Exponent, Inc. (NASDAQ:EXPO) Q3 2023 Earnings Call Transcript

Andrew Nicholas: And then maybe for my follow-up on margin. Can you help me bridge the gap in terms of kind of the revenue guide down versus the margin guide down? It looks like you’re still kind of high single-digit expectation for full year in ’23 on the top line, which I realize that’s below what you were at before at the midpoint, but still within that full year range and yet guidance for margins is below the prior range, if I’m not mistaken. Is there any other kind of outsized expenses that have come through since you last spoke with us? Or — anything else to call out? Or is it just a function of the fact that you’re kind of hanging in there with fixed costs and people in the consumer products business, the expectation that, that comes back around at some point next year?

Rich Schlenker: Yes. So look, it is — it’s all driven by that being a few million dollars less in the revenue line. We are we’re hitting on about where we expected the level of staffing to be. So we had indicated where we thought we would make some adjustments in that and did it. The fact that we have a slightly lower revenues has led to slightly lower utilization and the leverage you get out of that is quite high. So it — this is really just about, as I indicated, if you take a look at this at the last quarter, if that $8 million was only $6 million to $6.5 million, which is sort of what I would have expected in the third quarter. probably $1 million of that would fall to the margin line. And you would have been on the upper half of our EBITDA margin.

And the same goes for the fourth quarter. We are expecting probably about more of revenues in that quarter would have ended up with us $3 million or $4 million. That would have put us up in the high single digits, let’s say, had us hitting that range. And as such, you would have ended up seeing a couple of million dollars more in EBITDA and in return got yourself another 50 basis points to 80 basis points.

Operator: This concludes our question-and-answer session, and the conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.