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Exponent Inc. Reports Operating Results (10-Q)

November 04, 2011 | About:
10qk

10qk

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Exponent Inc. (EXPO) filed Quarterly Report for the period ended 2011-09-30.

Exponent Inc. has a market cap of $675.4 million; its shares were traded at around $49.48 with a P/E ratio of 23.7 and P/S ratio of 2.7. Exponent Inc. had an annual average earning growth of 16.3% over the past 10 years. GuruFocus rated Exponent Inc. the business predictability rank of 3.5-star.

Highlight of Business Operations:

The decrease in revenues for our engineering and other scientific segment was due a decrease in product sales in defense technology development and a decrease in reimbursable project related costs for consulting projects in defense technology development, partially offset by an increase in billable hours and higher billing rates. Product sales in defense technology development decreased to $627,000 for the third quarter of 2011 as compared to $7,300,000 during the same period last year due to lower sales of surveillance systems to the United States Army. Product sales will vary from quarter to quarter due to the timing of new contracts and delivery dates. Reimbursable project related costs for consulting projects in defense technology development decreased to $1,586,000 during the third quarter of 2011 as compared to $3,014,000 during the same period last year due to the timing of reimbursable expenses on these projects. During the third quarter of 2011, billable hours for this segment increased by 11.3% to 177,000 as compared to 159,000 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 sciences, biomechanics, human factors and engineering management practices. Technical full-time equivalents increased 5.1% to 457 from 435 for the same period last year due to our recruiting and retention efforts. Utilization increased to 74% for the third quarter of 2011 as compared to 70% for the same period last year due in part to elevated levels of activity on a number of major assignments that engaged consultants across many practices and our management of headcount to align resources with anticipated demand.

The decrease in compensation and related expenses during the third quarter of 2011 was due to a change in the value of assets associated with our deferred compensation plan, partially offset by an increase in payroll, fringe benefits and bonuses. During the third quarter of 2011, deferred compensation expense decreased $3,717,000 with a corresponding decrease to other income, net, as compared to the third quarter of 2010 due to a change in value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of plan assets of $2,511,000 during the third quarter of 2011 and an increase in the value of plan assets of $1,206,000 during the third quarter of 2010. Payroll increased by $2,001,000 and fringe benefits increased by $560,000 due to an increase in full-time equivalent employees and the impact of our annual salary increase on April 2, 2011. Bonuses increased by $387,000 due to a corresponding increase in profitability. We expect our compensation expenses 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 a decrease in product sales in defense technology development. During the first nine months of 2011, billable hours for this segment increased by 8.0% to 527,000 as compared to 488,000 during the same period last year. The increase was due to strong demand for our services. Technical full-time equivalents increased 3.9% to 456 from 439 for the same period last year due to our recruiting and retention efforts. Utilization increased to 74% for the first nine months of 2011 as compared to 71% for the same period last year due in part to elevated levels of activity on a number of major assignments and our management of headcount to align resources with anticipated demand. Product sales in defense technology development decreased to $6,999,000 for the first nine months of 2011 as compared to $9,718,000 during the same period last year due to lower sales of surveillance systems to the United States Army.

The increase in compensation and related expenses during the first nine months of 2011 was due to an increase in payroll, fringe benefits and bonuses, partially offset by the change in value of assets associated with our deferred compensation plan. Payroll increased by $6,036,000 and fringe benefits increased by $1,607,000 due to an increase in technical full-time equivalent employees and the impact of our annual salary increase on April 2, 2011. Bonuses increased by $3,203,000 due to a corresponding increase in profitability. During the first nine months of 2011, deferred compensation expense decreased $2,550,000 with a corresponding decrease to other income, net, as compared to the same period last year due to a change in value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of plan assets of $1,656,000 during the first nine months of 2011 and an increase in the value of plan assets of $894,000 during the same period last year.

The increase in net cash provided by operating activities during the first nine months of 2011 as compared to the same period last year was due to an increase in net income and a smaller increase in accounts receivable, partially offset by an decrease in accounts payable and accrued liabilities, a decrease in deferred revenues and an increase in deferred income taxes. Accounts receivable increased $1.8 million during the first nine months of 2011 as compared to an increase of $10.0 million during the same period last year. The smaller increase in accounts receivable during the first nine months of 2011 was due to a smaller increase in revenues. Days sales outstanding were 94 days for the first nine months of 2011 and 2010. Accounts payable and accrued liabilities decreased $1.2 million during the first nine months of 2011 as compared to an increase of $4.7 million during the same period last year. The decrease in accounts payable and accrued liabilities during the first nine months of 2011 was due to the timing of payments to vendors and a decrease in product sales in our defense technology development business. Deferred revenues decreased $1.3 million during the first nine months of 2011 as compared to an increase of $440,000 during the same period last year. The decrease in deferred revenues during the first nine months of 2011 was due to fewer pre-billed projects. Deferred income taxes increased by $3.6 million during the first nine months of 2011 as compared to an increase of $2.6 million during the same period last year. The larger increase in deferred income taxes was primarily due to an increase in contributions to our deferred compensation plan.

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