- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Exponent, Incoporated Third Quarter of Fiscal Year 2022 Financial Results Conference Call. Today's conference is being recorded. And now at this time, I'd like to turn the conference over to Joni Konstantelos. Please go ahead.

Joni Konstantelos

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

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

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

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

Catherine Ford Corrigan

review EBITDA our organization, outlook, evolving per detailed to and These Exponent's and another grow the call and Thank business ability solid reviewing more quarter model open earnings XXXX uncertainty. quarter third macroeconomic will results for and you, as resiliency will for year-over-year everyone, share. provide strength with we and performance. in delivered an a start and you, ever questions. revenue, of growth business financial challenges despite Exponent demonstrate our thank the then Joni, off our joining us by results will then I Rich of today. and diluted

solve expertise as Exponent critical proactive driven to a As companies health scientific necessary for and for with environment, work safety, remains advisor Demand increasing saw subject wearable they challenges. our utilities, differentiated the sciences Within services, matter engineering reality, and most data push and related to analytics with leverage work to to broad-based demand the automotive profound remains unrivaled innovations we and their help forward our by and our consumer and attention sectors. our technologies strong energy virtual related strong life products, growth storage. expertise

activity traction life safety the related On of side, litigation across and the Overall, our portfolio a recall reactive benefited long-term sciences multidisciplinary a and space. our offering we the strategy. in particularly product from diversified of showcases robust also work strength

technologies. our increased these to demand on detail, by of and our understand Turning augmented clients' the in better work, cognitive saw we impacts proactive the reality side, driven virtual to for more need engagements

and participant We insights also user saw driven product machine to increased learning experience as studies engagements improve to clients on human performance. remain reliant related data and Exponent's

value Importantly, our the has for sciences treatments safety regarding products and the the data increasing sector. life of and furthered work scientific healthcare in need

batteries and in storage, safety space, risk. to supporting energy frameworks work mitigate clients automotive through them the Within advising are our we on

in sustainability. the on still focus to While society's by growth opportunities ongoing see electric vehicles, we related driven early stages, long-term

as impact related storage, electronics long-term by execute including automotive, Overall, to a over several we evolving deliver by are and safety domestic litigation additional remain business ahead we expect included to our international gross health, reactive and consumer well another opportunities product remains as vehicles, quarter devices. the recall Reactive and the which spanning industries, work as digital of experienced engagements strategy. levels, healthy of advanced Our quarter medical related XXXX energy which and growing pharmaceutical we driven time encouraged in we litigation and work. arbitrations,

of XX% third within the in our health strong increased of demand the segments to the quarter. this well company's to engineering life robust across and energy experienced year Turning net segments. driven same in we scientific growth increased Exponent's XX% science revenues expanding consumer revenues represented revenues as litigation revenues as space, X.X%, in and for products, industries, represented Exponent's activity. data in and services prior Exponent’s to other scope as Net Net quarter. period sciences driven in year, prior compared period pharmaceuticals. the of third environmental the the the our Exponent's compared by X.X%, year-over-year engagements segments, in segment work by increased transportation, net several and including health

impact the third the the as health segment prior compared period. year exchange, for increased of net revenue the quarter of XXXX, in and environmental Excluding foreign X.X% to

recruiting committed here retaining at remain Exponent. team world-class to also We and a

While we for attracting and is demand any to we've in team. and for retaining engineering the to ensure have market, competitive scientific improve talent processes our the brightest continued the on talent and our best

Our turnover is decreasing.

we and robust, is candidates depth our and that of to pipeline both add breadth experience roster. seeing exceptional hiring are Our

We but show continue ever our in to not evolving to this acquire, retain environment. talent only ability also

us I'll of business as fourth with and expanding call results, more XXXX. third performance provide attract as outlook turn future, competencies team on on frameworks the conduct through that pillars all uncertainty. ability of imperative environment, year. the safety providing maintain tier raising in-market as to society Exponent's they technical successful a gives product the health and are their for Rich end and clients across an This navigate detail to cycles and services are respond the risk. ongoing to over our to our we macroeconomic to We quarter our our it now whether persevered to quarter gather talent keep is business data need that strategic analysis, that understand in and or regulatory remain look top evident we trying three strategy a of to along full-year volatility to will operations, the As the the confidence and to discuss and portfolio well the advisor has bar of

Richard Schlenker

and Thank afternoon, you, everyone. good Catherine,

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

third to million revenue It or $XXX.X and that hereon the will impacted growth the as revenues should million, $XXX.X revenues quarter by as X.X% million prior before was the to them third (ph) million, XXXX. For Net as noted in increased to from X.X% for year to net exchange. slightly of income be increased an the quarter reimbursements net refer to compared third of foreign third XXXX, compared revenues, to quarter I quarter [X.XXX%] decreased from the period. $XX.X $XX.X total

