Exponent Reports Third Quarter 2009 Results

• Press Release
• Source: Exponent, Inc.
• On 4:05 pm EDT, Wednesday October 21, 2009

MENLO PARK, Calif., Oct. 21 /PRNewswire-FirstCall/ -- Exponent, Inc. (Nasdaq: EXPO - News) today reported financial results for the third quarter and nine months ended October 2, 2009.

For the third quarter of 2009, total revenues were $55,245,000, as compared to $58,730,000 reported in the third quarter of last year. Revenues before reimbursements were $50,666,000, as compared to $51,751,000 in the third quarter of 2008. Net income for the third quarter of 2009 was $5,833,000, or $0.39 per diluted share, as compared to $5,942,000, or $0.38 per diluted share, in the prior year period. EBITDA(1) was $10,687,000, as compared to $10,704,000 in the third quarter of 2008.

For the first nine months of 2009, total revenues were $175,903,000, as compared to $169,946,000 in the same period of last year. Revenues before reimbursements were $158,026,000, as compared to $154,574,000 in the same period of 2008. Net income was $17,616,000, or $1.17 per diluted share, as compared to $18,082,000, or $1.13 per diluted share, in the prior year period. EBITDA in the first nine months of 2009 was $32,037,000, as compared to $31,823,000 in the first nine months of 2008.

During the third quarter of 2009, Exponent repurchased $4.7 million of its common stock, and closed the third quarter with $57.3 million in cash, cash equivalents and short-term investments.

"For the third quarter revenues before reimbursements, excluding product sales in our defense technology development practice, increased slightly over the same period last year. We are satisfied with this performance, considering the general macroeconomic climate, ongoing softness in the automotive industry, and the winding down of our support of the U.S. Army's Rapid Equipping Force (REF) labs in Iraq and Afghanistan," commented Dr. Paul Johnston, President and CEO. "We are pleased to have delivered higher earnings per share and EBITDA margin, as a result of effectively managing costs and repurchasing shares. Additionally, we had good performances in our mechanics and materials, electrical, and human factors practices, as well as our health sciences group.

"For the fourth quarter of 2009, we believe the demand for our services will remain relatively stable. However, we continue to see a tight corporate spending environment, especially in the automotive industry. While we are no longer supporting REF labs, we are continuing development and field support of the REF's ground penetrating radar program. As a result of these factors, we are still expecting revenues before reimbursements for the full year 2009, to be approximately flat with last year. As a reminder, in 2008 we had high product sales in technology development, a favorable foreign currency exchange rate environment, and an extra week in the fourth quarter.

"Our unique position as a leader in assisting clients to solve their most challenging engineering and scientific problems has allowed our business to remain relatively resilient through this economic downturn. We remain confident in our ability to grow over the long term as we build upon our strong market position and add capabilities that allow us to help our clients with their future technological, health and environmental challenges," concluded Dr. Johnston.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, October 21, 2009, starting at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. The audio on the conference call is available by dialing 877-941-2068 or 480-629-9712. A live webcast of the call will be available on the Investor Relations section of the Company's web site 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 web site, or by dialing 800-406-7325 and entering reservation 4171146#.

About Exponent

Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's multidisciplinary organization of scientists, physicians, engineers, and business consultants brings together more than 90 technical disciplines to address complicated issues facing industry and government today. The firm has been best known for analyzing accidents and failures to determine their causes, but in recent years it has become more active in assisting clients with human health, environmental and engineering issues associated with new products to help prevent problems in the future.

Exponent may be reached at (888) 656-EXPO, info@exponent.com, or www.exponent.com.

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 thereto under) 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. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. When used in this document and in the documents incorporated herein by reference, the words "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 general 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.

(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. A reconciliation of the measures to GAAP is set forth below.

