Q1 2024 Exponent Inc Earnings Call
Good day and welcome to the exponent incorporated quarter, One 2024 earnings conference call.
Operator: Good day, and welcome to the Exponent Incorporated Quarter 1 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Joni Konstantantelos. Please go ahead.
Operator: All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
Operator: After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.
Operator: To withdraw your question. Please press Star then two.
Operator: Please note this event is being recorded.
Joni Konstantantelos: I would now like to turn the conference over to Joni constant Telos. Please go ahead.
Joni Konstantelos: Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's first quarter 2024 financial results conference call. Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website at investors.exponent.com. This conference call is the property of Exponent, and any taping or other reproduction is expressly prohibited without prior written consent. Joining me on the call today are Dr. Catherine Corrigan, President and Chief Executive Officer, and Rich Schlenker, Executive Vice President and Chief Financial Officer.
Joni Konstantantelos: Thank you good afternoon, ladies and gentlemen, thank you for joining us on exponent first quarter 2024 financial results Conference call.
Joni Konstantelos: Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors that exponent dot com.
Joni Konstantelos: The conference call is the property of exponent and any taping or other reproduction is expressly prohibited without prior written consent.
Speaker Change: Joining me on the call today are Dr. Catherine Corrigan, President and Chief Executive Officer, and Rich Schlenker, Executive Vice President and Chief Financial Officer.
Joni Konstantelos: Before we start, I would like to remind you that the following discussion contains forward-looking statements, including, but not limited to, Exponent's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in Exponent's periodic SEC filings, including those factors discussed under the Caption Risk Factor in Exponent's most recent Form 10-Q.
Joni Konstantelos: Before we start I would like to remind you that the following discussion contains forward looking statements, including but not limited to act on its market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here.
Joni Konstantelos: Additional information that could cause actual results to differ from forward looking statements can be found in extra periodic SEC filings, including those factors discussed under the caption risk factor in exponents. Most recent Form 10-Q.
Joni Konstantelos: The forward-looking statements and risks in this conference call are based on current expectations as of today, and Exponent assumes no obligation to update or revise them, whether as a result of new developments or otherwise. And now, I will turn the call over to Dr. Catherine Corrigan, Chief Executive Officer. Catherine?
Speaker Change: Forward looking statements and risks in this conference call are based on current expectations as of today and excellent assumes no obligation to update or revise them, whether as a result of new developments or otherwise and now I will turn the call over to Dr. Catherine Corrigan Chief Executive Officer Catherine.
Catherine Ford Corrigan: Thank you Tony and thank you everyone for joining us today.
Catherine Ford Corrigan: Thank you, Joni, and thank you everyone for joining us today. I will start off by reviewing our first quarter 2024 business performance, which will then provide a more detailed review of our financial results and outlook. And we will then open the call for questions. Exponent's unparalleled reputation and decades-long expertise in failure analysis drove better than expected results in the first quarter. Despite a slow start, our reactive business grew in the mid-teens driven by robust failure analysis and dispute-related work spanning a wide spectrum of industries.
Catherine Ford Corrigan: I'll start off by reviewing our first quarter 2020 for business performance Rich will then provide a more detailed review of our financial results and outlook and we will then open the call for questions.
Catherine Ford Corrigan: Excellent unparalleled reputation and a decades long expertise in failure analysis drove better than expected results in the first quarter. Despite.
Catherine Ford Corrigan: Despite a slow start our reactive business grew in the mid teens driven by robust failure analysis and the related work spanning a wide spectrum of industries.
Catherine Ford Corrigan: Partway through the quarter, we experienced accelerated activity across a number of substantial engagements, contributing to our strong results in the quarter. These matters required active, real-time regulatory and safety-related insights to inform decision-making, and our exceptionally well-qualified team surged to meet time-sensitive regulatory enforcement deadlines. While many of these matters will continue in the second quarter, we do not expect the same level of activity.
Catherine Ford Corrigan: Partway through the quarter, we experienced accelerated activity across a number of substantial engagement.
Catherine Ford Corrigan: Thanks to our strong results in the quarter. These matters required active real time regulatory and safety related insights to inform decision making.
Catherine Ford Corrigan: Subsequently well qualified team surged to meet time sensitive regulatory enforcement deadline well.
Catherine Ford Corrigan: While many of these matters will continue in the second quarter, we do not expect the same level of activity.
Catherine Ford Corrigan: In our proactive business, excluding consumer electronics, which continues to experience cyclical impacts, we achieved year-over-year growth driven by strong activity in the transportation and utilities sectors. We will discuss our engagements in more detail. In our reactive services within transportation, we continue to see robust activity in automotive product liability and regulatory matters, such as evaluating the performance and safety implications of advanced driver assistance technologies and battery systems. In Life Sciences, our experts are advising clients on the root causes of safety concerns related to medical devices and diagnostics, leveraging multidisciplinary approaches that include expertise in material science, manufacturing, human factors, and health sciences.
Catherine Ford Corrigan: And our proactive business, excluding consumer electronics, which continues to experience impacts we achieved year over year growth driven by strong activity in the transportation and utilities sectors.
Catherine Ford Corrigan: Turning to our engagements in more detail.
Catherine Ford Corrigan: The services within transportation, we continue to see robust activity in automotive product liability and the regulatory matters. For example, evaluating the performance and safety implications of advanced driver assistance technologies and battery systems, Inc.
Catherine Ford Corrigan: Life Sciences, our experts I think clients on the root causes of safety concerns related to medical devices and diagnostics leveraging multidisciplinary approaches that include expertise in material science manufacturing human factors and health Sciences.
Catherine Ford Corrigan: In the energy industry, our failure analysis expertise continues to be leveraged across a range of projects from traditional oil and gas to renewables. More broadly, we are playing an increasing role in helping clients navigate the challenges of an ongoing and ever-evolving energy transition. Clients around the world rely on Exponent in renewable energy disputes involving wind, solar, and large-scale energy storage, including technology performance challenges and life expectancy of infrastructure investors.
Catherine Ford Corrigan: In the energy industry, our failure analysis expertise continues to be leveraged across a range of projects from traditional oil and gas to renewables more broadly we are playing an increasing role in helping clients navigate the challenges ongoing and I've heard evolving energy transition.
Catherine Ford Corrigan: Scientists around the world rely on exponent in renewables.
Catherine Ford Corrigan: Wind solar and large scale energy storage, including technology performance challenges in life expectancy of infrastructure.
Catherine Ford Corrigan: During the quarter, we did see ongoing budget constraints with some clients, particularly in the chemical sector. We continued to see some of these clients, causing litigation work in the near term. However, we did see an uptick in momentum during the quarter and we expect that activity to return to normalized levels.
