Exponent Reports Strong Third Quarter 2006 Results

MENLO PARK, Calif., Oct. 16 /PRNewswire-FirstCall/ -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the third quarter and nine months ended September 29, 2006.

For the third quarter of 2006, revenues grew 16.5% to $43,333,000, as compared to $37,192,000 in the same period one year ago. Revenues before reimbursements increased 15.6% to $40,049,000, as compared to $34,653,000 in the third quarter of 2005.

Net income for the third quarter of 2006 increased to $3,743,000, or $0.22 per diluted share, as compared to $3,515,000, or $0.20 per diluted share, reported last year. Third quarter 2006 net income, excluding $147,000 in net expenses related to FAS 123R, was $3,890,000, or $0.23 per diluted share.

EBITDAS(1) for the third quarter of 2006 increased 22.1% to $7,766,000, as compared to $6,361,000 for the same period one year ago.

On September 29, 2006, Exponent had $54 million in cash, cash equivalents and short-term investments. During the third quarter, Exponent used $12.9 million to repurchase shares, bringing the total amount used this year to repurchase shares of its common stock to $25.2 million.

"We performed very well in the quarter, reporting both strong top and bottom line results and growth in many of our practice areas. In addition, we improved our margins, continued to add more talent and focused on integrating our new hires to drive long-term growth," commented Michael Gaulke, CEO and President. "Revenues before reimbursements and excluding defense technology development increased 13% to $37.3 million this quarter from $33.0 million in the third quarter of 2005. These results were driven by good performance in our electrical, biomechanics, civil engineering, and construction consulting practices. Additionally, our defense technology development practice had a strong quarter, including the delivering of 215 MARCbots to the Robotic Systems Joint Project Office. We also received a follow-on order for additional MARCbots, which are scheduled to be delivered in the fourth quarter of this year."

"As we look to the remainder of the year, we are committed to growing the business through strategic opportunities and improving our overall operating performance. In the fourth quarter of 2006, we expect to post high single to low double-digit revenue growth. Exponent continues work at maintaining its differentiated market position as a multidisciplinary engineering and scientific consulting firm with unparalleled technical expertise," concluded Mr. Gaulke.

For the nine months ended September 29, 2006, revenues grew 9.3% to $127,014, 000, compared to $116,238,000 in the same period of 2005. Revenues before reimbursements increased 9.7% to $118,721,000, compared to $108,256,000 in the same period last year. Net income was $11,215,000, or $0.64 per diluted share, as compared to $11,476,000, or $0.66 per diluted share, reported in the same period of 2005. Net income, excluding $722,000 in net expenses related to FAS 123R, was $11,937,000, or $0.68 per diluted share.

EBITDAS(1) for the first nine months of 2006 was $22,891,000, as compared to $ 21,831,000 for the same period one year ago.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, October 16, 2006, starting at 4:30 p.m. Eastern Daylight Time/1:30 p.m. Pacific Daylight Time. The audio on the conference call is available by dialing 888-830-3976 and entering reservation #8146208. 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) 642-1687 and entering reservation #8146208.

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 70 technical disciplines to address complicated issues facing industry and government today. The firm's consultants analyze failures and accidents to determine their causes and provide answers to help prevent such problems. In addition, Exponent evaluates human health and environmental concerns to find cost-effective solutions.

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) EBITDAS is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization, and stock-based compensation. The Company regards EBITDAS as a useful measure of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDAS provides 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. This measure, 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 EBITDAS to GAAP is set forth in the document linked to below.

Condensed consolidated statements of operations for the quarters ended September 29, 2006 and September 30, 2005 (PDF format)