EXPO - Earnings call transcript Q1 2020

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Operator

Good day and welcome to the Exponent’s First Quarter of Fiscal Year 2020 Earnings Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Ms. Whitney Kukulka in the Investor Relations. Please go ahead, ma’am.

Whitney Kukulka

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

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

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

forward-looking filings, found risks Exponent’s Factor XX-K. Additional of otherwise. information whether that on those could including result conference in Form and cause revise the from them, can periodic Exponent’s in new statements call as statements actual Exponent caption SEC this to or The based obligation discussed differ results or developments under and no factors recent today of Risk are in most be update forward-looking as a expectations current to assumes

the Executive turn will to I Corrigan, over Chief now, And Catherine Officer. Dr. Catherine? call

Catherine Corrigan

and a be afternoon, call earnings These Thank all will today. healthy approach I ones are joining of loved we you, hope unprecedented different so, taking you Whitney for safe. good you to everyone. staying commentary. are that and times. Thank our call somewhat and our your

with address challenges business has we our model the our but for we what success. financial are on review you business the of share and quarter, for and will business, doing results the only not today’s strength also that had first associated us to coronavirus the positions impact we long-term the how our call, On pandemic will performance

with strong to pleased are another revenues report earnings. in year-over-year quarter growth We and

despite business operations and compared as related earnings and United certain and revenues of European This began the in $X.XX have share same period that late last January our the areas the our Our year. per $XXX were and of March. to to grew to growth half second $X.XX million Asian impact the to X% revenue occurred our in on coronavirus total States restrictions on operations in earnings

other company’s practices. Exponent’s this industries engineering expertise represented in revenues. its engaged quarter of vehicle segment revenues the across had and our in performances assessments. of for engineering, grew first segment in Multinational X% segment compared risk companies scientific consultants as and XX% the biomedical, Net quarter, XXXX. mechanical biomechanics interdisciplinary and first teams This notable engineering, scientific to net world-class

the Electric and infrastructure Gas management Our quarter in work of fire of related Exponent’s Pacific first X% net for their the revenues risk XXXX. and of integrity electric approximately with to utility

of chemicals represented health grow the segment, in to safety segment and the quarter the of X% in and this first chemical increased food revenues. Within scientists XX% as environmental health effects quarter this evaluated products practice first our human to Exponent’s XXXX. company’s net compared and as and continued segment Net regulation on the new revenues the environment.

the we addressing that over have same analysis employed is and rigor, Exponent fact-based years. XX associated with seriousness, with COVID-XX intellectual challenges for the

problems, to to things: people, three continuing We are clients’ shareholders. by safety our leadership value focused solve and on the delivering and of depressing our demonstrating health most

transportation, of some insurance model of utilities, are Exponent’s adaptable scientific team food. highly business near-term headwinds life serving shape many our Despite and industries and client sciences, in experts, dedicated areas capabilities, base market essential we business, the expected unique including position. Our leading diversified chemicals,

and to business reliability. continues and safety, the to focus resilience as long-term in deliver confident the on sustainability of society growth are our our health, We ability over

ended $XXX the We Exponent million equivalents of short-term cash, entered cash in this crisis quarter and in with strength. position investments. a

We a amid strong our history dividend has payments. have intent Exponent for our continue reiterated all macroeconomic quarterly a turbulence. today, of and track and stakeholders we record long to debt no of delivering

provide that will has responded and the comment now Exponent COVID-XX some seeing about the details are on the we to pandemic business. how I across trends

employees shelter from laboratory home been businesses. since inspection the activities Our for exception and have place the working with essential orders, of initiation in of

infrastructure Our remote business productive day continuity plan empowered have one. from and work robust

majority reputation for development to be to and and working adapt existing to new and clients by of business the relationships. process evolved initiated longstanding inbound based engagements on has remote vast our Our environment a continue our communication

see services customers their an to stay focus on is for strong season at additional market fire to management power We this in utility demand Preparation as are asked while clients sector. driver integrity for continue reliability home.

and chemical strength safety distribute ongoing complex products an Our regulation around comply clients represent continue food the area services must of regulations as with they as to world.

projects At have time, closures due to the spent our little the courthouse our some clients time support because have Very a moved, delays. legal and in slowing consultants’ put is same actually of hold. deadlines we legal on associated testifying litigation have of but portion seen courtrooms, of work

that pleased utilize are beginning to see are trials. and certain technology virtual hearings courts We to to hold

begin a restrictions advantage that a but footprint geographic are shipped, work site ease, restrictions our inspection that as driving competitive of consultants broad of of puts cannot Travel delaying it requires to many a locations. within Exponent’s be distance product as will or be

laboratory reality video are We enable such imaging as inspections increasing virtual XD technologies and our to remote and also streaming, of investigations. use

processes so participants also and while user quickly employees. our on as safety studies, the health paused as possible, can and we of our technologies, This our them pandemic restart has focusing are the and adapting we but that actively implementing designs temporarily study and

committed than to it pandemic. manage ever with where associated Our the thought actionable help are risk experts more especially mitigate and scientific leadership, delivering to can COVID-XX

of are technology physical mitigating use safety of the to occupational examples distancing interdisciplinary industrial risks teams products, our of hygiene workplace re-sterilization disinfectants national signs of diagnostics, including that evaluation potential regulation personal equipment protective across COVID-XX in from performance disinfection include the monitor and and Some to for of PPE illness. and issues Development, seeing and health processes boundaries. medical and the registration