Catherine Ford Corrigan: During the quarter, we did see ongoing budget constraints with some clients, particularly in the chemical sector. We continue to see some of these clients causing litigation work in the near term. However, we did see an uptick in momentum during the quarter, and we expect that activity to return to normalized levels. Within our proactive services, we saw strong demand in transportation, evaluating vehicle emissions issues, as well as in the utility sector, advising clients on asset integrity and risk mitigation.
Catherine Ford Corrigan: Within our proactive services, we saw strong demand in transportation evaluating vehicle emissions issues as well as in the utility sector advising clients on asset integrity and risk litigation, we continue to see strong demand in the chemical sector for our regulatory work evaluating the impact of chemicals on human health.
Catherine Ford Corrigan: The environment headway.
Catherine Ford Corrigan: Headwinds in the consumer electronics sector persisted due in part to the timing of product lifecycle as well as broader impact in the industry and that's the result, human subject research engagements decreased year over year, excluding consumer electronics proactive revenues were up low single digits in the quarter.
Catherine Ford Corrigan: We continue to see strong demand in the chemical sector for our regulatory work, evaluating the impacts of chemicals on human health and the environment. Headwinds in the consumer electronics sector persisted, due in part to the timing of product life cycles, as well as broader impacts in the industry. As a result, human subject research engagements decreased year over year. Excluding consumer electronics, proactive revenues were up low single digits in the quarter.
Catherine Ford Corrigan: Our ongoing efforts to align resources with demand coupled with our strategic investments in the growth areas of the business contributed to 75% utilization in the first quarter.
Catherine Ford Corrigan: I am grateful to our world class team would it be bonded with agility to the surge in client demand that we experienced in the quarter as always we will continue to closely monitor the market and focus on developing our top tier talent broadening our capabilities and continuously adapting to an evolving landscape.
Catherine Ford Corrigan: Our ongoing efforts to align resources with demand, coupled with our strategic investments in the growth areas of the business, contributed to 75% utilization in the first quarter. I am grateful to our world-class team, which responded with agility to the surge in client demand that we experienced in the quarter. As always, we will continue to closely monitor the market and focus on developing our top-tier talent while broadening our capabilities and continuously adapting to an evolving landscape.
Catherine Ford Corrigan: Turning to our segments excellent engineering and other scientific segment represented 84% of revenues before reimbursements in the first quarter.
Catherine Ford Corrigan: Revenues before reimbursements in the segment increased 8% for the first quarter driven by demand for exponent services across the energy vehicles and medical device sectors.
Catherine Ford Corrigan: Exponents environmental and health segment represented 16% of revenues before reimbursements in the first quarter.
Catherine Ford Corrigan: Just before reimbursement in this segment increased 1% for the first quarter work in this sector was primarily driven by regulatory engagements for the chemicals industry.
Catherine Ford Corrigan: Turning to our segments, Exponent's engineering and other scientific segment represented 84% of revenues before reimbursements in the first quarter. revenues before reimbursements in this segment increased 8% for the first quarter, driven by demand for Exponent services across the energy vehicle and medical device sectors. Exponent's environmental and health segments represented 16% of revenues before reimbursements in the first quarter. Revenues before reimbursements in this segment increased 1% for the first quarter. Work in this sector was primarily driven by regulatory engagements for the chemicals industry.
Catherine Ford Corrigan: Looking ahead, we have raised our revenue and margin expectations for the full year 2024, However, we still face consumer electronics and macro headwinds as well as the high hurdle rate for year over year comparisons due to the significant growth of our reactive business in 2023.
Catherine Ford Corrigan: What was the last few quarters, we've demonstrated the commitment and agility needed to adapt to challenging dynamics in both our consulting and talents marketplaces.
Catherine Ford Corrigan: Our first quarter results reflect this agility as well as the strength of our fundamental market drivers in this dynamic environment, we maintain an emphasis on advancing new business development strategically investing in growth opportunities, while aligning our resources and costs with anticipated demand.
Speaker Change: As we look to the future our value proposition is as strong as ever and I am confident in our ability to accelerate and drive long term revenue growth in the high single to low double digits.
Catherine Ford Corrigan: Looking ahead, we have raised our revenue and margin expectations for the full year 2024. However, we still face consumer electronics and macro headwinds, as well as a high hurdle rate for year-over-year comparisons due to the significant growth of our reactive business in 2023. Over the last few quarters, we've demonstrated the commitment and agility needed to adapt to challenging dynamics in both our consulting and talent marketplace. Our first quarter results reflect this agility, as well as the strength of our fundamental market drivers.
Catherine Ford Corrigan: I'll now turn the call over to rich to provide more detail on our first quarter results as well as discuss our outlook for the second quarter and the full year 2020.
Speaker Change: Thank you Catherine and good afternoon, everyone.
Speaker Change: Let me start by saying all comparisons will be on a year over year basis, unless otherwise noted.
Catherine Ford Corrigan: For the first quarter of 2024 total revenues increased three 3% to $144 9 million.
Catherine Ford Corrigan: And revenues before reimbursements or net revenues as I will refer to them from here on your increased 6.6% to 137 2 million as compared to the same period in 2023.
Catherine Ford Corrigan: In this dynamic environment, we maintain an emphasis on advancing new business development, strategically investing in growth opportunities, while aligning our resources and costs with anticipated demands. As we look to the future, our value proposition is as strong as ever, and I am confident in our ability to accelerate and drive long-term revenue growth in the high-single to low-double digits. I'll now turn the call over to Rich to provide more detail on our first quarter results, as well as discuss our outlook for the second quarter and the full year 2020.
Rich: Net income for the first quarter increased to $31 million or 59 cents per diluted share as compared to $29 $1 million or 50 cents per diluted share in the prior year period.
Rich: The realized tax benefit.
Rich: Shaded with accounting for share based awards in the first quarter of 2024 was $900000 or two cents per diluted share as compared to $3.6 million or seven cents per diluted share in the first quarter of 2023.
Richard L. Schlenker: Thank you, Catherine, and good afternoon, everyone. Let me start by saying that all comparisons will be on a year-over-year basis unless otherwise noted. For the first quarter of 2024, total revenues increased 3.3% to $144.9 million, and revenues before reimbursements, or net revenues, as I will refer to them from here on, increased 6.6% to $137.2 million as compared to the same period in 2023. Net income for the first quarter increased to $30.1 million, or $0.59 per diluted share, as compared to $29.1 million, or $0.56 per diluted share, in the prior year period.
