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Exponent Reports Second Quarter 2025 Financial Results

1. EXPO reported flat revenues but exceeded expectations in Q2 2025. 2. Net income decreased year-over-year to $26.6 million in Q2 2025. 3. Growth observed in construction, automotive, and medical device sectors. 4. Quarterly dividend of $0.30 announced to be paid on September 19, 2025. 5. Forecast maintains low single-digit revenue growth for fiscal year 2025.

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$68.3308/01 10:41 PM EDTLatest Updated
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FAQ

Why Neutral?

The flat revenue growth meets expectations but lacks strong growth indicators, similar to other firms experiencing flat growth. Past patterns show declining revenues can lead to investor caution despite a dividend.

How important is it?

Despite exceeding revenue expectations, the gradual decline in profitability metrics suggests caution. The dividend decision can attract investors but is offset by lower net income.

Why Short Term?

Near-term outlook suggests modest growth, but potential declines in sector demand could affect profitability quickly, akin to previous fiscal years where Q2 results impacted immediate share prices.

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MENLO PARK, Calif., July 31, 2025 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the second quarter of fiscal year 2025 ended July 4, 2025. “Second quarter revenues were flat but exceeded expectations, reflecting our team’s disciplined execution and resilience in this dynamic environment,” stated Dr. Catherine Corrigan, President and Chief Executive Officer. “We delivered year-over-year growth in dispute-related activities, particularly in the construction, automotive and medical device sectors. Proactive engagements were led by risk management work in the utilities sector, offset by softer demand in chemical regulatory work. We are encouraged by momentum in early-stage work related to digital health, AI usability, and distributed energy systems, all areas with significant growth potential. “Technological innovation continues to drive complexity and safety expectations to new heights. With a solid foundation of talent, deep multidisciplinary expertise, and growing traction in high-potential sectors, we are well positioned to achieve sustainable growth and deliver long-term value for our shareholders,” Dr. Corrigan continued. Second Quarter Financial Results Total revenues and revenues before reimbursements for the second quarter of 2025 increased 1% to $142.0 million and were approximately flat at $132.9 million, respectively, as compared to $140.5 million and $132.4 million in the second quarter of 2024. Net income decreased to $26.6 million, or $0.52 per diluted share, in the second quarter of 2025, as compared to $29.2 million, or $0.57 per diluted share, in the same period of 2024. The tax impact associated with share-based awards was immaterial in the second quarter of 2025. During the second quarter of 2024, we realized a tax benefit associated with share-based awards of $0.7 million, or $0.01 per share. Inclusive of the tax impact associated with share-based awards, Exponent’s consolidated tax rate was 27.9% in the second quarter of 2025, as compared to 26.3% for the same period in 2024. EBITDA1 decreased to $37.0 million, or 27.8% of revenues before reimbursements, in the second quarter of 2025, as compared to $39.9 million, or 30.2% of revenues before reimbursements in the second quarter of 2024. Year-to-Date Financial Results Total revenues and revenues before reimbursements for the first half of 2025 increased 1% to $287.5 million and were approximately flat at $270.3 million, respectively, as compared to $285.5 million and $269.6 million in the same period of 2024. Net income was $53.2 million, or $1.03 per diluted share, in the first half of 2025, as compared to $59.4 million, or $1.15 per diluted share, in the same period of 2024. During the first half of 2025, we realized a negative tax impact associated with share-based awards of $0.5 million or $0.01 per share, as compared to a positive benefit of $1.7 million or $0.03 per share in the first half of 2024. Inclusive of the tax impact associated with share-based awards, Exponent’s consolidated tax rate was 28.7% in the first half of 2025, as compared to 25.9% for the same period last year. EBITDA1 decreased to $74.5 million, or 27.6% of revenues before reimbursements, in the first half of 2025, as compared to $80.1 million, or 29.7% of revenues before reimbursements, in the first half of 2024. In a separate press release today, Exponent announced its quarterly cash dividend of $0.30 to be paid on September 19, 2025, and reiterated its intent to continue to pay quarterly dividends. For the first half of 2025, Exponent paid $31.6 million in dividends, repurchased $32.7 million of common stock, and closed the period with $231.8 million in cash and cash equivalents.  