Global optimization analysis of chain are COVID-XX related due failure and to company. claims construction COVID-XX the our supply rates Safety, including failure in related cause and chain analyzing disruptions. litigation exposure. delay documenting and to varied analysis to increased for Strategies impacts of supply root DNA risk analysis product

of For over has times XX advised the in years, across clients Exponent globe crisis.

crisis. to issues We address are to agility demonstrating clients’ demonstrated most the coronavirus compelling pivot our in and have quickly long the our context of we that ability

that continue their to its and and technological that processes grow products raise However, and what continues expectations complexity. health, sustainability to in evidence society is remains for reliability safety,

despite drivers of are XX marketplace. on Exponent’s for macroeconomic retaining focused in to and our have to we led and exceptional We remain the our our years market to remain turbulence. confident talent growth powered long-term These have ensure the mission We demand increasing interdisciplinary of for health our solutions committed increase in our developing that over periods value highly are business. and

in turn financial the call over three to to results activity the now weeks first on of Rich? discuss I’ll Rich business second quarter. quarter to detail first provide and the more our

Rich Schlenker

we surrounding due be our quarter first to Catherine. three the of to you, first provide on unless second discussing performance and quarter weeks or quarter. All I start results in the will Thank then high earnings the uncertainty the travel year and guidance this the comparisons a year-over-year otherwise financial cannot details revenue and business providing of by basis time, reliably pivot specified. on degree for restrictions. will At

respectively. revenues total revenues $XXX of XXXX, and up quarter For the first to X% reimbursements $XX.X were and million before million

quarter, work the wildfires of sale we to beginning first the It their the at of for related infrastructure electric the be revenues. noted should quarter. and approximately our X% German completed power second of integrity management our of PG&E During that generating entity net

design As and previously approximately had strategic inspection were entity million, a this not structural fit. of revenues and services $X annual discussed, its

or I $X.XX first the in realized last was issuance to In $X.X want tax per assure period area for that same or income share million million to diluted Net million $XX.X compared million benefit the or XXXX. $XX.X $X.XX as per as quarter in share-based compared growth of per share year. strategic that $X.X share for Europe $X.XX or remains a the upon awards the per was you $X.XX quarter, for first gains to share Exponent.

as As our a March reminder, program in released shares and part most years four granted are of annually of these compensation later.

issuance As on from The is such, this event. tax grant in first value quarter date. benefit is a awards primarily to the share-based from change based

to $XX for utilization year-over-year. X% the hours as quarter to first first was XX.X%, year were XXX,XXX, X% XX.X% billable quarter quarter, increased a million. for EBITDA the up for ago. compared the

three and Shanghai to step averaged utilization the of weeks week The approximately orders our the of a included by XX the in of final represent Hong week place of our first in shelter the the weeks Kong, quarter For business. final XXth low XX.X%. and week. X% in XX% this which quarter, down

lower first companies. our last caused the consumer primary period businesses on courthouse as the year. the for lab the The XX% as and travel quarter, three the by of closures codes such For are work work due utilization was of for restrictions for same delays average to second pausing utilization weeks compared products to on reasons user XX% restrictions the non-essential studies

our in X.X% mid-XXs as and Technical offering. service and our utilization in full-time XXX, critical employees We the long-term expand the to our more expect in annual continue quarter sequentially. to year-over-year and X% be mass up build were offices equivalent practices, we

resulting second of we to growth slightly still but count head quarter, in For X%. down flat be sequentially, a year-over-year head the count to approximately expect net

building as which candidates, We are business backlog are ready relaxed. a in-person restrictions for of prequalified interviews are

realized we quarter implemented strategic We although the growth. result rate moderated have increases, in a past first of will the of focus similar the rate mix. pricing our to X%. for areas and increase where we the demand was several quarter, as strong in years, year-over-year average hiring, was approximately

comp for of deferred million, expense for gains to deferred compensation after the and for compensation adjusting expense contract losses grew as expense in included X%. in a as compared compensation total $X.X $XX.X is in gains of the line. miscellaneous income and are bottom and quarter expense compensation offset in of the impact losses first an on million XXXX. have reminder, in deferred no a quarter,

in as other in the first of operating X.X% quarter Stock-based for million operating $X.X depreciation expenses increase quarter million million. expense to an included million; XXXX. the of of expense $X.X were is expenses $X.X compensation compared $X.X other was