XX% count as net share increased the share compared result is as a hand, down of other slightly third $XX.X diluted to XX% X.X% ago. to in our exceeded XX%, XXX expenses as than in year-over-year. hours $X.XX, up as a to were in Utilization of our equivalent the were XXXX. margin was points, quarter period to Technical EBITDA same year-over-year for quarter the expectations one to decrease X.X% full-time earnings a Billable share the quarter EBITDA XXXX. increased which the in of margin the as basis per repurchases. the compared the of On X.X%, producing were same third was our from revenues, quarter year third of employees per increase quarter XXX, $X.XX down share lower compared million of third anticipated. an of $XXX,XXX, as quarter

loss to headcount rate of and than exchange lower losses for gains purposes. and $X.X $XXX,XXX realized The expense was quarter the total quarter, Compensation deferred in in for quarter to in in utilization a loss balance was which million, we the Included X.X%. in compared is for adjusting ago a conversion year after expected, expense as growth as third approximately by utilization. consolidation the increase a was foreign slightly As compensation X.X% of offset increased third continue XXXX. bill the compensation deferred of compensation

and increased expenses a compensation gains As compensation and a quarter bottom in of have is primarily XX% deferred million Stock-based and engagement to and expenses for reminder, compared no in up million offset expense line. as on at depreciation operating million, our amortization expense third are to were quarter. the year was income to $X.X $X.X driven impact $X.X Included losses Other million, operating the miscellaneous other the ago. offices. by $X.X employee

loss consolidated to tax interest million higher in the to As was G&A share-based managers quarter XX.X% of of recruiting, rate the by expected, an held at as meeting of expenses up expenses, benefit approximately the and rates. by income quarter, in the Higher compensation was was deferred Inclusive $XXX,XXX. the Miscellaneous XXXX. XX% of Exponent's XX% September. driven for compared the third third G&A awards increase third increase marketing tax net in was The of the generated interest income $XXX,XXX end for quarter. $X.X for Interest expenses as to in-person were well as increased quarter.

to flows. cash our Moving

in quarter, we were quarter, capital through cash third million of million operations of Year-to-date, cash At from distributed million to million repurchase $X.X we During shareholders payments the and and end, the $XX.X quarter's million repurchased third generated common and the million. $XXX.X at dividend $XX.X of price had In average equivalents. stock. company $XX.X an common cash stock $XX.XX. we have of $XXX.X expenditures

our to Turning outlook.

year compared will prior, points points. as to XXX before high basis period the decrease one that in and basis EBITDA same reimbursements the will XXXX, XXX grow of margin to we quarter fourth single-digits anticipate the For mid to revenues

fourth improving XXX quarter XXX XXXX, our we as are basis be XX% X% last As guidance. the in We margin that is a margin to the before expected now quarter, result, and points narrowing to in for and same our will decrease XX% XX% revenues grow XXXX, reimbursements as the compared guidance EBITDA to to Utilization to basis anticipate revenue points. X% year. to full-year will compared

to we XX% utilization XX%, As be the XX.X% to full-year to XXXX. a as result, expect in compared

recruiting to top accelerate tier reminder, compared we talent in expect vacations, of the we remains fourth to full-time X%. recruiting quarter, more As year-over-year quarter. macro we XXXX, to X%, continue and compared equivalent quarters. seasonally to In between priority. quarter, increase sequentially grow retention the to continue we the expect quarter, due third our the bill a be X% rate to the holidays volatile efforts, employees and environment, and fourth this navigate utilization uncertain technical to Throughout to as realized fourth In is a other lower our while

the and $XX.X We full-year. for expect to stock-based $X.X million million $XX.X quarter be to million to in compensation milliion the $X.X

to fourth other expenses million. For operating we the quarter, million to be $X $X.X expect

we our the Collaboration expect $XX.X our development, of which be the on to offices a continuing million work expenses as to ongoing is to teams is from success interdisciplinary by other key For basis. $XX.X to regular million. enhanced full-year, operating is

million. million fourth expect to the we to $X.X $X expenses G&A quarter For be XXXX,

full-year continue recruiting, G&A increase. million. scale business XXXX, $XX.X expect million to and will the $XX.X to as expenses be gradually we travel For development G&A expenses to activities

managers in-person beginning end our which of half third of quarter fourth approximately the straddled the include and the expenses meeting, the these reminder, a As of quarter.

remain rates interest year income prior As quarter we be elevated, period, expect relative approximately fourth to $XXX,XXX. to interest

anticipate income we quarter. addition, $XXX,XXX for the to be approximately In miscellaneous

fourth XXXX implies a XX%, as quarter rate XX.X% XXXX, the the tax expect For compared as ago. same to year quarter This compared in of XX.X%, be a in to XX.X% approximately we to rate our of XXXX. full-year tax

not any awards. based the we For do share benefit of additional anticipate remainder tax XXXX, associated with

benefit $X estimated tax full-year million. the So be to is

a of in from $XX tax awards As we reminder, had XXXX. million share-based benefit

issuance awards to reduce by The the income by awards between share in share-based $X.X the be So the and Capital expected change and is share value million from net will share-based determined per million. by XXXX full-year. benefit for full-year grant this difference $X expenditures diluted is for of $XX earnings tax stakes. the a

for are drive in for now to to turn ability call I profitability remarks. to back have shareholders. Catherine confident delivered the and sustainable another yet will quarter and We results are solid value our pleased long-term closing of

Catherine Ford Corrigan

Thank you, Rich.

our innovate and insights respond ready is their driven business clients paths strategy. on to and changing of ever dynamics, support the deliver market critical clients As rapidly primed data Exponent to that

that our new the We will of engagements both confident pool, for maintaining value maintaining continue industries Exponent's continue our for our strong strong build the sides and by and the long-term Service questions. proactive across to and history high XX-year all to while upon are on flow now offerings ready Overall, will Operator, profitable talent growth business. we Vital growing reactive quality remain of shareholders. we drive

Exponent (EXPO) 27 Oct 222022 Q3 Earnings call transcript