Business Overview Exponent’s engineering and other scientific segment represented 85% of the Company’s revenues before reimbursements in the second quarter and 84% in the first half of 2025. Revenues before reimbursements in this segment increased 1% in both the second quarter and the first half of 2025, as compared to the prior year period. Growth during the quarter was driven by demand for Exponent's dispute related services in the construction, automotive, and medical device sectors. Exponent’s environmental and health segment represented 15% of the Company’s revenues before reimbursements in the second quarter and 16% in the first half of 2025. Revenues before reimbursements in this segment decreased 4% in the second quarter and 1% in the first half of 2025, as compared to the same period in the prior year. The decline during the quarter was related to lower levels of activity for proactive projects in the life sciences sector and our chemical regulatory services. Business Outlook “We are encouraged by the market opportunities across the industries that we serve, and our recruiting activity is driving increases in headcount as we strategically build upon our diversified portfolio of talent and capabilities,” commented Richard Schlenker, Executive Vice President and Chief Financial Officer. “Based on current market demand, we continue to expect growth in the second half of 2025 and are maintaining our full year guidance.” For the third quarter of 2025, as compared to the same period one year prior, Exponent anticipates: Revenues before reimbursements to be up in the mid-single digits; and,EBITDA1 to be 26.75% to 27.75% of revenues before reimbursements. As a reminder, we are returning to a 52-week fiscal year in 2025, which will pose a headwind for full-year comparisons since fiscal 2024 benefitted from a 53rd week. For the full fiscal year 2025 as compared to fiscal year 2024, Exponent anticipates: Revenues before reimbursements to grow in the low single digits; and,EBITDA1 to be 26.50% to 27.0% of revenues before reimbursements. “As our current engagements lay the groundwork for future opportunities, we remain focused on helping our clients navigate an evolving and uncertain landscape. By leveraging the expertise of our world-class team of experts and the breadth of our services portfolio, we are well-positioned to capture future demand and drive sustained long-term growth,” Dr. Corrigan concluded. Today's Conference Call Information Exponent will discuss its financial results in more detail on a conference call today, Thursday, July 31, 2025, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing (844) 481-2781 or (412) 317-0672. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 4464397#. Use of non-GAAP Financial Measures 1 EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation, and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income, and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present, and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. Exponent has provided its outlook regarding EBITDA as a percentage of revenues before reimbursements. The Company has not reconciled this non-GAAP financial measure to the corresponding GAAP financial measure because guidance for the various reconciling items is not provided and the Company is unable to estimate with reasonable certainty the effect of these items without unreasonable effort. For example, the Company is unable to estimate with reasonable certainty the impact of equity awards on Exponent’s taxes without unreasonable effort. These items are uncertain, depend on various factors, and may have a material effect on Exponent’s results computed in accordance with GAAP. A reconciliation between the historical GAAP and non-GAAP financial measures presented in this release is provided in the financial tables at the end of this release. About Exponent Exponent brings together 90+ technical disciplines and 950+ consultants to help our clients navigate the increasing complexity of more than a dozen industries, connecting decades of pioneering work in failure analysis to develop solutions for a safer, healthier, more sustainable world. Exponent's consultants deliver the highest value by leveraging multidisciplinary expertise and resources from across Exponent's offices in North America, Asia, and Europe. Exponent's consultants, laboratories, databases, and computing resources work seamlessly together around the globe, enabling us to produce the breakthrough insights needed to