$X.X of included bad for million expenses an million, extra increase potential an XX.X%. this accrual $X.X were debts. G&A

our both receivables million Today, billed But it reserve a and experienced $X to our increasing sheet in to have material crisis. current not taking by a the bring on AR to for receivables. we are deterioration approach conservative due balance unbilled the we

a as XX% utilization result income to was of the EBITDA which points to compared down net was income interest of same to expense. interest to estimating for last rates, quarter, margin compared revenues, approximately XXXX. we quarter basis Due debt in was interest as bad the be year lower XXXX second the a XXX,XXX steep higher now for XXX,XXX. as a of the in first in and period X,XXX,XXX same period are decline XX

the miscellaneous included million, quarter deferred income compensation $X.X gains. for currency was for for XXX,XXX losses after which foreign adjusting in

second expect for the of to XXX,XXX. miscellaneous income XXXX quarter We be approximately

of tax inclusive rate awards, tax remaining quarter a be for the expect the to rate last our to for for consolidated first the our was XX.X%. the compared we of consolidated XXXX, as tax same quarters negative share-based period X.X% approximately benefit year. X.X%, For

a million for as for operating was our bonuses. $XX.X the of negative to paying quarter. were result expected, out $X.X expenditures cash Moving as million cash flows, the annual quarter flow capital a

year full $X be to million million. $XX we CapEx the For expect XXXX, to

$XX closed first and repurchased price short-term dividends; quarter, paid million in $XXX equivalents and no the debt. $XX.X and average cash, of the million stock in million Exponent an in cash $XX.XX at period investments common with during

and of a sheet available current end and to quarter million $XX the stock dividends tend paying have had We quarterly program. repurchase balance under continue our strong the at

quarter not at year we do know business the to provide and second will not restrictions as able quarter. time, and when Turning travel guidance are or Again, the this evolve. how we for to reliably

wanted we the same for utilization, set, XX% data to share XX% which limited the preliminary a in compared as XXXX. is to weeks three period While averaged

estimate three We for approximately equates decline last to the be If as to quarter the XX%, net this period. revenues XX% were to year. likely utilization the would XX% XX.X% XX%. decline a entire XX% period the second of in revenues EBITDA by the for in then, week to year-over-year net as percentage margin to revenues XX% compared in to year-over-year same decline net

and generate last second year change equivalent the XX bonus of aligned to $X.XX be noted a $X estimate For employees revenues, accrual corresponding pretax exponent’s a of basis maintain decrease in we is EBITDA revenues, third and or million second margin and such, quarter, should profitability. in net pre-bonus that XX increase would points It in desire X% shareholders quarter profits. which to that one net are is EPS. a in their change as to

in per balance Despite the debt it the we quarterly cannot dividend and sustainable $XXX ended continue We duration disruption our sheet. EBITDA Exponent and unprecedented by cash while of share quarter position and revenues, backdrop, in tends million and to model the earnings on magnitude the we of strength. a believe business predict grew cash the in no the quarter first the a payments. we are or has caused with pandemic.

to remarks. back I Catherine will for the turn closing now call

Catherine Corrigan

Thanks, Rich.

business resilient, drivers the market strong. because Our is fundamental remain

will challenges safety, sustainability the processes, resolve regulatory tackle disputes. they bar raise hurdles, that and mitigate and companies face products complex reliability, to society risk As on and continues their innovate health,

While business and business travel based we doing safety and emerge restrictions our and from by our short-term, all the and to the workers, prepared employees health part and the of to firm life’s sheet. this on challenge as in impacting these our our salute on of are a and the incredible for healthcare distancing whom company protect even restrictions, these essential depend We the workers the adhering are we current balance an physical teamwork of strength to the necessities. are as stronger

now are for we questions. Operator, ready

Operator

Tobey our first [Operator from Sommer Instructions] And we’ll SunTrust. with take question

Tobey Sommer

XQ your question the is and and ability, opportunity best deferred in two bucket utilization, Thank in actual you could of destruction? demand kind of to revenue shortfall first primary the versus into My projects buckets, therefore you. Thanks.

Catherine Corrigan

thanks, Yes. Tobey.

engaged, are seeing we we So, of already, I’m in we seeing seeing existing and projects have that of yet, we’ve projects. we hadn’t delay is that cancellations What projects maybe, seeing pleased right. say but we’re been not pausing the to started are are

studies, So, this includes things right. user like our

that we in health of category; Rich that do allow relevant have clients to those participants, paused all general those we Obviously, in to pauses in and with same mentioned, on to in protocols focusing motivation are side, develop but need but get lot us will had work the of the showing a Something our that on kind restrictions and safety the compliance is that of again. the thing. litigation work, of going the

because of settlements for the increased seeing, we’re seeing not closed, courthouses are are of We example the lots are pandemic. What of deferred. cases, things that is because being

Now, very judges trials. instead we trials beginning seen technology. are bench seeing trials jury to a the interestingly, are to of move the clients and We’ve use

to a So, there because legal interesting, all Those certain aspects, the to a of international are and of meeting arena, work of are we larger courthouse. are back is summonings paused. that take it subject arbitration example, There the not where coming sort those jury is tend have in not are requirements the for engagements.

