX.X increasing announced and Exponent Today, in $X.XX, share million XXX,XXX short-term with million, to quarterly ended cash $XX.X approximately During cash,

Chapter Pacific continued financing As same client XX Tuesday, for we but it at filed for is the have has Electric firm. Gas announced previously bankruptcy that of and time discussed, operations. on a secured the PG&E

safe receivables. Exponent’s of safety revenues. believe revenues PG&E ended management, Exponent with PG&E X.X% power. We and the PG&E provides or Exponent million mission million were with $XX.X services $X.X provide XXXX, approximately reliable For our of year management assessment to total from and services. construction critical are PG&E’s integrity to We primarily

services, our remain request optimistic be realized we continues may PG&E some non-essential but about that As to future deferred. demand, projects

by expect as to to full XXXX. to revenues XXXX. points for single reimbursements compared margin as XX digits decline XXXX we is year basis before high in grow EBITDA the basis mid XXX to to expected approximately XXXX, the For compared to points

Our XXXX reflects momentum business offset due outlook Catherine closing remarks. project. turn by a for to the conclusion the partially to of full now for areas, challenging the human positive of the year large in year-over-year will back number I call comparison factors

Catherine Corrigan

arise, Thank Rich. you, failure, world whether Exponent scientific clients advice. or liability on the disaster, recall issue, a complex rely When international manmade sound a construction a or around problems it’s an product technology natural or dispute for

industry services and and Our macroeconomic reputation downturns changes. is in reactive strong insulated relatively us from unique leaves

proven relatively to On the side, to our cycles. regulatory proactive also and services have economic insensitive be design consulting

clients must survive. consulting electronics and of manufacturing cost innovate in consumer, drive to design our device example, continue the and to industries medical out For

the regulatory ability profitability. user chemicals side, large compliant client to and long-term and XXXX a independence clients diverse headwinds we in face completion growth breadth to in due study, Well, of confident sales the the are our a generate base practice benefits our in be areas. we must the Exponent sustainable volume. industry On from of of growth

We company financial strong, are for focused results, stakeholders. and success, on our value creating positioning for delivering the sustainable

the call open now questions. will We Operator? to

Operator

we Thank Foresi Fitzgerald. you. And go take with [Operator first Instructions] caller, ahead. Joseph Please Cantor will our

Joseph Foresi

couple Hi. questions. a wanted different ask just I to of

about than those this like a that fairly year what next one? tough ability And off had Is gap? is you that fill new in First, to think to with we’ve think large and even of comp dealt reasonable roll rolling before. off? there any the reason you’ve kind to a pipeline of project revenues. shown different And through this you’ve that past it the replace contracts manage for is when look How because with do large

Catherine Corrigan

when situations our disciplines it’s them come practices. feel I Yes, time the folks different been concentrated from project, having primarily in Joe strong sort fairly the mean, the on to able of standpoint the past, than we’ve those ability that regard That the where this back particular around is – of these unusual have firm. I to with we’re folks this Catherine. across particular those in to had is from be kinds flow I area. of a into mean, working this folks

Gulf, has for this who think which all time. BP the working the project worked on on at our example, same portfolio side. they’re You in focused was the about, environmental work primarily also of projects instance, In a that folks of those on that

they come able they work is in of there of as participate within that baseline their large a off areas. technical So that are project, level to

projects, that than in hit see which So, the after fell project was as recall a and sort good expected we We out of pause. product size demand quarter look the bit off. demand, the a slower we vehicle might fourth had have we a

as as we sort to quarter. pushed the though strong is early to But into out we we feel fourth disputes and gotten year the construction in the the the generally as opposed feel relatively marketplace, of look Some confident. demand

growth. we that to of digit revenue of the in first we’ll we mid half As high end by deliver of believe to despite able the that sort said, that be the single the the year, year headwinds

Joseph Foresi

give like where that baked you And the a should it before it. with working are original what’s utilization thoughts sort large sounds side, initial about Got Maybe the be I’ve then exit in actually can maybe diligently to into insight your It project, this Rich more every year. resources like margin the guidance. on years, to as fundable. particularly get you do seen your us back year to of the little And to guidance. past

Rich Schlenker

Yes.

we’re – what we’re in down. utilization project about we here stepping if what is only into and talking for in our we of take guidance that account this got revenues full So, the that was – the we’ve is X% you the had that, doing year,

