Good day, and welcome to the Exponent's Q2 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Joni Konstantelos with Investor Relations. Please go ahead. Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's Q2 2023 financial results conference call. Please note that this call will simultaneously webcast on the investor relations section of the company's corporate website at www.exponent.com/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, 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. The forward-looking statements and risks in this conference call are based on current expectations as of today, Exponent assumes no obligation to update or revise them, whether as a result of new developments or otherwise. Now I will turn the call over to Dr. Catherine Corrigan, Chief Executive Officer. Catherine? Thank you, Joni, thank you everyone for joining us today. I will start off by reviewing our Q2 2023 business performance. Rich will then try to provide a more detailed review of our financial results and outlook. We will then open the call for questions. We delivered solid Q2 results, growing net revenues by 10% and expanding earnings per diluted share. We continue to demonstrate the strength of our diverse and ever-evolving services portfolio, which anticipates and adapts to our clients' critical needs throughout their product life cycles. Growth in the quarter was driven by robust demand for our reactive offerings. The proactive side saw increased demand in the chemicals and life sciences sectors, offset by some moderation in the electronics sector. Overall, our strategic mix of capabilities across industries and the product life cycle performed well, despite specific headwinds that I will discuss in a moment. Turning to our engagements in more detail, within our reactive services, we saw strong increased demand for our disputes and litigation-related work, with particular strength in the transportation, construction, and consumer products sectors. On the automotive side, we are fielding more and more questions about the design and performance of advanced driver-assistance and battery systems in accident scenarios, as these technologies become more complex and more prevalent in the fleet, and the decisions made by artificial intelligence algorithms are challenged. We also saw increased product safety and recall-related engagements as clients leveraged our expert insights to understand the root cause of issues with their products. The proactive side benefited from increased demand in the chemicals and life science sectors, driven in large part by regulatory engagements. This was offset by some moderation in the electronics industry, associated with the timing of client product releases, coupled with the disruption caused by the actions the industry has taken to reduce staff. These factors impacted data gathering activities and human subject research, as well as product development consulting, as products moved through their life cycles out of the development stage and into the refinement stage. While we expect these trends within electronics to persist over the next few quarters, we are optimistic about the longer-term opportunities in this sector. We are well positioned, given the increasing role of artificial intelligence in product innovation and performance, with our capabilities in curating data to drive AI algorithms, as well as our experience analyzing the physical consequences of AI-driven decisions. Our diverse portfolio of proactive offerings positions us well to capitalize on the complexities associated with next-generation designs and increasing expectations around safety, health, and the environment. Improved retention, as well as our accelerated recruiting efforts over the last year, drove a 15% increase in headcount year-over-year, which reflects the strength of our employee value proposition. While these investments in our talents are critical for our future growth, we remain diligently focused on aligning our resources with the growth of the business and future opportunities. Rich will share some additional color on our expected headcount growth in a few moments. Turning to our segments, Exponent's engineering and other scientific segment represented 83% of our net revenues in the Q2, increasing 10% in the Q2 and 11% in the first half compared to the prior year. Growth in the quarter was driven by strong demand for Exponent services across the transportation and construction sectors. Exponent's environmental and health segment represented 17% of the company's net revenues in the Q2. Net revenues in this segment increased 10% in the quarter and 4% in the first half compared to the prior year. Growth was driven by regulatory consulting around the impacts of chemicals on human health and the environment, as well as activity in the life sciences sector. As we move into the back half of the year, we remain focused on strengthening our client relationships, managing resources in line with the growth of the business, and meeting the dynamic needs of our clients. Overall, I am pleased to see the power of our diverse portfolio delivering solid growth through economic cycles as we address our clients' most complex challenges. I'll now turn the call over to Rich to provide more detail on our Q2 results, as well as discuss our outlook for the third quarter and the full year 2023. Thank you, Catherine, and good afternoon, everyone. Let me start by saying all comparisons will be on a year-over-year basis, unless otherwise noted. For the Q2 of 2023, total revenues increased 7.6% to $140.2 million, and revenue before reimbursements, or net revenues, as I will refer to them from here on, increased 9.7% to $129.7 million, as compared to the same period of 2022. Net income for the Q2 was $25.7 million or $0.50 per diluted share, as compared to $25.8 million or $0.49 per diluted share in the prior year period. The realized tax benefit associated with accounting for share-based awards was immaterial in the Q2s of 2023 and 2022. Exponent's consolidated tax rate was 29% in the Q2, as compared to 27.3% for the same period of 2022. EBITDA for the Q2 decreased less than 1% to $36.8 million, producing a margin of 28.4% of net revenues, as compared to $37.1 million, which was a margin of 31.4% in the same period of 2022. The year-over-year step down in margins was anticipated as expenses normalized post-pandemic. Billable hours in the Q2 were