                                   EXPONENT, INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            For the Quarters Ended October 2, 2009 and September 26, 2008
                                     (unaudited)
                        (in thousands, except per share data)




                                      Quarter Ended        Nine Months Ended
                                      -------------        -----------------
                                    October    September   October   September
                                        2,         26,        2,          26,
                                      2009        2008       2009        2008
                                      ----        ----       ----        ----
    Revenues
    --------
      Revenues before
       reimbursements              $50,666     $51,751   $158,026    $154,574
      Reimbursements                 4,579       6,979     17,877      15,372
                                     -----       -----     ------      ------

        Revenues                    55,245      58,730    175,903     169,946
                                    ------      ------    -------     -------

    Operating expenses
    ------------------
      Compensation and
       related expenses             34,571      33,097    107,371      99,804
      Other operating
       expenses                      5,331       5,620     15,917      16,636
      Reimbursable expenses          4,579       6,979     17,877      15,372
      General and
       administrative
       expenses                      2,379       3,346      8,238       9,542

                                    ------      ------    -------     -------
                                    46,860      49,042    149,403     141,354
                                     ------      ------    -------     -------

        Operating income             8,385       9,688     26,500      28,592

    Other income
    ------------
      Interest income, net              93         397        527       1,362
      Miscellaneous income, net      1,209         (43)     2,265         247
                                     -----         ---      -----         ---
                                     1,302         354      2,792       1,609
                                     -----         ---      -----       -----

        Income before
         income taxes                9,687      10,042     29,292      30,201

    Income taxes                     3,854       4,100     11,676      12,119
                                     -----       -----     ------      ------


        Net income                  $5,833      $5,942    $17,616     $18,082
                                    ======      ======    =======     =======


    Net income per share:
    ---------------------
      Basic                          $0.41       $0.40      $1.24       $1.21
      Diluted                        $0.39       $0.38      $1.17       $1.13

    Shares used in
     per share computations:
    ------------------------
      Basic                         14,241      14,736     14,167      14,890
      Diluted                       15,028      15,709     15,029      15,937



                      EXPONENT, INC.
           CONDENSED CONSOLIDATED BALANCE SHEETS
            October 2, 2009 and January 2, 2009
                        (unaudited)
                      (in thousands)
                      ==============


                                    October 2,    January 2,
                                      2009          2009
                                      ----          ----
          Assets
    Current assets:
      Cash and cash equivalents    $48,513       $32,598
      Short-term investments         8,757        24,772
      Accounts
       receivable, net              68,669        62,208
      Prepaid expenses
       and other assets              7,979         6,275
      Deferred income taxes          5,085         4,455
                                     -----         -----
        Total current assets       139,003       130,308
    Property, equipment
     and leasehold
     improvements, net              29,841        31,371
    Goodwill                         8,607         8,607
    Other assets                    18,483        12,804
                                    ------        ------
                                  $195,934      $183,090
                                  ========      ========

          Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable
       and accrued liabilities      $5,148        $6,536
      Accrued payroll and
       employee benefits            28,864        35,528
      Deferred revenues              5,123         6,171
                                     -----         -----
        Total current liabilities   39,135        48,235
    Other liabilities                9,056         4,968
    Deferred rent                    1,459         1,793
                                     -----         -----
        Total liabilities           49,650        54,996
                                    ------        ------

    Stockholders' equity:
      Common stock                      16            16
      Additional paid-in capital    82,763        72,734
      Accumulated other
       comprehensive loss             (296)         (345)
      Retained earnings            136,121       127,127
      Treasury stock, at cost      (72,320)      (71,438)
                                   -------       -------
          Total stockholders'
           equity                  146,284       128,094
                                   -------       -------
                                  $195,934      $183,090
                                  ========      ========



                                EXPONENT, INC.
                           EBITDA and EBITDAS (1)
       For the Quarters Ended October 2, 2009 and September 26, 2008
                                  (unaudited)
                                (in thousands)



                           Quarter Ended          Nine Months Ended
                           -------------          -----------------
                        October     September    October    September
                           2,           26,        2,           26,
                          2009         2008       2009         2008
                          ----         ----       ----         ----

    Net Income          $5,833       $5,942    $17,616      $18,082

    Add back (subtract):

      Income taxes       3,854        4,100     11,676       12,119
      Interest
       income, net         (93)        (397)      (527)      (1,362)
      Depreciation
       and
       amortization      1,093        1,059      3,272        2,984
                         -----        -----      -----        -----

        EBITDA (1)      10,687       10,704     32,037       31,823
                        ------       ------     ------       ------

      Stock-based
       compensation      1,693        1,726      6,437        6,352
                         -----        -----      -----        -----

        EBITDAS (1)    $12,380      $12,430    $38,474      $38,175
                       =======      =======    =======      =======

    (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 compliment 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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