very we’re is different. what seeing So, there

positives, and some things able that, of get then they’re like the going video. they going. but keep video to see travel We’re those go We proceedings seeing because and to them restrictions

inspection. that inspection again, like, those distant For happening is of what’s projects are can on, facilities physically a look we, proceed that and as where be what inspections can example, the seeing places that with and require we’re things paused. types company, for we onsite working but okay, does we protocol those

technology and the up ramping that. We’re things like

is get obviously, with be base the we category. essentially necessarily taking health actively We work moving here, we XX.X% that safety. in on those, precisely in what the good are protecting to news be Tobey, that order resisting will our that again, and know account the into can’t deferred So, client is everyone’s need timing working to work that but

Tobey Sommer

your in What’s time that? using leverage of long-term the balance some the ratio. for different You’ve time? a you. to had a sheet intent Thank to goal getting this execute Is

Rich Schlenker

actions disheartens margins, but We our for that’s we’re Look guarantee believe talking as be repurchases quarter Hopefully, that be. no be as us expended where we I $XX $XX firm to think see we’ll yes, in utilization, growing that million cash that dividends first shareholders that with them overtime And to in our XX% is committed million to do at us. the drop a we it return to we even on may shares. our there’s margins of the direction. to better, we are the repurchasing margins generating about a have at to where good step our we’ll continually cash much fortunate profitability and XX% not at and dividends through even very fact during level is here, XX%

of to dividends execute returning continuing that repurchases to on value comfortable are and shareholders. plan we So, and

Tobey Sommer

Was in concentrated first the there the when month quarter, purchases market – was no volatility? share were Rich. the in March Thanks, those of

Rich Schlenker

They were.

Tobey Sommer

grown decade, perform Perfect. give over Last a be to can think me, the company question proportion you kind how helpful. any total color just to on respect that of you would and services that’s us with the proactive that from last going of is as the do

Catherine Corrigan

Yes.

So, thanks Tobey.

there’s range, the of and projects those about, work of use some proactive products about short-term the the the just chemical and emergency our beyond emergency demands side, talked we’re the safety the to already, strong. season; strengths. utility doing, classified that authorizations related where I quite for to uses. – hurdles On demand there need about side, get be whether had seeing will food longer-term regulatory to to mean, across the I in even we’ve our inflow COVID-XX that’s opportunities, the on directly a we’re When you the is regulation talked remains integrity an in upcoming management, short-term, area I talk example, that right? fire of

areas So these – that’s strength. of are ongoing

We essential things that continue work, in of in around example, to that even things type of the later. the look environment. of comes work when consider I that, so deferred be again, are not at it environment long-term that doing to will this we’re is at world our because of view chemical until are short-term, macroeconomic in those the have the some going for regulatory look industries, there you especially, clearly bar. I proactive feel like the the and consumer to considered products the when side, on the necessarily to When bar up, longer-term. the the nature the the But consequences and our and laboratory

always have that will so we that anticipate And as demand to area. the we drive in in continue that long-term

look is area, that driving of type we’re design regulatory When at framework that We’ve changes there device the been that regulatory consumer seeing, the got in lot consulting are the I on impact of device Still a the medical device doing, Europe. this on medical medical the area. in electronics. primarily the framework in regulatory work. in have you going There’s

in So, products. as belts, we periods to clients which is of sort continue XXXX, believe They still their that, are tightening are what saw recessionary is see in the sort their timeframe. and we what of we innovating even XXXX

believe as need electronics to those machine that And are area. that vehicles more continue that interacting drive would recognition with interface. automated human types interface the and technologies, We’ll to opposed in new way and to with more even touch. that things voice the more of you of to from the that innovation importance We human consumer machine now, the that human

for in to the demand front long-term types and talking in a us. the are have we that of we diverse so services about. very through we’re confident the we of we that pauses short-term manage just From perspective, are having as that the And opportunities do really

Tobey Sommer

Thank you.

Catherine Corrigan

you’re welcome.

Operator

next Blair. question our Andrew Nicholas William now with from We’ll take

Trevor Romeo

similar or Trevor any any if coming taking was for in This �� thus for is I difference was you trends if for in April, utilization detail you trend thank seen there as of wondering you and and on throughout saw kind April far. Romeo what improvements thank a that March revenue you’d also point? my at good questions saw we of decline, you progressed how kind the if this up below providing in gradual just to the afternoon. in Hi, actually you Andrew,

Rich Schlenker

XXth last week stepped for Yes. now, utilization Sure, increments XX% from where I’m weekly some in week details that precision a I in March. can to was that in is dealing the was then But are the saw down week March Again, week, April XX% back everybody, give the to more we saw was we XX%, we XX% third around really utilization to even first XX%, What it I what down to and week. that XX% of share second in as in mentioned XX%, the step-down the which going that. in up XX% here.