Richard L. Schlenker: Inclusive of the tax benefit for share based awards <unk> consolidated tax rate was 25, 4% in the first quarter of 2024.
Richard L. Schlenker: 18% for the same period in 'twenty to 'twenty three.
Richard L. Schlenker: EBIT for the quarter increased 12, 2% to $41 million producing a margin of 29, 2% of net revenues as compared to $35.8 million or 27, 8% of net revenues.
Richard L. Schlenker: In this in the same period of 2023.
Richard L. Schlenker: This year over year increase in margins was driven by higher revenues.
Richard L. Schlenker: The realized tax benefit associated with accounting for share-based awards in the first quarter of 2024 was $900,000, or $0.02 per diluted share, as compared to $3.6 million, or $0.07 per diluted share, in the first quarter of 2023. Inclusive of the tax benefit for share-based awards, Exponent's consolidated tax rate was 25.4% in the first quarter of 2024, as compared to 18% for the same period in 2023.
Richard L. Schlenker: And an increase in utilization during the first quarter of 2024.
Richard L. Schlenker: Billable hours in the first quarter were approximately 392000.
Richard L. Schlenker: An increase of 2% year over year.
Richard L. Schlenker: Yeah.
Richard L. Schlenker: To go full time equivalent employees in the first quarter with 1003.
Richard L. Schlenker: Which is a decrease of 5% as compared to one year ago.
Richard L. Schlenker: Sequentially full time equivalent employees decreased 1%.
Richard L. Schlenker: Compared to the fourth quarter of 2023.
Richard L. Schlenker: As we strategically a lot aligned our resources with demand.
Richard L. Schlenker: Utilization in the first quarter was 75% up from 70% in the same period of 2023.
Richard L. Schlenker: The realized rate increase was approximately 5% for the first quarter of 2024 as compared to the same period a year ago.
Richard L. Schlenker: EBITDA for the quarter increased 12.2% to $40.1 million, producing a margin of 29.2% of net revenues as compared to $35.8 million or 27.8% of net revenues in the same period of 2023. This year-over-year increase in margins was driven by higher revenues and an increase in utilization during the first quarter of 2024. Billable hours in the first quarter were approximately 392,000, an increase of 2% year-over-year. The average number of technical full-time equivalent employees in the first quarter was 1,003, which is a decrease of 5% as compared to one year ago.
Richard L. Schlenker: In the first quarter after adjusting for gains and losses in deferred compensation expense compensation expense increased four 7%.
Richard L. Schlenker: Included in total compensation expense is a gain in deferred compensation of $6 $3 million as compared to a gain of $3.9 billion in the same period of 2023.
Richard L. Schlenker: As a reminder gains and losses in deferred compensation are offset in miscellaneous income and.
Richard L. Schlenker: And have no impact on the bottom line.
Richard L. Schlenker: Stock based compensation expense in the first quarter was some $3 million as compared to seven 1 million in the prior year period.
Richard L. Schlenker: sequentially, full-time equivalent employees decreased 1% as compared to the fourth quarter of 2023 as we strategically aligned our resources with demand. Utilization in the first quarter was 75%, up from 70% in the same period of 2023. The realized rate increase was approximately 5% for the first quarter of 2024 as compared to the same period a year ago. In the first quarter, after adjusting for gains and losses in deferred compensation expense, compensation expense increased 4.7%.
Richard L. Schlenker: Other operating expenses in the first quarter were up 10, 1% to $10 $5 million draw.
Richard L. Schlenker: Driven primarily by increased engagement at our offices and investments in our infrastructure.
Richard L. Schlenker: Included in other operating expenses is depreciation and amortization expense of $2 $3 million for the first quarter.
Richard L. Schlenker: G&A expenses declined three 5% to five 6 million for the first quarter.
Richard L. Schlenker: This decrease was primarily due to a reduction in use of outsourced personnel if need be.
Richard L. Schlenker: Kris and recruiting expenses.
Richard L. Schlenker: Interest income increased to $2 $6 billion for the first quarter driven by an increase in interest rates.
Richard L. Schlenker: Included in total compensation expense is a gain in deferred compensation of $6.3 million, as compared to a gain of $3.9 million in the same period of 2023. As a reminder, gains and losses in deferred compensation are offset by miscellaneous income and have no impact on the bottom line.
Richard L. Schlenker: Helane its income excluding the deferred compensation game was approximately $800000 for the first quarter.
Richard L. Schlenker: During the quarter capital expenditures were $1.5 million, we distributed $15 6 million to shareholders through dividend payments and repurchase five $5 million of common stock at an average price of 70 713.
Richard L. Schlenker: Stock-based compensation expense in the first quarter was $7.3 million, as compared to $7.1 million in the prior year period. Other operating expenses in the first quarter were up 10.1% to $10.5 million, driven primarily by increased engagement at our offices and investments in our infrastructure. Included in other operating expenses is depreciation and amortization expense of $2.3 million for the first quarter. DNA expenses declined 3.5% to $5.6 million for the first quarter. This decrease was primarily due to a reduction in the use of outsourced personnel and a decrease in recruiting expenses. Interest income increased to $2.6 million for the first quarter, driven by an increase in interest rates. Miscellaneous income, excluding the deferred compensation gain, was approximately $800,000 for the first quarter.
Speaker Change: Turning to our outlook.
Richard L. Schlenker: For the second quarter as compared to one year one year prior.
Richard L. Schlenker: We expect revenues before reimbursements to be flat to up in the low single digits and EBIT dollar to be 20, 725%.
Richard L. Schlenker: So 28, 5% of revenues before reimbursements.
Richard L. Schlenker: For the fiscal year year 2024, we are increasing our revenue and margin guidance, we expect revenues before reimbursements to grow in the low single digits and EBITDA to be 26 to 5% to 27%.
Richard L. Schlenker: End of revenues before reimbursements.
Richard L. Schlenker: We expect.
Richard L. Schlenker: The average technical fulltime equivalent employees to decline sequentially, one to one 5% in the second quarter of 2024.
Richard L. Schlenker: During the quarter, capital expenditures were $1.5 million. We distributed $15.6 million to shareholders through dividend payments and repurchased $5.5 million of common stock at an average price of $77.13. Now, turning to our outlook.
Richard L. Schlenker: We recently completed our annual performance review process.
Richard L. Schlenker: As a result average ftes for the second quarter will be down approximately 8% year over year.
Richard L. Schlenker: We expect sequential headcount growth in the back half of the year.
