• Total Revenue: Approximately flat at $145.5 million for Q1 2025.
• Net Revenue: Approximately flat at $137.4 million compared to Q1 2024.
• Net Income: Decreased to $26.7 million or $0.52 per diluted share, down from $30.1 million or $0.59 per diluted share in Q1 2024.
• EBITDA: Decreased 6% to $37.5 million, with a margin of 27.3% of net revenues.
• Utilization Rate: 75%, approximately flat compared to Q1 2024.
• Billable Hours: Approximately 376,000, a decrease of 4% year over year.
• Average Technical Full-Time Equivalent Employees: 966, a decrease of 4% year over year.
• Stock-Based Compensation Expense: $8.2 million, up from $7.3 million in Q1 2024.
• Other Operating Expenses: Increased 15% to $12.1 million.
• Interest Income: Increased to $2.7 million for Q1 2025.
• Capital Expenditures: $1.8 million for the quarter.
• Dividends and Share Repurchases: $16.4 million distributed through dividends and $5 million in share repurchases.
• Engineering and Scientific Segment Revenue: Represented 84% of revenues before reimbursement, approximately flat for the quarter.
• Environmental and Health Segment Revenue: Represented 16% of revenues before reimbursement, increased 2% for the quarter.

• Warning! GuruFocus has detected 2 Warning Sign with EXPO.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Exponent Inc (NASDAQ:EXPO) exceeded expectations in the first quarter, demonstrating the resilience of its diversified business model.
• The company reported sequential headcount growth of 2%, attributed to lower turnover than expected.
• Exponent Inc (NASDAQ:EXPO) has a strong presence in reactive services, which are less impacted by economic cycles, providing stability.
• The company is strategically positioned to assist clients with shifts in global supply chains, particularly in the consumer electronics industry.
• Exponent Inc (NASDAQ:EXPO) continues to invest in top talent and infrastructure, positioning itself for long-term sustainable growth.

Negative Points

• Revenues were approximately flat year-over-year, indicating limited growth in the first quarter.
• Net income decreased to $26.7 million from $30.1 million in the prior year, reflecting a decline in profitability.
• The company experienced a negative tax impact associated with share-based awards, affecting earnings per share.
• Utilization rates are expected to decline in the second quarter due to holiday impacts and market uncertainties.
• There is ongoing macroeconomic uncertainty, leading to some clients delaying proactive work, impacting revenue growth.

Q & A Highlights

Q: Could you contrast the growth rates in proactive and reactive work this quarter and share the current proportion of reactive work in your portfolio? A: Growth in the reactive business was in the low single digits, offset by a slight decline in proactive services. Currently, about 60% of our work is reactive, with 80% to 90% of that being litigation or dispute-driven.

Q: Have you seen any changes in the pace of proactive work across certain markets recently, particularly with supply chain changes? A: Supply chain disruptions and decisions about using different materials can impact product reliability and safety. Clients are exploring diversification strategies, and we are positioning ourselves to assist them. We have seen some increased demand for evaluations and testing in new manufacturing environments, particularly in life sciences and medical devices.

Q: Could you unpack the second quarter outlook further, especially regarding utilization and any areas of softness? A: Utilization is slightly below last year, partly due to the July 4th holiday. Some areas, like life sciences, are experiencing delays in regulatory processes, and there are uncertainties in proactive testing for consumer products. These factors have impacted forecasts by 100 to 200 basis points.

Q: How do you view the potential impact of macroeconomic factors on customer decision-making? A: While macroeconomic factors like tariffs can impact industries, 60% of our work is reactive and necessary regardless of economic conditions. Proactive work in regulated industries like utilities and chemicals will continue despite disruptions. We have a diverse portfolio that helps us navigate challenging times.

Q: How are you approaching FTE growth in the current environment, and what areas are you focusing on for hiring? A: We are hiring strategically in areas with increasing demand, such as automated vehicles, asset risk, and digital health. We expect to be about 4% ahead in headcount by year-end, closing the gap from the start of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.