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EI

EXPONENT INC (EXPO)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 (quarter ended April 4, 2025) revenue was $145.51M, up 0.4% YoY; net revenues (before reimbursements) were $137.44M, roughly flat YoY, while diluted EPS fell to $0.52 vs $0.59 prior year due to higher other operating expenses and a higher effective tax rate .
  • Versus S&P Global consensus, total revenue modestly beat ($145.51M vs $144.47M*) while EPS missed ($0.52 vs $0.547*); EBITDA also missed ($37.54M vs $39.79M*). Bold moves: revenue beat; EPS/EBITDA miss. Values retrieved from S&P Global.
  • Management maintained full-year 2025 guidance (low-single-digit net revenue growth; EBITDA margin 26.25%–27.0% of net revenues) and guided Q2 net revenues down low-single digits with EBITDA margin 26%–27% .
  • Capital return remains steady: $0.30 quarterly dividend declared (payable June 20, 2025) and $16.4M dividends paid in Q1; cash ended the quarter at $245.1M, supporting continued buybacks and dividends .

What Went Well and What Went Wrong

What Went Well

  • Net revenues held flat despite a 4% YoY decline in billable hours and headcount, supported by strong dispute-related (reactive) work in chemicals, transportation, and utilities; realized billing rates increased ~4% YoY .
  • Environmental & Health segment revenue increased 2% YoY in Q1 with stronger regulatory consulting activity in chemicals; segment utilization improved to 72% .
  • Management reiterated resilience of the diversified, litigation-heavy model, emphasizing stable demand for failure analysis and regulatory support through cycles; “lawsuits, accidents… are constants” .

What Went Wrong

  • EPS declined to $0.52 from $0.59 due to higher other operating expenses (Phoenix land lease renewal non-cash rent and Menlo Park tenant loss) and higher tax rate (29.4% vs 25.4% prior year) .
  • Proactive work softened as consumer electronics engagements eased on product cycle timing; some clients delayed proactive studies amid macro/regulatory uncertainty .
  • EBITDA margin compressed YoY (27.3% vs 29.2%) on higher stock-based compensation and occupancy costs, and lower rental income; management flagged Q2 utilization headwinds (holiday timing) .

Financial Results

Period Comparison

MetricQ1 2024Q4 2024Q1 2026
Revenues ($USD)$144.93M $136.77M $145.51M
Revenues before reimbursements ($USD)$137.21M $123.76M $137.44M
Net Income ($USD)$30.14M $23.59M $26.65M
Diluted EPS ($USD)$0.59 $0.46 $0.52
Operating Income ($USD)$30.71M $27.25M $44.43M
EBITDA ($USD)$40.12M $31.23M $37.54M
EBITDA Margin (% of net revenues)29.2% 25.2% 27.3%
Total Operating Expenses ($USD)$114.22M $109.51M $101.08M

Actual vs Consensus (S&P Global)

MetricQ1 2026 ActualQ1 2026 ConsensusSurprise
Revenues ($USD)$145.51M $144.47M*+$1.04M / +0.7%
Diluted EPS ($USD)$0.52 $0.5468*-$0.0268 / -4.9%
EBITDA ($USD)$37.54M $39.79M*-$2.25M / -5.7%

Values retrieved from S&P Global.

Segment Breakdown (Q1 2026)

SegmentRevenue ($USD)Share of Total Revenue (%)
Engineering & Other Scientific$122.14M 83.9%
Environmental & Health$23.37M 16.1%
Total$145.51M 100%

Operating KPIs

KPIQ4 2024Q1 2026Q3 2025
Billable Hours~360,000 ~376,000 ~376,000
Avg Technical FTEs947 966 976
Utilization (%)68% 75% 74.1%
Realized Rate Increase YoY~4% ~4% ~6%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues (before reimb.)Q1 2025Down low-single digits ——
EBITDA Margin (% of net rev.)Q1 202525.0%–26.0% ——
Net Revenues (before reimb.)Q2 2025—Down low-single digits New Q2 guide
EBITDA Margin (% of net rev.)Q2 2025—26.0%–27.0% New Q2 guide
Net Revenues (before reimb.)FY 2025Low-single-digit growth Low-single-digit growth (maintained) Maintained
EBITDA Margin (% of net rev.)FY 202526.25%–27.0% 26.25%–27.0% (maintained) Maintained (later raised to 27.4%–27.65% in Q3’25)
Dividend per shareQ2 2025$0.30 (raised in Q1) $0.30 (payable Jun 20, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Current Period (Q1 2026)Trend
Reactive vs Proactive mixReactive solid in utilities/medical devices; proactive strengthened in consumer electronics and utilities Reactive low-single-digit growth; proactive slight decline; mix ~60% reactive/40% proactive Reactive strength; proactive softer near-term
AI/technology initiativesEmphasis on digital health, wearables, automation; AI raising complexity in safety-critical systems AI integration across industries; failure analysis demand in ADAS, medical devices, utilities risk modeling Broadening impact; balanced reactive/proactive
Consumer electronicsHealthy activity Q4 in user studies and hardware dev Easing due to client product cycle timing; opportunities from supply chain shifts Short-term softness; medium-term upside
Utilities & energyAsset integrity and risk work; global disputes (LNG, renewables) Demand in transportation/utilities driving activity; risk mgmt continuing to grow Durable demand across cycles
Regulatory/legalChemicals litigation/regulatory resurgence Q4; ~10% regulatory exposure, majority international Some slower regulator responses; chemicals regulatory work growing; FDA/EPA scrutiny persists Elevated scrutiny; steady engagements
Hiring/HeadcountStarting 2025 with 5–6% FTE headwind; plan sequential growth Sequential FTE +2%; plan hiring in AV, asset risk, digital health Improving trajectory into 2H