Richard L. Schlenker: For the second quarter, as compared to the year prior, we expect revenues before reimbursements to be flat to up in the low single digits, and Yvette Da to be 27.25% to 28.25% of revenues before reimbursement for the fiscal year, year 2024. We are increasing our revenue and margin guide. We expect revenues before reimbursements to grow in the low single digits and even thought to be 26.25 to 27% of revenues before reimbursement.
Richard L. Schlenker: And as a result, our full year average full time equivalent will be down approximately 5% to 6% on a year over year basis.
Richard L. Schlenker: We expect utilization in the second quarter to be 71% to 73% as compared to 69, 4% in the same quarter last year.
Richard L. Schlenker: We expect the full year utilization to be 69, five to 71, five as compared to 69, 9% in 2023.
Richard L. Schlenker: We still believe our long term target of <unk>.
Richard L. Schlenker: The average technical full-time equivalent employees will decline sequentially by one to 1.5% in the second quarter of 2024, as we recently completed our annual performance review process. As a result, average FTEs for the second quarter will be down approximately 8% year over year.
Richard L. Schlenker: Brain mid Seventy's utilization is achievable as we continued to strategically manage account and balance sheet utilization based on market demand.
Richard L. Schlenker: We expect our year over year realized rate increase to be four to four 5% for the second quarter and full year.
Richard L. Schlenker: For the second quarter of 2024, we expect stock based compensation to be five three to $5 $6 million.
Richard L. Schlenker: We expect sequential headcount growth in the back half of the year, and as a result, our full year average full-time equivalent will be down approximately 5% to 6% on a year-over-year basis. We expect utilization in the second quarter to be 71 to 73% as compared to 69.4% in the same quarter last year. We expect the full year utilization to be 69.5% to 71.5% as compared to 69.9% in 2023. We still believe our long-term target of sustained mid-70s utilization is achievable as we continue to strategically manage egg count and balance utilization based on market demand.
Richard L. Schlenker: For the full year 2024, we expect stock based compensation to be $22 five to $23 $3 billion.
Richard L. Schlenker: For the second quarter, we expect other operating expenses to be 11, three to $11 $8 million for the full year, we expect other operating expenses to be $46 five to $47 $5 million.
Richard L. Schlenker: It should be noted that we expect that during the second quarter, we are going to take the opportunity to early exercise an option to extend our lease for our test and engineering Center in Phoenix, Arizona.
Richard L. Schlenker: We expect our year-over-year realized rate increase to be 4% to 4.5% for the second quarter and full year. For the second quarter of 2024, we expect stock-based compensation to be $5.3 to $5.6 million. For the full year 2024, we expect stock-based compensation to be $22.5 to $23.3 million. For the second quarter, we expect other operating expenses to be $11.3 to $11.8 million. For the full year, we expect other operating expenses to be between $46.5 and $47.5 million.
Richard L. Schlenker: Although our current lease does not expire until 2028, we want to lock in the pricing at this time.
Richard L. Schlenker: Although we will not pay any higher rent until 2020, the new lease accounting rules require us to recalculate the rent expense for the length of the new lease period.
Richard L. Schlenker: This will result in an immediate increase in our non cash rent expense of $400000 during Q2.
Richard L. Schlenker: Oh, 2024, and an increase of $1 1 million during each of Q3 and Q4 of 2024.
Richard L. Schlenker: It should be noted that during the second quarter, we are going to take the opportunity to early exercise an option to extend our lease for our test and engineering center in Phoenix, Arizona. Although our current lease does not expire until 2028, we want to lock in the pricing at this time. Although we will not pay any higher rent until 2028, the new lease accounting rules require us to recalculate the rent expense for the length of the new lease term.
Richard L. Schlenker: We are very excited to secure this facility as we believe it will continue to be an integral part of our future growth.
Richard L. Schlenker: For the second quarter, we expect G&A expenses to be $6.5 million to $7 million for the full year, we expect G&A expenses to be $24 million to $25 million.
Richard L. Schlenker: We expect interest income to be one $8 million to $2 million per quarter for the remainder of 2024.
Richard L. Schlenker: In addition, we anticipate miscellaneous income to be approximately 700 to $800000 for the second quarter of 2024 for.
Richard L. Schlenker: This will result in an immediate increase in our non-cash rent expense of $400,000 during Q2 of 2024 and an increase of 1.1 million during each of Q3 and Q4 of 2024. We are very excited to secure this facility as we believe it will continue to be an integral part of our future growth.
Richard L. Schlenker: For the full year, we expect miscellaneous income to be approximately two to $2 2 million.
Richard L. Schlenker: This includes.
Richard L. Schlenker: An expected decrease in rental income of 400000 in Q3 and 600000 in Q4 due to the loss of a tenant in Menlo Park.
Richard L. Schlenker: We expect G&A expenses to be $6.5 to $7 million. For the full year, we expect G&A expenses to be $24 to $25 million. We expect interest income to be $1.8 to $2 million per quarter for the remainder of 2024. In addition, we anticipate miscellaneous income to be approximately $700,000 to $800,000 for the second quarter of 2024. For the full year, we expect miscellaneous income to be approximately $2 to $2.2 million. This includes an expected decrease in rental income of $400,000 in Q3 and $600,000 in Q4 due to the loss of a tenant in Menlo Park, California, where we own our building, for the remainder of 2024.
Richard L. Schlenker: California, where we own our building.
Richard L. Schlenker: For the remainder of 2024, we do not expect any additional tax benefit associated with share based awards.
Richard L. Schlenker: For the second quarter of 2024, we expect our tax rate to be approximately 28% as compared to 29% in the same quarter, one year ago for the full year of 2024.
Richard L. Schlenker: The tax rate is expected to be 27, 2% to 27, 3%.
Richard L. Schlenker: Compared to 26, 2% in 2023.
Richard L. Schlenker: The increase in tax rate is due to less tax benefit from share based awards in the first quarter.
Richard L. Schlenker: In closing we are pleased to have delivered profitable growth.
Richard L. Schlenker: I'll now turn the call back to Catherine for closing remarks.
Richard L. Schlenker: We do not expect any additional tax benefit associated with share-based awards. For the second quarter of 2024, we expect our tax rate to be approximately 28% as compared to 29% in the same quarter one year ago. For the full year 2024, the tax rate is expected to be 27.2 to 27.3% as compared to 26.2% in 2023. The increase in the tax rate is due to less tax benefit from share-based awards in the first quarter. In closing, we are pleased to have delivered profitable growth. I will now turn the call back to Catherine for her closing remarks.
Catherine: Thank you rich.
Catherine: I am pleased with our performance in the first quarter and Im encouraged by the market signals, we are seeing particularly in the reactive space. Our roots in failure analysis continue to strengthen and grow fortifying our leadership position as we branch into new untapped areas around the product's lifecycle.
