Exponent’s second quarter results showed resilience in a challenging demand environment, as revenue remained flat year over year but topped Wall Street’s expectations. Management credited robust performance in litigation and dispute-related engagements, particularly within the construction, automotive, and medical device sectors, as key drivers of the quarter. CEO Catherine Corrigan highlighted ongoing demand for failure analysis expertise, stating, “Clients turn to us for extraordinary specialized expertise when the stakes are high,” as companies face heightened safety and performance scrutiny. However, softer demand in chemical regulatory services and lower utilization rates contributed to margin pressure.

Is now the time to buy EXPO? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Exponent’s Q2 Earnings Call

• Tyler David Barishaw (Truist): Asked how much the decline in utilization was due to the July 4 holiday versus other factors. CFO Richard Schlenker explained that about half was holiday-related and the rest due to lower utilization and new hires.
• Tyler David Barishaw (Truist): Inquired about client reactions to easing tariff uncertainty and new trade deals. CEO Catherine Corrigan said some clients are delaying projects due to tariff uncertainty, particularly in chemicals, but are still seeking regulatory support.
• Tyler David Barishaw (Truist): Sought preliminary revenue outlook for next year. Corrigan shared optimism around growth areas like wearables, sensors, and energy infrastructure, while Schlenker expected more moderate rate realization.
• Karandeep Singhania (UBS): Asked about growth trends in proactive versus reactive work. Schlenker said both were similar, but litigation work within reactive services showed notable strength.
• Karandeep Singhania (UBS): Asked about ongoing delays in regulatory-driven work. Corrigan acknowledged delays, especially at the EPA, but said most projects are proceeding with clients finding ways to move forward.

Catalysts in Upcoming Quarters

In the quarters ahead, our analyst team will be monitoring (1) the pace of hiring and integration of new technical staff to support expanding workloads, (2) signs of recovery or continued delays in regulatory-driven projects, particularly in chemical and life sciences, and (3) early progress in securing larger engagements tied to the energy transition, wildfire mitigation, and AI-enabled safety-critical applications. The ability to maintain or improve utilization rates will also be closely watched.

Exponent currently trades at $71.15, up from $68.96 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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