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Exponent Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2012 06:06AM

Exponent Inc. (EXPO) filed Quarterly Report for the period ended 2012-09-28. Exponent, Inc. has a market cap of $705.8 million; its shares were traded at around $54.02 with a P/E ratio of 21 and P/S ratio of 2.6. Exponent, Inc. had an annual average earning growth of 14.5% over the past 10 years. GuruFocus rated Exponent, Inc. the business predictability rank of 3.5-star.



Highlight of Business Operations:

During the quarter, we assisted clients with several high-profile investigations that engaged consultants across many of our practices. The growth in consulting revenue and the increase in utilization combined with moderate growth in other operating and general and administrative expenses resulted in a 13% increase in income before taxes as compared to the same period last year. Net income increased to $10,225,000 during the third quarter of 2012 as compared to $8,744,000 during the same period last year. Diluted earnings per share increased to $0.72 per share as compared to $0.60 in the same period last year due to the increase in net income and our ongoing share repurchase program.

The increase in revenues for our engineering and other scientific segment was due to an increase in billable hours, higher billing rates and an increase in reimbursable project-related costs. During the third quarter of 2012, billable hours for this segment increased 5% to 186,000 as compared to 177,000 during the same period last year. The increase in billable hours was due to strong demand for our services in our mechanics and materials, electrical, thermal, human factors, and engineering management consulting practices. Technical full-time equivalent employees increased 4% to 473 during the third quarter of 2012 as compared to 457 for the same period last year due to our continuing recruiting and retention efforts. Utilization increased to 76% for the third quarter of 2012 as compared to 74% for the same period last year due to new work in key areas and elevated levels of activity on a number of major assignments. Reimbursable project-related costs for consulting projects in defense technology development increased to $3,572,000 during the third quarter of 2012 as compared to $1,586,000 during the same period last year due to the timing of reimbursable expenses on these projects.

The increase in compensation and related expenses during the third quarter of 2012 was due to an increase in payroll, fringe benefits, stock-based compensation, bonus expense, and the change in value of assets associated with our deferred compensation plan. Payroll increased by $1,361,000 and fringe benefits increased by $111,000 due to the increase in technical full-time equivalent employees and the impact of our annual salary increase on March 31, 2012. Stock based compensation expense increased $222,000 due to an increase in the value of unvested restricted stock units granted during the first nine months of 2012 as compared to the value of unvested restricted stock units granted during the same period last year. Bonuses increased by $1,220,000 due to a corresponding increase in profitability. During the third quarter of 2012, deferred compensation expense increased $3,617,000 with a corresponding increase to other income (expense), net, as compared to the third quarter of 2011 due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of the plan assets of $1,094,000 during the third quarter of 2012 and a decrease in the value of the plan assets of $2,523,000 during the third quarter of 2011. We expect our compensation expense to increase as we selectively add new talent.

The increase in revenues for our engineering and other scientific segment was due to an increase in billable hours and higher billing rates, partially offset by the decrease in product sales in defense technology development. During the first nine months of 2012, billable hours for this segment increased 6% to 560,000 as compared to 527,000 during the same period last year. The increase in billable hours was due to strong demand for our services. Product sales in defense technology development decreased to $2,866,000 for the first nine months of 2012 as compared to $6,999,000 during the same period last year due to lower sales of surveillance systems to the United States Army. Technical full-time equivalent employees increased 4% to 472 during the first nine months of 2012 as compared to 456 for the same period last year due to our continuing recruiting and retention efforts. Utilization increased to 76% for the first nine months of 2012 as compared to 74% for the same period last year due to new work in key areas, elevated levels of activity on a number of major assignments, and our management of headcount to align resources with anticipated demand.

The increase in compensation and related expenses during the first nine months of 2012 was due to an increase in payroll, fringe benefits, bonus expense, stock-based compensation expense and the change in value of assets associated with our deferred compensation plan. Payroll increased by $4,647,000 and fringe benefits increased by $649,000 due an increase in technical full-time equivalent employees and our annual salary increase on March 31, 2012. Bonuses increased by $3,374,000 due to a corresponding increase in profitability. Stock-based compensation expense increased $1,045,000 due to an increase in the value of unvested restricted stock units granted during the first nine months of 2012 as compared to the value of unvested restricted stock units granted during the same period last year. During the first nine months of 2012, deferred compensation expense increased $3,679,000 with a corresponding increase to other income (expense), net, as compared to the first nine months of 2011 due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of the plan assets of $2,027,000 during the first nine months of 2012 as compared to a decrease in the value of the plan assets of $1,652,000 during the first nine months of 2011. We expect our compensation expense to increase as we selectively add new talent.

Read the The complete Report



Stocks Discussed: EXPO,
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