in hit don’t being we’ve clearly the a to of between the can hit sort the March third but high-XXs, bottom, hovering we’re a for it So, want last – of when a – the I four last want I to month. you week that that low-XXs last in low-XXs back didn’t all plateau that and to XX% see weeks that the you week through set – XX% least of take that way of at April, in around

and dramatic first restrictions as March, period out. moved back almost That happening of time studies right we sort closed into play we was because probably And there travel of in for in us, March about geographically drop being of user things that revenues things over stepped clearly, X% hold that’s really in tightening some you put up work saw somewhere latter was away. courts of sort – on gradual about got played our jet of of then were part being the immediately. and The

in Shanghai, see, over is components much feed to reporting But and different – of part into data back with And analysis are about we client. testing our in with testing on I again, are over to analyses. was come through our a our of the then to in need but production small business, having challenges in clients Asia. Shanghai. that our deep could that doing our obviously, weeks into full saw I lend and looked over both – up Shanghai, halt and at the stay in for that research the a almost to the being that through we’ve that levels brought dropped that Asia, office began to months, then development up way in zero of into even we’re we work several over higher and step cycles point in are to it in what production had – there. to back all very small when I than seeing business going a order in back at now down did development home in productivity it’s what we What And XXXX. lot that several back

an we example. are an So, we take seeing upswing as there that when

a So, do in the like is that still all help are back testing we saying, of being do what businesses. able as U.S. know slowdown part and was We to not to of in Catherine part for able of those non-essential our some play for and labs testing that that essential, the non-essentials the hopefully, business. but evaluation things will our improve do

Trevor Romeo

for then appreciate Okay. follow-up, just like on And side, detail. level touch areas. head in to to you’re sounds wanted count the of I certain going that certainly Thank my it still you. expense add

there So, manage wait you true expenses board pull we beyond, are is areas this the can near-term there looking where freeze to are be guess, across I other headcount in levers that and you’d compensation, out? to or while the

Catherine Corrigan

Yes. thanks, Trevor.

So, I can one. that take

this particularly becomes like important it’s of always in we all, doing times headcount important company. to performance are And something is that, side, think in I note management the first very the that this. On actively

– and professional are and during staffs on to side fact natural gone clients. to feathering increasing what careers of we their a is ability their sort value very recruiting headcount we to actually time. of our there that of been growth, in they of do to strongly because are but on, that’s this growing for the in in headcount that management – – And has the goal use activities. continue Our the that type has provide bar the performance because our of

courtship It’s for think that it’s recruiting continue We do our long a the to Ph.D. pipeline. process us in important long-term fill to for

So, areas we these work it’s going hold to virtually, quite and a of on practice. recruiting And when strength. pauses food our recruiting safety that a be pipeline lot university activity that’s but of important our continue in currently; to we and to very events in expect eased continue fill we for deferrals have regulation to and chemical point is of

around talent opportunities there the So, that going for bring to other sort is that able if the going to increased find us to kind that are be demand, if we in have there to areas have But around and a well, will realize we of demand time that – our market-by-market in to kind is business of to will be we structural on of right we’re of a is business, that. by it of change area, area then absolutely over that and talents doing head manage sort our business have count. evaluation we

regards been in things non-chargeable non-chargeable natural Now, has travel a meals. like there expenses, to other with decline

able canceled, webinars, thought by most few those quite that. be – right doing like and are of we’re probably, have leaderships, now, Our but events replaced and consultants actually not things to been a those of at aren’t been conferences out have virtual

has related where costs reductions. and declining some there so primarily that’s we And been of there are the realizing

Trevor Romeo

detail. great. Okay. again, all thank Well, you for the

Catherine Corrigan

You’re welcome.

Operator

We now will our take next Marc from Riddick Sidoti. question with

Marc Riddick

Hi, good evening.

Rich Schlenker

Marc. Hey,

Catherine Corrigan

Marc. Hey,

Marc Riddick

much I and first conversation getting that or or those pricing of and were if a relief, way get lines. much business you all it’s for could that the in detail your from helpful. and any trends, you on wondering along I thank provided touch financial you the wanted a pressures of a anything customers So, to whether like you’re certainly around little sense seeing the was very or if all, not of – you

Rich Schlenker

that. we based individual an structure individual’s rate. that in for I we exponent each we same we expending. time they’re on has because beginning decades a established the that the Marc, has value pride consultant our billing And in that each primarily, at firm that – marketplace, the year rate January, on clients their all of charge established really think have seeing is over aren’t that that’s

discount well volume to client a an and to going So not we’re discounts that established level that established we We’ve we’ve it delaying our paid the from what There we’re And decades this industry that rates to clear our our – have, going known on at give on we’re the that in marketplace. is that the exponent most it our work we sure players. them. clients, arrangement sure overall We’ve being clients to financial to individual or in even with as further is communications rate discount is the well getting or going with focused that that our they’re at chart that going more that or small – rate and over doing that, services with making focused are the largest we’re doubt. scope is time. negotiate even we’re our have seen following doing bill in is we’re same the newest on up value them more and that budgets communicating we’re being diligent and clients about will as as overall no that in to in deliver we making become the

doing. are in clients we’re a that approach that top value getting taking what our to the that’s they’re So ensure