Management Commentary

  • “Exponent’s first quarter results exceeded expectations, reinforcing both the resilience of our diversified business model and the value we deliver… failure analysis expertise drove increased dispute-related activities… impacted by easing in the consumer electronics industry due to timing of clients’ product development life cycles” — CEO Dr. Catherine Corrigan .
  • “We continue to expect growth in 2025 and are maintaining our full year guidance. However, we continue to face headwinds in the second quarter as we close our year over year headcount gap.” — CFO Richard Schlenker .
  • “Artificial intelligence is increasingly integrated into safety-critical systems… our teams are at the forefront of addressing the increasingly complex technical and human-machine challenges” — CEO (Q3 2025) .

Q&A Highlights

  • Mix & growth: Reactive grew low-single digits while proactive declined slightly; current mix ~60% reactive, of which 80–90% is litigation/dispute-driven .
  • Utilization outlook Q2: Guidance embeds holiday timing headwind (~150–200 bps) and minor edge-case delays in proactive work; adjusted utilization near ~72% .
  • Supply chain diversification: Early-stage work evaluating new suppliers/materials in Asia and medical devices; opportunities not yet needle-moving but building .
  • Regulatory dynamics: Some slower responses from US regulators; chemicals regulatory consulting growing globally; overall regulatory-related work ~10% of business, majority outside US .
  • Hiring plans: Focused on autonomous vehicles litigation/safety case, asset risk modeling, digital health/wearables; target year-end headcount ~4% above start .

Estimates Context

  • Revenue beat, EPS/EBITDA miss: Actual revenue $145.51M vs $144.47M*; EPS $0.52 vs $0.5468*; EBITDA $37.54M vs $39.79M*. Values retrieved from S&P Global.
  • Implications: Street likely to trim near-term margin/EPS on higher occupancy and tax rate; Q2 utilization headwind and proactive delays linger, but full-year revenue guide maintained .

Key Takeaways for Investors

  • Resilient reactive engine: Litigation/dispute-driven work supported flat net revenues despite lower hours/headcount; positions EXPO defensively through macro cycles .
  • Near-term margin pressure manageable: EBITDA margin down YoY on non-cash lease and higher SBC; Q2 holiday/utilization headwind is transitory; FY guide maintained .
  • AI and complex systems are secular tailwinds: Growing demand across ADAS, medical devices, utilities risk modeling should support mix and realized rates longer-term .
  • Consumer electronics pauses are timing-related: Product cycle/ supply chain shifts create medium-term upside; keep an eye on proactive recovery into 2H .
  • Capital allocation steady: $0.30 dividend maintained; strong cash ($245.1M) supports buybacks and opportunistic investments .
  • Watch Q2 utilization and tax rate: Effective tax rate elevated (29.4% vs 25.4% prior year), pressuring EPS; management guided Q2 EBITDA margin 26%–27% .
  • 2H setup constructive: Sequential hiring progress and expected proactive rebound in studies/regulatory work underpin full-year growth plans .


## Appendix: Additional data and sources
- Q1 2026 8-K press release and financial tables (May 1, 2025): **[851520_0001171843-25-002692_exh_991.htm:0]** **[851520_0001171843-25-002692_exh_991.htm:2]** **[851520_0001171843-25-002692_exh_991.htm:4]** **[851520_0001171843-25-002692_exh_991.htm:5]**.  
- Q1 2026 10-Q financials and MD&A (May 9, 2025): **[851520_0000950170-25-067987_expo-20250404.htm:2]** **[851520_0000950170-25-067987_expo-20250404.htm:17]** **[851520_0000950170-25-067987_expo-20250404.htm:18]** **[851520_0000950170-25-067987_expo-20250404.htm:20]** **[851520_0000950170-25-067987_expo-20250404.htm:23]**.  
- Q1 2026 earnings call transcript (May 1, 2025): **[851520_EXPO_3424840_0]** **[851520_EXPO_3424840_2]** **[851520_EXPO_3424840_3]** **[851520_EXPO_3424840_4]** **[851520_EXPO_3424840_6]** **[851520_EXPO_3424840_7]** **[851520_EXPO_3424840_8]** **[851520_EXPO_3424840_12]**.  
- Prior quarter Q4 2024 results and call (Feb 6, 2025): **[851520_0001171843-25-000676_exh_991.htm:0]** **[851520_0001171843-25-000676_exh_991.htm:5]** **[851520_0001171843-25-000676_exh_991.htm:6]** **[851520_0001171843-25-000676_exh_992.htm:0]** **[851520_EXPO_3414741_0]** **[851520_EXPO_3414741_2]** **[851520_EXPO_3414741_4]**.  
- Q3 2025 results and call (Oct 30, 2025): **[851520_0001171843-25-006835_exh_991.htm:0]** **[851520_0001171843-25-006835_exh_991.htm:1]** **[0000851520_2218221_3]** **[0000851520_2218221_6]**.  
- Dividend press release Q2 2025 (May 1, 2025): **[851520_0001171843-25-002692_exh_992.htm:0]**.