Catherine: As industry transform at breakneck speed I am confident in our ability to capitalize on the strong market drivers to accelerate our growth operator, we are now ready for questions.
Catherine: Thank you we will now begin the question and answer session to pass. Your question you May Press Star then one on your Touchtone phone.
Catherine: If youre using a speakerphone please pick up your handset before pressing the keys.
Catherine: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Catherine: At this time, we will pause momentarily to assemble our roster.
Catherine: The first question comes from Andrew Nicholas with William Blair. Please go ahead.
Catherine Ford Corrigan: I am pleased with our performance in the first quarter and am encouraged by the market signals we are seeing, particularly in the reactive space. Our roots in failure analysis continue to strengthen and grow, fortifying our leadership position as we branch into new untapped areas around the product's life cycle. As industries transform at breakneck speed, I am confident in our ability to capitalize on these strong market drivers to accelerate our growth. Operator, we are now ready for questions.
Catherine Ford Corrigan: Hi, Good afternoon. This is Dan Maxwell on for Andrew today.
Speaker Change: Just to start I know you mentioned and called out in the press release that January got off to a bit of a slow start but any more detail you can give on how demand progressed over the course of the quarter, maybe on a month by month basis.
Speaker Change: And then on top of that anything you can call out since the end of the quarter and if those trends have continued.
Speaker Change: Yeah. So we definitely are.
Catherine Ford Corrigan: Felt things.
Speaker Change: Being slow in coming.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed, and you would like to withdraw your question, please press star. Then, At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Nicholas, with William Blair. Please go ahead.
Speaker Change: Coming around after the new year and that continued in and through the first four weeks of the quarter are what.
Andrew Owen Nicholas: What we did you know we expected a leap.
Andrew Owen Nicholas: The feedback from our business units with things would pick up some but what we saw beginning in February was a real step up and a number of our engagements, especially in the reactive area.
Andrew Owen Nicholas: And as Kathryn noted in her comments. These were you know litigation matters that really required a lot of attention as well as a regulatory investigations that a number of our clients were going through.
Unknown Executive: Hi, good afternoon. This is Dan Maxwell on for Injury Today. Just to start, I know you mentioned and called out in the press release that January got off to a bit of a slow start, but any more detail you can give on how demand progressed over the course of the quarter, maybe on a month by month basis. And then, on top of that, anything you can call out since the end of the quarter and if those trends have continued.
Unknown Executive: So we were able to turn those up.
Unknown Executive: What we saw was those sort of peak in the late February early March.
Unknown Executive: We know that a number of those matters, either the trial or arbitration as incurred or they've moved into a later phase of the regulatory investigation and as such the level of activity has stepped down or will be stepping down.
Unknown Executive: Yeah, so we definitely felt things were slow in coming around after the new year, and that, you know, continued through the first four weeks of the quarter. What we did, you know, we expected at least feedback from our business units, which things would pick up some, but what we saw beginning in February was a real step up in a number of our engagements, especially in the reactive area. And, as Catherine noted in her comments, these were litigation matters that really required a lot of attention as well as regulatory investigations that a number of our clients were going through.
Unknown Executive: Or in the during the second quarter and that is what is reflected in our guidance still stronger than where we were we were feeling things where when we.
Unknown Executive: I announced our yearend results and provided in our guidance for the year.
Unknown Executive: So very positive on that but not quite.
Unknown Executive: Seeing that sustained level that we saw the surge b in the February early March time.
Speaker Change: Great very helpful. Thanks, Rich and just for my follow up would you say that your visibility into the demand pipeline has improved at all from last quarters sort of uncertainty.
Unknown Executive: So, we were able to turn those up. What we saw was they sort of peak in late February and early March. We know that a number of those matters, either the trial or arbitration, have occurred, or they've moved into a later phase of the regulatory investigation. And as such, the level of activity has stepped down, or will be stepping down, during the second quarter. And that is what is reflected in our guidance still stronger than where we were feeling things were when we announced year-end results and provided our guidance for the year. So very positive on that, but not quite yet at that sustained level that we saw the surge be in the February, early March time.
Unknown Executive: When you look at the second quarter and into the back half of the year.
Speaker Change: Yeah. Thanks, Dan.
Unknown Executive: Look we still.
Unknown Executive: Have.
Unknown Executive: Some degree of uncertainty as we look out later in the year, where we're pleased with.
Unknown Executive: Where we are these are the various client relationships in consumer electronics for example, and our discussions with those clients are ongoing.
Unknown Executive: But you know oftentimes depending on the time and the product lifecycle. You know they are still looking to gauge what the data look like that we are collecting for them before they can actually really developing a roadmap into the future and so you know.
Unknown Executive: Great, very helpful. Thanks, Rich. And just for my follow-up, would you say that your visibility into the demand pipeline has improved at all from last quarter's sort of uncertainty when you look at the second quarter and the back half of the year?
Speaker Change: Part of what's reflected in our guidance is a continuing level of uncertainty around that as we get out further in Q3 and Q4, especially in the electronics sector.
Unknown Executive: I think it's.
Speaker Change: Something there I just think that it's important that.
Unknown Executive: Yeah, thanks, Dan. You know, look, we still have some degree of uncertainty as we look out later in the year. You know, we're pleased with where we are vis-a-vis, you know, our various client relationships in consumer electronics, for example, and our discussions with those clients are ongoing. But, you know, oftentimes, depending on the time in the product lifecycle, they are still looking to gauge what the data look like that we are collecting for them before they can actually really develop their roadmap into the future. And so, you know, part of what's reflected in our guidance is a continuing level of uncertainty around that as we get out, you know, further into Q3 and Q4, especially in the electronics sector.
Unknown Executive: You know everybody or that we all understand I think that exponent well we are heavily invested 60% of our work is in the reactive area a lot of those matters come in very quickly and could end at any time, but.
Unknown Executive: Over the decades, we have demonstrated that our portfolio of those projects thousands of them. We do about 10000 projects a year provide across almost every industry, who manufacturers or processors something is is it.
Unknown Executive: Client and somewhere around 3000 different clients a year ended the organization that is what is provided this portfolio that has allowed us to be consistent in our AR and our ability to predict.
Unknown Executive: I think you're
Unknown Executive: I think it's, if I could add something there, I just think that it's important that, you know, everybody, or that we all understand. I think that Exponent, while we are, you know, heavily invested, 60% of our work is in the reactive area. A lot of those matters come in very quickly and could end at any time.
Unknown Executive: The trend in the direction.