Marc Riddick

you side, as you standpoint. technology maybe, And maybe feel sort how when of previously as the time consultants’ the was little And may great. of get what little bit to the of bit done a discuss need to degree for of that the and far home, touch some have I testing how standpoint, where and if how then feel at that to but you sort we prepared Okay, of the reflect other spend process of but if the sort and upgrade a – can that versus thing. little work this, to as about had I you a continuity you working you imagine from want it’s might look transitioning are I just the could in from aspects the technological from mix having then not that in office though and been on did technology being we’re business wanted virtually type you like just to what to

Rich Schlenker

Yes.

going definitely little and over nature. to part off Catherine talk the start it of bit and in talk I’ll operational a question, to then continuity and about about little driven your that’s and in I’m bit that. to latter more So, technology planning hand a cultural business

do business something we work handles That’s director our we of across and our safety business continuity on. It area a goes health transition by that team But important It’s in actually part that well was we do that So, It’s security as driven absolutely of the to team team and director we a that that that the be that Quality, exponent led to place our have it. plan. the continuity. organization. and test, and happened have that is team obviously, can very is needs as IT ensure leads over it’d we technology from that effort. of our that information there

VPN-ing into in We day. a simultaneous or the that That the able coming to were or or day organization remotely. go two. a on connections in XXX from out number X,XXX are That’s be connections our XXX literally within normal road people to of might XXX

back be next able away right in, come on working that. and servers connected everybody fully to the So, on day, doing the was

allow analysts computing organization environments virtual able up our computing, IT to set stuff Our that our visualization do is some who heavier heavier of for and that stuff. people, and visualization

to they or models their running do doing different than would, were things. some doing those types of No able if and that to home. at offsite they We’re work continue night from

office, we need look and place but be high. business feedback the tools to solicit working software have had improve box, being add and In of how has we learned the to sites, been all into continuity otherwise from as that how from our on, continued down the go front that go our you that, their feedback everybody; the people continued very well. We’ve gone tool doing very are – very things been list productive and re-educate expand we’ve to up our would the excellent in collaboration those that the addition our is that on to tools work productivity about in on to and things they they’re on home continued at team if we new use stand and staff

on some our lab said those Catherine slowing that as seen be an of things participants I have is we’ve where just in in need the the a has you to where It’s inspection, some type room, see are you driving we’re long-term want how that maybe, of Catherine, you to in that things work this that of even delays the about the having. things talk study changing or short-term? the court

Catherine Corrigan

yes. Yes,

that add on of on less little Let a me the more side. people to side, the sort bit but technical

interactions on Exponent that’s right? sauce important the this to team this people’s sorts – to the our where engage because is part together business continuity development this on company, quickly projects secret environment, work us also multidisciplinary plan why ability the on development, on to among so our are synergy of and members is programs, other marketing these on very very being And company. business important We’re allowed that of where our of productive, people and remote a are capabilities, pivot to

set an to we’ve technology, share emphasis can teams the in and way community, So, can volunteer the experiences builds We’ve builds employees that the on a that website just quite had to people because work connection their right. of our – together. beyond goes ability up that where builds a type the have that

communication of and be formal a where in that communication cannot video the doing the video. entire lot to both sense long-term that the just that incredibly that hard within working maintain, going been family what’s the be. to been addresses company, we – we of importance company very that of And That employees it’s grateful are are of We’ve I’ve we something because sense informal weekly and is and want team, of gatherings, the to use are that where doing emphasizing, that to for overstated. on. about

have don’t in to But now. being to things have the term, ability people short-term, get of will start our we company demonstrated working a the that back will medium pivot from as a to absolutely to in number We norm, as that anticipate and at home years the normal.

We’re of teamwork this. going going us to be emerge that able to continue to help is to to out have culture really of strongly this

Operator

to now Huseby next is Alexis with Davidson. caller, We’ll who move our D.A.

Alexis Huseby

are your and Rich. Hi, Hope healthy. safe and employees staying Hi, you Catherine.

Catherine Corrigan

to but workforce. we great is hear, continued a That have

Rich Schlenker

Yes.

well. as You

Alexis Huseby

and workforce you. connected feeling company. the engaged with your Give Thank

to I important think how beginning is. we that’s recognize all are that

for you on So, I did question technology. have another

on it courtrooms a sense like of the So, portion using and in projects adjustment technology what seen outside litigation of, business be remotely you some sounds your restrictions you’ve to just basis can travel the if of end company-wide have do regional home comfortably and comes reopening, a will plan or it a timeline? have you on you to work when eventually to conducted from and wondering

Rich Schlenker

So, in over, experts them full first control of to all, things other interact clients, even some ability such is we courtroom utilizing But require we I a those that the depends technologically our mean matter going choose of truly And may involved agreement technology effectively clients with. for with need then and technology the to leader we’re that and in. in our maybe some regulators, to other do present parties we the are that be them of there. what being communicate and the our to committed to findings are judges, times, have is to implement work, and it’s

that be locations we broader others to scan, insights working site. We maybe in are going location to people applications gathering attending out leverage documentation geographic even geographic there. we our quite measurement, we further and can work so a through, in apply with on images, that that it’s diverse and And and that and that done technologies visit areas, can physically inspections, they ensure that can in also able matter scanning can that need, weren’t taking on a though the drone that

you So, add Catherine, want on do to here?