XXX the stepping points. of If XXX stopping, the down basis to talking week, we’re impact about utilization you XXrd exclude about

well, a going to start heavy and think X.X% – I that year our overcome headwind, hurdle a impact. we what off a have here with the we’re So to will

quarter’s we’re through the think the around utilization year But forward indicated, be impact that low can comparisons to it year that move we do year, of we past utilization we we the the As be that come that we the we year, end. going was we achieved think in this levels as gradually, last holidays the even. some to UT we first XXs. that will will at that the see the we move improve that and of and as see tough and we’re going beginning pretty And the and excluding – hopefully vacations to at have be

have, we UT to as year. QX, bit amount next some we get to QX, fourth into be XXrd of think week, of for what there’ll modest that’s non-exempt we a the the So, in heavy impact issue the hopefully and little in quarter QX,

Joseph Foresi

Okay. And than at long had, economically attractive becomes I is you’ve the me, have to work times. having for known the proactive that one more kind But same of ever a then time, company of think, volatile there you the think last also period built-in time. during the for I business defensiveness

how So, for on focusing to your business volatility the and maybe areas you Thanks. could about, side just proactive talk XXXX? reacts what you’re economic

Catherine Corrigan

Joe. Yes, sure.

you going businesses that look, looking an their tightening So, yes, I expect belts, their regard in economic be the to it’s I right. across with think know, their are downturn, to and reasonable proactive to mean, side, clients

at and and continue proactive something develop strong our new have we sales many They so new the gone very innovate consulting the services products some like not down, certainly see when to look concentrated, we’ll to where industry electronics out deliver units. even are you technologies But area they’re selling design if That’s their look consumer you as our at And and things that. services. us. put for to have very, of

look our continue where of And that not with another survive work. say, we’re going have to design place increasing device product of kind consulting proactive and in so They’re that to kind a they’re if the let’s scaling And sales. we population. medical I going it’s to work those our we necessarily an envision when where scenario clients’ rapid have doing And at, environment. aging cycles industry,

of economy. think that’s So – the the independent you when about of and role

a around from there, products happen, be so also again XXX the the products. a And able perspective whether the of order demand ensuring those to XXXX new a the reliability and them safety of innovation those That them. you’re of selling to to in quality, survive has and or

cars So, really disasters – I we’ve to the the in in the things man-made and the really side, don’t stuff flow proactive of are large sorts instances. crash, cycle. recalls, litigation where of economic breaks, seem principles the around had with underlie think And that regard there our thinking kind are the projects, to side those of business. scenarios natural past with those seen We’ve product products those reactive

So their on spend mean again, They certainly is the are tightening, their they legal are. side. I watching belt

we’ve installation immune, shown there we there are is I So the not in but past. some think that

Rich Schlenker

get now, back. services see in growth consulting side, would here. still It was And we an just a provide. and design is a is was I – Also Does services grow though the could, a bit? like was but work double-digit I seen rate a impacted really little add on growth – which back in proactive on time challenge. food we to that XXXX, our mean, that that that XXXX good safety time that just again, through over what area we’ve we in chemical continue that we side – hold was frame Yes, provide Europe food area, lot frame. even that regulatory the the that rate

services, in last chemicals and and growth of the the anything continues there to much regulation see through And continued safety ever-changing cycles. that economic to things so the down in demand at landscape as trade don’t our with world going an to We our there continued is on those the focus regulatory relative environment be year-out time there. we such for a and in really this year-in, see change around slowing

seen those the back it’s time part lot, are largest are we’ve in up ago of that nine, but they really a over our a then that biggest had had businesses XX the those – those proactive still years to we make areas that factors services parts we’ve businesses So what of today. grown we and of play And lot continued or we the things today.

Joseph Foresi

Thank you.