Unknown Executive: That our business and the demand in the market places is going so I you know.
Unknown Executive: I think we've demonstrated over a long period of time that has worked out well last couple of quarters, we've seen more variability in that.
Unknown Executive: But over the decades, we have demonstrated that our portfolio of those projects, thousands of them; we do about 10,000 projects a year, provide across almost every industry who manufactures or processes something is a client, and somewhere around 2,000 different clients a year into the organization. That is what provides this portfolio that has allowed us to be consistent in our ability to predict the trend, the direction that our business and the demand in the marketplace are going.
Unknown Executive: I do believe fundamentally the model is the same.
Unknown Executive: Very diverse client base.
Unknown Executive: It's a very diverse set of services.
Unknown Executive: And a pretty resilient.
Unknown Executive: Amanda environment, where clients are focused on the issues of safety health and the environment as they continue to innovate.
Unknown Executive: So I think we've demonstrated over a long period of time that that has worked out well. The last couple of quarters, we've seen more variability in that, but I do believe fundamentally the model is the same. A very diverse client base, a very diverse set of services, and a pretty resilient demand environment where clients are focused on the issues of safety, health, and the environment as they continue to innovate.
Unknown Executive: Yeah.
Speaker Change: Great. Thanks, again, and congrats on the strong quarter.
Unknown Executive: The next question comes from Josh Chan with UBS. Please go ahead.
Speaker Change: Hi, good afternoon, Catherine rich congrats on a good quarter.
Speaker Change: Thank you.
Speaker Change: Yeah on the on the reactive business.
Speaker Change: Could you just talk about was it really a few cases that drove the surprise this quarter or if it was more than just a few cases and then what was the theme that you notice about the unexpected uptick in the quarter.
Unknown Executive: Great. Thanks again and congrats on the strong quarter.
Operator: The next question comes from Josh Chan with UBS; please go ahead.
Joshua K. Chan: Yeah. Thanks, Josh It was it was across the spectrum.
Unknown Executive: Hi, good afternoon, Catherine and Rich. I congratulate you on a good quarter. On the reactive business, could you talk about whether it was really a few cases that drove the surprise this quarter, or if it was more than just a few cases, then what was the theme that you noticed about the unexpected uptick in the quarter?
Joshua K. Chan: But it wasn't one particular theme necessarily and rich highlighted that a little bit but yeah. We were seeing it in the energy sector in particular around some.
Unknown Executive: Some of the some of the larger disputes really getting into a ramp up phase around delivery of expert reports than actual testimony activity. These reactive engagements can often be characterized by a lot of ebb and flow right and so we had a lot of flow across.
Unknown Executive: Yeah, thanks, Josh. It was across the spectrum. You know, it wasn't one particular theme necessarily. And, you know, Rich highlighted that a little bit.
Speaker Change: A number of them in the sort of simultaneously in that February March timeframe, but in addition to the to the guests.
Unknown Executive: Side, there was a theme around the sort of recall and regulatory action side of the equation. This is this is heading more over into that into the vehicle area as well as the life Sciences, particularly medical devices.
Catherine Ford Corrigan: But, you know, we were seeing it in the energy sector in particular around some of the larger disputes really getting into a ramped-up phase around delivery of expert reports and actual testimony activity. You know, these reactive engagements can often be characterized by a lot of ebb and flow.
Catherine Ford Corrigan: Ignostic Arena.
Catherine Ford Corrigan: Medical devices have innovated and become more complex the FCA.
Catherine Ford Corrigan: As the watchdog.
Catherine Ford Corrigan: And so we had a lot of flow across a number of them sort of simultaneously in that February and March timeframe. But in addition to the dispute side, there was a theme around the sort of recall and regulatory action side of the equation. This is this is heading more over into the vehicle area as well as the life sciences and, particularly, medical devices and diagnostics arena. You know, as medical devices have innovated and become more complex, the FDA as the watchdog, you know, that's an agency that can become active almost at any moment. Our clients don't necessarily see it coming. We don't necessarily see it coming, either.
Catherine Ford Corrigan: No. That's an agency that can become active almost at any moment, our clients don't necessarily see it coming we don't necessarily see it coming but the good news from my perspective is that when these clients were tapped on the shoulder by those regulators we were their first call as we were.
Catherine Ford Corrigan: Actions to deliver for them the kinds of insights they needed to be able to go to the regulators.
Catherine Ford Corrigan: Zentz their findings and work through that decision making process.
Catherine Ford Corrigan: That was really proud of our teams to be able to do that so you know it wasn't one big matter will often talk about our bacon that are coming on coming off. This was that this was a collection of those they were larger than average for sure, but there was sort of a simultaneous.
Catherine Ford Corrigan: Densification of that activity yeah in the in the reactive area I think the.
Catherine Ford Corrigan: But the good news from my perspective is that when these clients were tapped on the shoulder by those regulators, we were their first call, and we were positioned to deliver for them the kinds of insights they needed to be able to go to the regulators and present their findings and work through that decision-making process. And I was really proud of our teams for being able to do that. So, you know, it wasn't a big matter.
Catherine Ford Corrigan: Though we're talking about a group of projects that were.
Catherine Ford Corrigan: Half a percent.
Catherine Ford Corrigan: Yeah, maybe even maybe up to one 5% of our revenues on individual projects, but it.
Catherine Ford Corrigan: It was across.
Catherine Ford Corrigan: A diverse set of clients and industries and services as Catherine has described would choose.
Catherine Ford Corrigan: Probably the most encouraging thing that again, we've continued to see.
Catherine Ford Corrigan: Over the last a year and a half here is that the demand for.
Catherine Ford Corrigan: We'll often talk about a big matter coming up, coming off. This was a collection of those. They were larger than average, for sure, but there was sort of a simultaneous intensification of that activity. Yeah.
Catherine Ford Corrigan: For our services in this.
Catherine Ford Corrigan: Reactive area that we've been in for over five decades.
Richard L. Schlenker: Yeah, in the reactive area, I think that, you know, we're talking about a group of projects that were, you know, a half a percent to, you know, maybe even maybe up to one and a half percent of our revenues on individual projects. But, you know, it was across a diverse set of clients and industries and services, as Catherine has described, which is probably the most encouraging thing that, again, we've continued to see over the last year and a half here is that the demand for our services in this reactive area that we've been in for over five decades is stronger than ever, and I think that's a very promising message for the future.
Catherine Ford Corrigan: Is stronger than ever and.
Richard L. Schlenker: I think that's a very promising a message for the future.
Speaker Change: That's really helpful color. Thank you both for that.