Catherine Corrigan

sort impact. a business much, area kind a of Yes. it’s area it’s very sort – of of by business

it’s were very just that first vibe – is on hunkered like, in our what basis and very relationship in we’re weeks, we and The with ramp. conversations contact but just close the to clients. much now of everybody’s kind very and had, folks we been punch it of terms on in interesting. the We’ve big couple very the we litigation were But much that this Not gut well, hunkered on around the basis, what’s were are are the we side, just this really sounding understand On had down closing a was right. project-by-project – a going been the corner taken courts of turning on in like, down. attitude

backlog do adjusted The down. we’ve we’ve got that staying we’ve a this claims aren’t moving judges disputes need be need and The And and get the to with with and in things again, courts conversations how about now we’ve now be – about the our we resolved. plaintiffs, got system, the that conversations hunkered clients are and who got we’ve right. that got out, to that insurance various paid justice got need because

we, safety technology can the in the inspection because there’s back the health expertise motivation of standpoint not the we as the and the of things have like so or of from inspections, that’s on bring tying play that. to bring we to of only technology And lot And but a the sending can participants, course that, we a Rich there. big of role it said, piece, whether

and can on scientists standpoint, safety to that that. that health because first thought One really this are were very we occupational to and of advise started it the do new to our to really it’s we because that to United occupational areas can what States the managing approach normal trying are like. this we manage so to we called down-ramp. can – lead we on-ramp, that now, related would to impact going a approach there’s area, a this and passive of on accomplish no sort how the within of be is when the It’s health COVID-XX how active companies look we But from sort And just so technological it. able longer about they medicine

Rich Schlenker

one that. onto add last would I thing Yes.

The think, of our I point is on the is of the that and continuing that on. is work the we’re a seeing continuing majority even litigation what work majority at is on still side. we’re that

be is it all, more work likely clients engagement, Some the engagement, them at that is, be and long and the is work the or not lots answers people not of a all what seeing of and taking larger in not to there the longer two because they off the decisions. haul. being to There’s business the to right our is information a make get this do the at month middle slow affected those heard the it to down to we’ve realize and is need going from

So, we’ve been clear that work yes, pause. has some been

it sort tended Some reason be to a to be on clients sort and on of and that to back cases. going issues. those on there’s get issue. might Then, take a individual have of the or chosen types off get cases to no serial It’s are opportunity. That’s of that smaller to midsized continue action class

work is to on majority in on and the depends even of client, how it most trial close continuing. it continues or So, but don’t, practices there that it is some matter the are that the is and depends date such it on hearing that that’s and there,

Alexis Huseby

Do just are hold have that on flow or more that governmental vein, a or at cash and environment say clients you from the hold. it’s in or of into that client’s benefit subject, on then side of if a all, would And any CARES any those sense. issue it’s due or makes aid? on to your in uncertainty put Act sense That perhaps projects being general a Understood. business other is subset on you put insight

Catherine Corrigan

Yes.

Rich Schlenker

Yes.

spending those it, out, get we’ve if revenues it But the for something set all are our doing of work this finding small more. fact projects Sure. make stretched are on hold, are of things investors about of the than remember that many clients to They putting of in they that that large companies. keep look, is very talked realize But just, our along clients. they’re revenue, There the very corporations our majority, companies cost to difficult corporations are majority there. XX% a some others so do our of that large up yes. they XX% So, and Are majority tend environment? and more you because to they just diverse times of the out

or hold lawyers so in cannot that doing as experts in or productive as on of put they efficient. things and And be that that everybody the they period in realize time are they

money that. So, ultimately, them to going it in is save doing

over It had issues officer are every $XXX,XXX feedback is collectability went to business project our incredibly we the that we review there of review strong there? managers, through the strength the with client and we area the reviewing asked and clients outstanding that would got we the players a and industries of of principal our oil automotive our business that And larger be. that some through We’ve we’ve But of an companies. the got for that have. of It in big got ones we’ve X.X% remember doesn’t taking mean, in of that there and gas. are got most are were hit. And only a that receivables are the those

day, end receivables our to your the if even We going the recession deal still the of relative pretty assessment litigation we we’re to clients, hard, we’re through in at fact that’s what in shape quality you of this. is plate. that the the the getting there’s with have So, they’re there good is last the and that saw on hit back the feel

the through your product register need to regulatory still bodies. You

those do things. must You

hiring hunker people put and more litigation, Some can’t can they that on and freeze regulation, it do inside. it that. use a clients down They pull on can do But they but others on outside. means

clients. the But in with variable last ultimately, these they deal quite things. So, it to need was with cycle

Alexis Huseby

makes absolutely both. Thank sense. Great. That you

Catherine Corrigan

Alexis. Thanks,

Operator

with question now our England next Sam We’ll from Berenberg. take

Sam England

guys. Hi,

from a couple Just me.

result of you just some being there’s conversation that COVID-XX. talked opportunities before of wondered I chain of management a if one, as the potential clients impact in any materializing, projects evidence area? any those like started supply coming in First about with any areas

Catherine Corrigan

Sam. Thanks, Yes.