Operator

our take we’ll SunTrust. from Sommer next ahead. And question with Tobey go Please

Tobey Sommer

could are hiring, us to was loaded wondering like in the to give if hiring talk a on your year, color patterns compared or Thanks. us junior you and a little seasoned last I more differences any if could sounded or folks, are recipient? year it frontend about we these biggest historical practices which

Catherine Corrigan

Yes. Thanks Tobey.

recruiting. wise, front have hires university those the So to don’t numbers I most the be in are of going percentage me, of

we are out Ph.D.s, are time focused was looking there these are junior go in of when staff They’re coming recruiting of interesting programs. season. mid senior the It’s But as out some So the is and them to MIT. bringing the we because these hires fall we’re out go the well. that in. it’s When there I folks big in to folks they most Stanford, that’s programs. and typically pulling the the we’re out, the on had certainly big fall, with top

of we’ve the had quarter. And so which seen crop that focus into bumper in coming into organization in fall, the is translates very that recruiting what talent we successful is university first a the a on

we these are areas. high into our growth on much, folks a philosophy So focused in not really change so hiring

here in about help people work the polymer and you electrical them. – take around folks we is done these And in are sciences. folks engineering and the done to have some another, These batteries, people relationship chemicals a toxicology, course, who work demand. of folks develop So in paradigm science, that have think we is of who seeing engineering, areas mechanical good in are thermal we where

but are execution So are the and becoming only business, working that ones they are marketplace. the of the not the in who in ones are because they famous projects, they fact growing on the the developing

the up organization, then of moving getting same, the so the them can developing remains So in strategy they generate the and best paradigm that in, talent, them business.

Tobey Sommer

And been if the in economic for comment have data global I macro Great. Europe, was slows behavior you wondering issue by some you of has the down whether economy, either perceived customers and changes China to things slowing where trade work of you extent any or there that customer demand couple in and you whether phenomenon? the impacted generates

Catherine Corrigan

Sure.

regulatory over or the we there, the plus are projects situation. of the would acute have look kind the had first, our of around situation, regulatory will particular is a a the almost of back of taking to around things to out, to certainly of direct installation of of a I last regard if economy, something Certainly, be look that not have environment that What lot I discussion not taking monitoring because a But coming in affect out a new feeling of are kind that – because of really effects. kind potential pause there macro the uncertainty. that’s we in clearly really of certainly or either with regard to first something and regard. that Significant the unknown, business. any in sort Brexit it with scheme are the our are a seeing minutes or There’s – off that changes that the we And refer the of that it’s there uncertainty that. relative couple business. that UK, client. sort is turns effect. ago in So Europe seen one – that comes tariff and are aware some sort like, of mean, coming the the projects could not I’m it, but they we of specifically

So to developments we regard. that continue in monitor

Tobey Sommer

Okay.

to there Just got two CapEx, XXXX. you any year build respect other the surge that like me. One, for related beyond are maybe outs questions with this notable to Boston,

lift. of – that’s then review, regard? provide infrequent for to us your what you expectations could episode in the color of you XXXX? on revenue could Just think CapEx And extent kind you in us PG&E really give To that’s some that

Rich Schlenker

Yes.

on on places. any back in plans not of and CapEx cookie-cutter area move, have don’t have the view at we this area this in sort we’re strategic move we in here right do our established from would have spend that for shareholders financial time, as something unusual in Silicon number behind that large We back, along really feel for this the an that go Menlo relative cost that is is – Park, a few lease. large be the there. in of area, move CapEx Valley and things now you lease looking schedule. that enough and large repeat a that gotten really such the other years putting the this but here. as side, facility So a side, but to of right the the it. this don’t CapEx did Other something labs is company, do the Boston We warehouse, because building We’ve facility the came storage XXXX facility Boston the We operations acquire to has

organization had client far work we of and improving the sunk side PG&E, in worked in issue electric clearly reliability practices of San quite focus we side. that we very side help event on across Bruno there reasonably historically them with really that such, system and and a relative is both but is got work our not decade around in management our we’ve transmission that that construction distribution on the diversed their that. a capabilities safety to have occurred our are as and gas to turned such, and around – work but last have support system very gas over our the the their other as the lot and the short, of to attention We’ve as our of is over vast we some side, than side, the look business. different safety really set that the electric assess portfolio obviously a of over As falls on work, this much trying done gas that to there the engagements in system. line clients. on that of client is Most projects work a evaluating that any our And a on We’ve in and PG&E teeth integrity

we to at some a how hopeful, same some our and business, is are areas little have Right now, that probably a assessing be So, some. organization their client expectation go that up we will go will forward. down going go also really is but bit, here they our time the

expecting level and short get quarter the we same a at term, the until for So first we’re expectation from of as volume learn relatively business and until really our the into the year something we here have the different new for we to look be different client. don’t

Tobey Sommer

much. very Thank you

Operator

Please And question Sam from come will go our next England Berenberg. ahead. with

Sam England

guys. Hi,

offset talked just percentage And point the expectations a point that whether is wages wage to is rate percentage X you what to about to mainly or it’s wondering XXXX? for due desire increase Just X are inflation whether opportunism? rising

Rich Schlenker

Yes.

