Exponent, Inc.

Welcome to the Exponent First Quarter of Fiscal Year 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Whitney Kukulka of Investor and Relations. Please go ahead, ma'am.

Thank you, Operator. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's First Quarter of Fiscal Year 2020 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 www.exponent.com slash investors. 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. Before we start, I would like to remind you that the following discussion contains forward-looking statements including but not limited to exponents 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 exponents periodic SEC filings including those factors discussed under the caption risk factor in Exponent's most recent form 10-K. 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. Katherine Corrigan, Chief Executive Officer. Katherine?

Thank you, Whitney, and good afternoon, everyone. Thank you for joining our call today. I hope that all of you and your loved ones are staying healthy and safe. These are unprecedented times, so we will be taking a somewhat different approach to our earnings call commentary. On today's call, we will not only review our business performance and financial results for the first quarter, but we will also share with you the impact that the coronavirus pandemic has had on our business, what we are doing to address the associated challenges, and how the strength of our business model positions us for long-term success. We are pleased to report another strong quarter with year-over-year growth in revenues and earnings. Our total revenues grew 7% to $106 million and our earnings per share were 49 cents as compared to 42 cents in the same period last year. This revenue and earnings growth occurred despite the impact that business restrictions related to the coronavirus began to have on our Asian operations in late January and on certain areas of our European and United States operations in the second half of March. Exponence engineering and other scientific segments represented 80% of the company's first quarter net revenues. Net revenues in this segment grew 6% in the first quarter as compared to 2019. This segment had notable performances in its biomedical, mechanical engineering, vehicle engineering, and biomechanics practices. Multinational companies across industries engaged our interdisciplinary teams of world-class consultants for scientific expertise and risk assessments. Our work for Pacific Gas and Electric related to the integrity management of their electric utility infrastructure and fire risk was approximately 4% of Exponent's net revenues in the first quarter of 2020. Exponent's environmental and health segment represented 20% of the company's first quarter net revenues. Net revenues in this segment increased 8% in the first quarter as compared to 2019. Within this segment, the chemical regulation and food safety practice continue to grow as our scientists evaluated the effects of chemicals and new products on human health and the environment. Exponent is addressing the challenges associated with COVID-19 with the same seriousness, intellectual rigor, and fact-based analysis that we have employed for over 50 years. We are focused on three things, the health and safety of our people, Demonstrating leadership by continuing to solve our clients' most pressing problems and delivering value to shareholders. Our unique capabilities, dedicated team of scientific experts, adaptable business model, and highly diversified client base shape Exponent's leading market position. Despite the expected near-term headwinds in some areas of our business, we are serving many essential industries, including utilities, Life Sciences, Chemicals, Transportation, Insurance, and Food. We are confident in the resilience of our business and our ability to deliver growth over the long term as society continues to focus on safety, health, sustainability, and reliability. Exponent entered this crisis in a position of strength. We ended the quarter with $152 million in cash, cash equivalents, and short-term investments. We have no debt, and today we reiterated our intent to continue quarterly dividend payments. Exponent has a long history and a strong track record of delivering for all of our stakeholders amid macroeconomic turbulence. I will now provide some details about how Exponent has responded to the COVID-19 pandemic and comment on the trends that we are seeing across the business. Our employees have been working from home since the initiation of shelter in place orders, with the exception of laboratory and inspection activities for essential businesses. Our business continuity plan and robust infrastructure have empowered productive remote work from day one. Our business development process has evolved to adapt to a remote working environment, and the vast majority of our engagements for new and existing clients continue to be initiated by inbound communication based on our reputation and longstanding relationships. We continue to see strong demand for utility integrity management services as clients focus on power reliability while their customers are asked to stay at home. Preparation for fire season is an additional market driver in this sector. Our chemical regulation and food safety services represent an ongoing area of strength as clients must continue to comply with complex regulations as they distribute products around the world. At the same time, we have seen slowing of a portion of our litigation support projects due to courthouse closures and associated legal delays. Very little of our consultants' time is actually spent testifying in courtrooms, but because the legal deadlines have moved, some clients have put work on hold. We are pleased to see that certain courts are beginning to utilize technology to hold virtual hearings and trials. Travel restrictions are delaying work that requires inspection of a site or of a product that cannot be shipped. But as restrictions begin to ease, Exponent's broad geographic footprint will be a competitive advantage as it puts our consultants within driving distance of many locations. We are also increasing our use of technology such as video streaming, 3D imaging, and virtual reality to enable remote inspections and laboratory investigations. This pandemic has also temporarily paused our user studies, but we are actively adapting the study designs and implementing processes and technologies so that we can restart them as quickly as possible while focusing on the health and the safety of our participants and our employees. Our scientific experts are more committed than ever to delivering actionable thought leadership, especially where it can help to manage and mitigate risk associated with the COVID-19 pandemic. Some examples of issues that our interdisciplinary teams are seeing include mitigating safety risks in the workplace, from occupational health and industrial hygiene to the use of technology to monitor physical distancing and potential signs of illness. Development, regulation, and performance of medical products, disinfectants, and personal protective equipment, including evaluation of COVID-19 diagnostics, re-sterilization processes for PPE, and disinfection registration across national boundaries. Global supply chain optimization, including root cause analysis of increased product failure rates due to supply chain disruptions. Strategies for documenting and analyzing construction delay impacts related to COVID-19 and litigation claims related to COVID-19 exposure. Safety, failure analysis, and risk analysis are in the very DNA of our company. For over 50 years, Exponent has advised clients across the globe in times of crisis. We have long demonstrated our ability to pivot quickly to address our clients' most compelling issues, and we are demonstrating that agility in the context of the coronavirus crisis. However, what remains evident is that society continues to raise its expectations for safety, health, sustainability, and reliability, and that products and processes continue to grow in their technological complexity. These market drivers have powered Exponent's growth for over 50 years, and have led to increased demand for our interdisciplinary solutions despite periods of macroeconomic turbulence. We remain focused on developing and retaining our exceptional talent to ensure that we are increasing our value in the marketplace. We remain committed to our mission and are highly confident in the long-term health of our business. I'll now turn the call over to Rich to provide more detail on our first quarter financial results and to discuss business activity in the first three weeks of the second quarter. Rich?