Richard L. Schlenker: I think on the reactive side you'd previously expected that business to be flat for the year, obviously Q1 was better but the full year guidance now incorporate a better outlook for the rest of the year or two or is it just.
Richard L. Schlenker: Q1 that was better.
Richard L. Schlenker: No it does.
Richard L. Schlenker: Include.
Richard L. Schlenker: Some are.
Richard L. Schlenker: Positive step forward.
Richard L. Schlenker: In that area, it's but not.
Unknown Executive: That's really helpful, Carlos. Thank you both for that.
Richard L. Schlenker: Not quite at the level that we experienced there in the first quarter. Additionally.
Unknown Executive: So I think on the reactive side, you previously expected that business would be flat for the year. Obviously, Q1 was better. But does the four-year guidance now incorporate a better outlook for the rest of the year too, or is it just Q1 that was better?
Unknown Executive: The hurdle that we are overcoming of how strong the demand was last year.
Unknown Executive: The reactive area was that that area grew 20 plus percent like being two two in Q3 on a year over year basis in 'twenty three.
Richard L. Schlenker: No, it does include some, you know, positive step forward in that area, but not quite at the level that we experienced there in the first quarter. Additionally, the hurdle that we are overcoming of how strong the demand was last year in the reactive area was that that area grew 20 plus percent in Q2 and Q3 on a year over year basis in 23 for Q2 and 3, so we are, that's a little higher even hurdle than we had here in Q1, and so we've got a little bit of that as well that might be dampening the year over year growth, but we still are very positive about the market overall.
Richard L. Schlenker: Yeah for Q2 and three so we are that's a little higher even hurdle then we had here in Q1.
Richard L. Schlenker: And so we've got a little bit of that as well that might be dampening the year over year growth, but we still are very positive about the market overall and I would add too you know one of the things that we've demonstrated in that first quarter is that we're positioned to historic in response to that demand and this is traditional.
Richard L. Schlenker: What happens in a reactive portfolio when he steps and flows and so what we're you know as we've aligned our resources with demand, we're ensuring that we have the capacity to be able to search our teams culturally are ready to do that they're eager to do that when when when demand comes through so it will be ready for <unk>.
Catherine Ford Corrigan: Well, and I would add that one of the things that we demonstrated in that first quarter is that we're positioned to search in response to demand. And this is traditionally what happens in our reactive portfolio with these ebbs and flows.
Catherine Ford Corrigan: At those ebbs and flows that come in the next few quarters.
Catherine Ford Corrigan: And so, you know, as we've aligned our resources with demand, we're ensuring that we have the capacity to be able to search. Our teams are culturally ready to do that. They're eager to do it when the demand comes through. So we'll be ready for any of those ebbs and flows that come in the next few quarters.
Speaker Change: That sounds great and then if I can ask a question about margins.
Catherine Ford Corrigan: Your full year margin guide is lower than what you achieved in Q1 is that all because of revenue expectations and anything else that we should think about there in terms of the margin cadence.
Speaker Change: Yes so.
Catherine Ford Corrigan: A couple of things one yeah, we are not expecting the utilization to be quite at the level that it was in Q1.
Richard L. Schlenker: That sounds great. And then, if I could ask a question about margins, your four-year margin guide is lower than what you achieved in Q1. Is that all because of revenue expectations? Anything else that we should think about there in terms of the margin cadence?
Speaker Change: For one.
Speaker Change: The reason that we just explained about.
Speaker Change: The demand environment.
Richard L. Schlenker: Yeah, so a couple of things. One, you know, we are not expecting the utilization to be quite at the level that it was in in Q1. For one, the reason that we just explained about that demand environment, but also that utilizations do step down just in the cyclical times of the year. So when we have more vacations and holidays, which occur in late second quarter into the third quarter for the summer and then our holidays that are around the end of the year.
Speaker Change: Also that utilization Skus step down just in the cyclical times of the year. So when we have more vacations and holidays, which occur in late second quarter ended the third quarter for the summer and then our holidays that are <unk>.
Richard L. Schlenker: Round.
Richard L. Schlenker: At the end of the year, so those tend to be lower utilization quarters for us. So.
Richard L. Schlenker: So margins do step down in that period of time.
Richard L. Schlenker: So those tend to be lower utilization quarters for us. So margins do step down in that period of time historically, and as I had outlined, we do have some increase in the expenses there related to the amortization of the rent expense.
Richard L. Schlenker: Historically.
Richard L. Schlenker: And as I.
Richard L. Schlenker: We do have some increase.
Richard L. Schlenker: In the in the expenses there related to the amortization of the.
Unknown Executive: Sounds great. Thank you for the color and congrats on a good quarter.
Richard L. Schlenker: Rent expense.
Speaker Change: That's great. Thank you for the color and congrats on the good quarter. Thank.
Operator: Thank you. Thanks, Josh. Again, if you have a question, please press star then 1. The next question comes from Tobey Sommer with Truist Securities. Please go ahead.
Speaker Change: Thank you thanks Thomas.
Tobey O'Brien Sommer: Again, if you have a question. Please press Star then one.
Operator: The next question comes from Tobey Sommer with Jewish Securities. Please go ahead.
Operator: Yeah. Good evening. This is Jack Wilson on for Tobey.
Unknown Executive: Yeah, good evening. This is Jack Wilson on for Toby. I'd like to start out with what's your hiring posture going into sort of the back half of the year and sort of your, your, views on the availability of talent in the market right now?
Jack Wilson: Maybe just start out with sort of.
Jack Wilson: What's your what's your hiring posture going into sort of the back half of the year and sort of your your your views on the day of the availability of talent in the market right now.
Jack Wilson: Yeah. Thanks, Jack our human capital, obviously has been driving force behind the growth and as rich alluded to in his comments.
Catherine Ford Corrigan: Yeah, thanks, Jack. You know, our human capital, obviously, is the driving force behind the growth. And, as Rich alluded to in his comments, we expect in the back half of the year that we will be sequentially increasing our headcount. You know, that has been stepping down over the last several quarters as we have adjusted our model to drive that utilization to the right level.
Catherine Ford Corrigan: We expect in the back half of the year, we will be sequentially, increasing our head count that has been stepping down over the last several quarters as we have adjusted our model.
Catherine Ford Corrigan: That utilization should the right level.
Catherine Ford Corrigan: Going forward our growth engine is is in our people. It's in the hiring of that exceptional talent and that development of that exceptional talents and sell them. We are working with every one of our business unit leaders.