A we people of to think of clients’ is clients, market marketplace the got yield overall, value clearly the at engineers lot charge and So of realization absolutely look the that there. on pricing our pricing out our we we – of our of our in which value do and scientists based the raising. from look, with that the what is has

that on for that a blend said, down that’s current junior same more a you we number you actually your When it. realized X% that we basis, our X% X% range. at staff closer of how The year-over-year that the blend to in our are to we employees on occurs increasing. in is as into But employees. your on rate something increase – look to So based

around. up end You coming

annual We effective April have are our raises X. that

rate junior billing be they in increases or got fast, put rises at But rate increase rising that place. we’re current to are level tend or in really fall allows the average of hiring be our below in or wages on They improving. X% again are that wages. average of of increase They we’ve You’ve group. in. that to staff, Those X% average below which at more

our on into higher plus rate the pay of wages The little take pull It that some growth is we’ve people you bonus, what out increase what a to that better that’s gain being out the we junior you go charge overall, well in staff for a relative where and bit to leverage if wages coming price little little with it. factors other depending But still by is. happens compensation. fall So, a increase profitability of depend leverage seen on get headcount able at increase. and of will where

Sam England

just it XXXX? was from them? have hire of And around in following a we that, amount great. a there XXXX is very sort XXXX. of felt so demand pipeline high available, Or on then, in sort Okay, to people or fact of you of should And indication and read that the you decent as and hiring strong that that

Catherine Corrigan

Yes.

is automated demand let’s electronics micro we are example. of emerging transportation that vehicles, the marketplace side technologies, seeing we out out there; we When chemicals, clearly emerge is to the that. areas look mobility, new driving the to, say, look there for So, industry,

in of areas, electric vehicles, price If you’ve components a number the many seen shooters urban different that. any around to of the

match orient every seeing And we the perfectly where the we PhD – so know, candidate hiring right we is we’re can’t thesis marketplace. we because the those away, see And ourselves demand. you the of the job areas toward certainly the of but really pull with certainly

Rich Schlenker

look, headwind Yes, solid. follow to this said, have clearly underlying as We and on we’ve is think think we would I the growth for just X% for quarter. say, the up I first that year the X.X%

those of going that significantly. underlying is growth the really impact an issue we hiring So, see demand, the that part are to still But timing.

you’re you good candidates. as Sometimes described Catherine lot there, out of see really a

not people several six months, but You only nine you these know or be to over really years. over needed recruiting

think business. in. But exact the demand on doesn’t bring in work a in them quarter-to-quarter if basis clearly we process. You didn’t Recruiting long future. our be there them is We wouldn’t hiring the a was timing

the for We’re two. or year next hiring

got think because We’ve some demand to hiring just four to years three out now. there is where from not there profitability us. clearly We’re we or – is important

Sam England

on factors months? last few it generate just large rolling the any the over human of does XXXX to that’s contracts off just from expecting back are then me, of one or zero to client the that And off, that great. you or next tail Okay, XXXX further in we should expect

Catherine Corrigan

Yes.

we continue those. to of with that studies have portfolio human factor to of So type, a respect

of clients a of We have across of and studies that clients, types portfolio factor human studies outside – frankly, well. that as those from broader

So a project client of products that to look relationship the and year or the we single absolutely to expect over around consumer reach issues others that continue last but at two, have users. the that don’t we engagement and we we’ve with scale their between had the

Rich Schlenker

other is in it had to the project growth is think other that what a to our that double-digit level. in This to is underlying of client. low growing. think We a being implies I XXXX high are that as is projects And contributing even It a single-digit we portfolio clients – thing high growth, our those growth and area. with this

one growing comparison. we have this a is high growing as – laid with a challenge with it’s But of client, why we the on and this area with that So sort this growth this others. is, difficult top project it’s of this have that’s

Sam England

Okay, great. Thanks.

Operator

this further time. there no questions at And are

disconnect. your now ladies now, for you and of you participation, Thank conclude does today’s As conference. this and gentlemen, all may

Exponent (EXPO) 31 Jan 192018 Q4 Earnings call transcript