help multinational companies, startups, law firms, insurance companies, governments, and society respond to incidents and push their products and processes forward. Exponent may be reached at (888) 656­-EXPO, info@exponent.com, or www.exponent.com. Forward Looking Statements This news release contains, and incorporates by reference, certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. When used in this document and in the documents incorporated herein by reference, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the possibility that the demand for our services may decline as a result of changes in generally applicable and industry-specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10-K under the heading “Risk Factors” and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements. Source: Exponent, Inc. EXPONENT, INC.  CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three and Six Months Ended July 4, 2025 and June 28, 2024 (unaudited) (in thousands, except per share data)                                  Quarter Ended Six Months Ended        July 4, June 28, July 4, June 28,         2025  2024  2025  2024                Revenues             Revenues before reimbursements $132,868 $132,434 $270,305 $269,641  Reimbursements    9,094  8,102  17,164  15,828                  Revenues    141,962  140,536  287,469  285,469                Operating expenses            Compensation and related expenses  97,474  79,466  173,377  169,793  Other operating expenses   12,072  11,185  24,167  21,716  Reimbursable expenses   9,094  8,102  17,164  15,828  General and administrative expenses  6,145  6,039  11,152  11,675                        124,785  104,792  225,860  219,012                  Operating income   17,177  35,744  61,609  66,457                Other income              Interest income, net   2,344  2,231  5,058  4,857  Miscellaneous income (expense), net  17,294  1,707  7,908  8,791         19,638  3,938  12,966  13,648                  Income before income taxes  36,815  39,682  74,575  80,105                Income taxes     10,262  10,455  21,372  20,736                                 Net income   $26,553 $29,227 $53,203 $59,369                               Net income per share:           Basic    $0.52 $0.57 $1.04 $1.16  Diluted    $0.52 $0.57 $1.03 $1.15                Shares used in per share computations:          Basic     51,185  51,111  51,234  51,059  Diluted     51,502  51,517  51,587  51,475                 EXPONENT, INC.CONDENSED CONSOLIDATED BALANCE SHEETSJuly 4, 2025 and January 3, 2025(unaudited)(in thousands)                             July 4, January 3,          2025   2025     Assets      Current assets:         Cash and cash equivalents  $231,801  $258,901   Accounts receivable, net   171,012   161,407   Prepaid expenses and other assets  22,838   26,573    Total current assets   425,651   446,881  Property, equipment and leasehold improvements, net  71,637   73,007  Operating lease right-of-use asset  72,338   75,248  Goodwill     8,607   8,607  Other assets     181,197   173,527         $759,430  $777,270                Liabilities and Stockholders' Equity     Current liabilities:        Accounts payable and accrued liabilities $25,268  $22,136   Accrued payroll and employee benefits  92,197   119,285   Deferred revenues    11,653   16,369   Operating lease liability   5,851   5,393    Total current liabilities  134,969   163,183  Other liabilities     122,213   116,935  Operating lease liability   74,472   76,084    Total liabilities   331,654   356,202             Stockholders' equity:        Common stock    66   66   Additional paid-in capital   364,304   345,689   Accumulated other comprehensive loss  (2,493)  (3,791)  Retained earnings    646,038   624,151   Treasury stock, at cost   (580,139)  (545,047)    Total stockholders' equity  427,776   421,068         $759,430  $777,270              EXPONENT, INC. EBITDA and EBITDAS (1) For the Three and Six Months Ended July 4, 2025 and June 28, 2024(unaudited)(in thousands)                      Quarter Ended Six Months Ended    July 4, June 28, July 4, June 28,     2025   2024   2025   2024            Net Income $26,553  $29,227  $53,203  $59,369            Add back (subtract):                    Income taxes  10,262   10,455   21,372   20,736  Interest income, net  (2,344)  (2,231)  (5,058)  (4,857) Depreciation and amortization  2,520   2,486   5,012   4,810              EBITDA (1)  36,991   39,937   74,529   80,058             Stock-based compensation  5,246   5,577   13,426   12,917              EBITDAS (1) $42,237  $45,514  $87,955  $92,975                                  (1) EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.           

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