Catherine Ford Corrigan: But going forward, our growth engine is in our people. It's in the hiring of exceptional talent and in the development of that exceptional talent. And so, you know, we are working with every one of our business unit leaders to really ensure that we are executing and developing the right recruiting plans based on the demand pull of the market in very specific areas of places where we truly are developing new capabilities and need to fill gaps in that talent.
Catherine Ford Corrigan: To really ensure that we are executing in and developing the right recruiting plans.
Catherine Ford Corrigan: Based on the demand pull up the market you know and in very specific areas have places, where we truly are developing new capabilities and.
Catherine Ford Corrigan: You need to fill gaps in that talent. So we're doing that strategically and expect to increase that head count sequentially.
Catherine Ford Corrigan: Well still and we expect to end with a year over year reduction of about 5% in our head count that sequentially, we will be adding head count in terms of the environment we have.
Catherine Ford Corrigan: I believe is an exceptional employee value proposition.
Catherine Ford Corrigan: So we're doing that strategically and expect to, you know, increase that headcount sequentially. We will still end up with a year over year reduction of about 5% in our headcount, but we will be adding headcount sequentially.
Catherine Ford Corrigan: We hire the best and the brightest from doctoral programs and graduate programs in engineering science around the United States and as well as globally.
Catherine Ford Corrigan: We feel.
Catherine Ford Corrigan: I'm very encouraged by the landscape right now in terms of our ability to compete because we do we do compete with our clients. So it's always a.
Catherine Ford Corrigan: In terms of the environment, you know, we have what I believe is an exceptional employee value proposition. We hire the best and the brightest from doctoral programs and graduate programs in engineering science around the United States and as well as globally. And, you know, we feel, you know, I'm very encouraged by the landscape right now in terms of our ability to compete because, you know, we do compete with our clients. So it's always a challenging environment because engineering and scientific expertise is always in demand. But I see ourselves as well positioned to accelerate our recruiting as we see the demand pull grow in the marketplace.
Catherine Ford Corrigan: A challenging environment, because engineering and scientific expertise is always in demand.
Catherine Ford Corrigan: I see ourselves as well positioned to accelerate our recruiting as we see the demand fall well within the marketplace.
Speaker Change: Yeah Joe.
Catherine Ford Corrigan: One clarification.
Catherine Ford Corrigan: The when I spoke about the full year average ftes it is across all four periods.
Catherine Ford Corrigan: The average there. So obviously, we were down 5% from the first quarter.
Catherine Ford Corrigan: Proximately, 8% down in the second then things should improve on a year over year basis.
Catherine Ford Corrigan: They will still be down but be improving in the back half of the year being at a lower year over year decline.
Richard L. Schlenker: One clarification, when I spoke about the full-year average FTEs, it is across all four periods, the average there, so obviously, we're down 5% in the first quarter; we'll have approximately 8% down in the second. Then things should improve on a year-over-year basis. They will still be down, but they will be improving in the back half of the year, at a lower year-over-year decline, and that should come out at an average of 5% to 6% for the full year.
Catherine Ford Corrigan: And that should come out at <unk>.
Richard L. Schlenker: An average of 5% to 6% for the full year.
Speaker Change: Okay. Thank you for that color there and then are there any sort of particular regulations, you're you're tracking sort of in light of it being an election year or that your clients are tracking, especially in the energy space that we should be aware of.
Richard L. Schlenker: Yeah.
Richard L. Schlenker: Always in an election year.
Speaker Change: Folks raised questions around the regulatory environment, how will that impact.
Richard L. Schlenker: Our outlook and various things of that nature, and we certainly track the <unk>.
Catherine Ford Corrigan: Okay, thank you for that color there. And then are there any sort of particular regulations you're tracking sort of in light of it being an election year or that your clients are tracking, especially in the energy space, that we should be aware of?
Catherine Ford Corrigan: Literary frameworks, whether that's at the state level, which drives a lot of hard work as well as at the national level and on a global level because a lot of our chemical regulatory work. For example is global so we're looking at all of those frameworks.
Speaker Change: We are not.
Catherine Ford Corrigan: Not we haven't historically seen.
Catherine Ford Corrigan: Yeah, you know, it's always in an election year, and folks raise questions around the regulatory environment, how will that impact our outlook, and various things of that nature. And, you know, we certainly track the regulatory frameworks, whether that's at the state level, which drives a lot of our work, as well as at the national level and the global level, because a lot of our chemical regulatory work, for example, is global.
Catherine Ford Corrigan: Significant swings in one direction or another or whether we have started the markdown of chronic administration of more regulation friendly administration or.
Catherine Ford Corrigan: More of an anti regulatory.
Catherine Ford Corrigan: Administration in a in a scenario, where there's less appetite for regulation will often sees you know maybe where building more pipelines that <unk> infrastructure, we don't get involved in those and that kind of work when those defeats arise and also when safety regulations are.
Catherine Ford Corrigan: The bar is raised to which we see continuously over time clearly that's good for us from the standpoint of our disputes work from a standpoint of our regulatory work. So while we're certainly paying attention to this.
Catherine Ford Corrigan: So we're looking at all of those frameworks. You know, we are not, not, we haven't historically seen, you. I am not anticipating that we will have any real material shift based simply on a change of administration in the near term.
Catherine Ford Corrigan: I am not anticipating that we will have any real material shift.
Catherine Ford Corrigan: Based simply on a change of administration in the near term.
Speaker Change: Okay. Thank you and just one quick one I might have missed it but any change to sort of that full year capex expectation.
Unknown Executive: Okay, thank you. And just one quick one, I might have missed it, but any change to sort of the full year CapEx expectation?
Richard L. Schlenker: No, we, you know, while the first quarter was lower than the, you know, sort of average there, we still should be, you know, expecting CapEx to be in that, give or take, you know, $15 million range. Okay, thank you.
Richard L. Schlenker: No.
Richard L. Schlenker: While the first quarter was lower than the sort of average there.
Richard L. Schlenker: We still should be.
Richard L. Schlenker: We're expecting our.
Richard L. Schlenker: Capex to be in that.
Richard L. Schlenker: Give or take $15 million range.
Speaker Change: Okay. Thank you very much and congratulations on the strong results.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session as well as conference. Thank you for attending today's presentation. You may now disconnect.
Unknown Executive: Okay, thank you very much, and congratulations on the strong results. Thank you. This concludes our question and answer session.
Unknown Executive: Okay.
Unknown Executive: [music].
Unknown Executive: Yeah.
Unknown Executive: Yes.
Operator: This concludes our question and answer session, as well as the conference. Thank you for attending today's presentation. You may now disconnect.
Operator: Yeah.
Operator: [music].
Operator: Okay.
unknown: BF-WATCH TV 2021
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