It staff opportunity that’s And it manufacturing are they a they scenario, So, to like having presents They Rich an clients, a support actual Shanghai we’re for them, in and Asia, early us be Kong, little us, them product need or Hong with to of are in to on, our for qualified. and from those reason. unable over that’s suppliers perspective, for type ramp really allows are in their change bit quality on because an up to over who travel, issues going a some where if particular. things about talked to extent in whether They an opportunity is able there really the this in issue. support control had root evaluating failure cause analysis to have that. us some

area pursuing materiality it’s not that while perspective relationships that we clients there we conversations an these that going that now, are with right have. of that moved based as so something the certainly And on but now actively needle has from the our on are are a is – is

Sam England

that we – – on, you not you that discussions. that could that we about at the They’re we’re engagements. the develop maybe, you point time. there’s a of that again, is it’s full talk not because are say have different not areas we’re number could to areas little It had into getting we truly that said, engagements do truly needle, this further – as is something bigger Catherine, the just over here the bit move but truly a

Catherine Corrigan

substances can with of that reg scientific typically engagements met things are to in need labeling regulatory or I like these many where kill hurdles Yes. quite and authorizations, things microorganisms. mean, to that. side that little And biocides utilized are nature. products around busy various actually are on be there elaborate that studies is activity, active Sure. regulatory No. I actual more emergency The use a

ramp existing team as well sort So for the team – U.S. a largest earlier doing just over bit that area safety. that work. both is activity seen that around work as is I our occupational is work probably related health that And up mentioned few weeks. United our advisory and project last that that’s the the of Kingdom we’ve of really little

in with into be have products, actively workforce. they on-ramp health to the their is concerns to of the want manufacturing who again, This time, also particularly their they safety to ensuring are who At be same want and production. the about manufacturing clients sector, and manage able that back

as actively are doing in well. we area So, that work

really important that has been are we’ve very of And the earliest activity seen those, that through. think, come I so areas two

Sam England

inquiries? of you calls, on And Okay, just you business inbound next helpful. question development commented hesitant the be those on another just a just that anything talk the terms to still great. about is then commit moment? Is in you’ve decline to It’s that level more process not been similar that’s slowdown that’s to or inbound based of the it That’s might much how bit being bit the staffing at changing ongoing? seen the could it Thanks. revenue a people really conversation in of

Catherine Corrigan

Yes.

our to lot traveling excellent changed So, in them a out terms cooped is on are a opportunity It in doing dedicating leadership COVID-XX. and our people They capabilities are and But that with be by use out demand ongoing as are done, that closed, be getting yes, meeting, tends the doesn’t so are while not touches attendance those well. ultimately have right? resources to depend really regard are be way. It the technology way information are doing process, that our pitch, using engaged with a right? way had and at we been some clients based focused thing to are we on contact – our we directly. the thought one that on very I engagement and in of employees it clients webinars. a that to business up around We’ve that craving of ensuring to well-articulated is sort hasn’t giving the the our being mean, in to development we’ve of we they’re been and there

coming level rate terms that’s actual Sam. if three see But on is only at to you, what to we likely, are about is In that coming hit flow, the talking and that of we opportunities be an but maybe, terms that – to just – we’re again, for that sort of will it ballpark going numbers utilization. of revenue project and would and for sort using the be in we’re roughly those, XX% this projects, don’t incoming level. of maybe, That’s continuing XX% about of caveat in. weeks know of I probably, engagements in absolutely data the Rich’s

Rich Schlenker

Yes.

we that engagements in, to that seem a in number new that coming volume. is, getting good call means a we a are indication let’s such it week a it’s over of it that while and that we’re XX% because do in through think XXX XX% projects. I hundreds, are slow, It still large getting

getting are new and they have regulatory still wanting get So, have to matter and they’ve in and engaged us evaluated to clients us product litigation new issue us having a got new engaged. that a need and getting engaged, a

get But clarity. that we’re and sure started, again, they’re even engagement’s tomorrow want it to they all want them going of us might getting engagement make only set can. still there’s until super have XX% or that work more and be seeing when sending the others Some that majority to that start clearly XX% and is the us that waiting in

those I is matters way, we come for believe as elapse. will news good because along in think a time us,

Sam England

all me. great. from That’s so much. you Thank Okay,

Rich Schlenker

Thank you.

Operator

as like today question-and-answer And their session for presentation. the for participation. well everyone We as thank that would does conclude to our

You may now disconnect.

Exponent (EXPO) 30 Apr 202020 Q1 Earnings call transcript