approximately 388,000, an increase of 4.4% year-over-year. The average technical full-time equivalent employees in the Q2 were 1,077, which is an increase of 15% as compared to 1 year ago. This exceeded our expectations as recruiting has been very successful and retention has improved. Utilization in the quarter was 69%, down from 77% in the same period of 2022. While we expected utilization to decline from the elevated level it was in the Q2 of last year, our higher-than-anticipated headcount resulted in lower utilization in the quarter. As Catherine mentioned, we are diligently focused on strategically balancing our resources with the growth of the business and our pursuit of future opportunities. The realized rate increase was approximately 5.3% for the Q2 as compared to the same period a year ago. In the Q2, after adjusting for gains and losses in deferred compensation expense, compensation expense increased 12.6%. Included in total compensation expense is a deferred compensation gain of $4.1 million, as compared to a loss of $11.3 million in the same period of 2022. This is a $15.4 million swing. As a reminder, gains and losses in deferred compensation are offset in miscellaneous income and have no impact on the bottom line. Stock-based compensation expense in the Q2 was $5.2 million, as compared to $4.6 million in the prior year period. Other operating expenses in the Q2 were up 17.7% to $10.3 million, driven primarily by increased employee activity at our offices. Included in other operating expenses is depreciation and amortization expense of $2.2 million for the Q2. G&A expenses were up 15.6% to $6.6 million for the Q2. The increase in G&A expenses was primarily due to increased travel as employees returned to in-person engagement with clients and professional development. Interest income increased to $1.6 million for the Q2, driven by an increase in interest rates. Miscellaneous income, excluding the deferred compensation gain, was approximately $700,000 in the Q2. During the quarter, capital expenditures were $5.4 million, and we distributed $13.2 million to shareholders through dividend payments. We ended the Q2 with $148.2 million in cash and cash equivalents. Turning to our outlook. Our full year 2023 outlook is unchanged. For the third quarter 2023, as compared to 1 year prior, we expect revenues before reimbursements to grow in the high single to low double digits, and EBITDA margin to be 27.5%-28.5% of revenues before reimbursements. For the full year 2023, as compared to 1 year prior, we are maintaining our guidance and expect revenues before reimbursements to grow in the high single to low double digits, and EBITDA margin to be 28%-28.5% of revenues before reimbursements. As mentioned, we remain focused on strategically aligning our headcount with the growth of the business. These actions include reducing hiring and increasing performance management. As a result, in each of the next 2 quarters, we expect technical full-time equivalent employees to decline sequentially 2%-3%. Over the next quarter or two, our hiring will be surgical in nature to address areas of high utilization and strategic growth. We have also increased performance management, which will increase turnover. Performance management is ongoing in our firm as we evaluate each employee's career trajectory towards determining if they are on a path to principal or if their career skills are better aligned with a career in industry, government, or academia. Performance management tends to be less when resources are constrained and turnover is high, such as when in 2021 and 2022. We expect utilization in the third quarter to be 68%-70%, as compared to 73% in the same quarter last year. Utilization in the third quarter will continue to be tempered by increased headcount, as well as seasonally higher vacation and holiday time during the summer months. Our expectations for full year utilization is 69%-70%, as compared to 73.8% in 2022. We still believe our long-term target of sustained mid-seventies utilization is achievable as we continue to strategically manage headcount and balance utilization based on market demand. We expect the 2023 year-over-year realized rate increase to be 4.75%-5.5%. For the remaining quarters, we expect stock-based compensation to be $4.8 million-$5.2 million. For the full year 2023, we expect stock-based compensation to be $22 million-$22.8 million. For the third quarter, we expect other operating expenses to be $10.7 million-$11 million. For the full year, we expect other operating expenses to be $41.7 million-$42 million, as in-office activities continue to pick up. G&A expenses are increasing as post-pandemic travel increases for business and professional development. For the third quarter of 2023, we expect G&A expenses to be $7.3 million-$7.7 million. For the full year, we expect G&A expenses to be $26.7 million-$27.2 million. We expect interest income to be approximately $1.8 million per quarter for the remaining quarters of 2023. In addition, we expect miscellaneous income to be approximately $750,000 per quarter. For the remainder of 2023, we do not anticipate any additional tax benefit associated with share-based awards. The year-over-year tax benefit associated with share-based awards will be $2.4 million, less than it was in 2022, which is $0.05 per diluted share impact to EPS. For 2023, we expect our tax rate, exclusive of the tax benefit for share-based awards, to be approximately 28.5%, as compared to 27.0% in 2022. For the Q3 of 2023, we expect our tax rate to be approximately 29%, as compared to 27% in the same quarter a year ago. For the full year of 2023, the tax rate inclusive of the tax benefit for share-based awards is expected to be 26.1%, as compared to 22.6% in 2022. In closing, our 2nd quarter results continued to underscore the strength of our business model and financial position. As we look to the back half of the year, we remain positioned to continue our profitable growth. I will now turn the call back to Catherine for closing remarks. Thank you, Rich. Exponent continues to advance science and engineering to empower our clients with solutions to their most critical challenges. We are uniquely positioned to advise them as they navigate the complexity of society's increasing expectations around safety, health, and the environment. Supported by the strength of our world-class team and our ever-evolving services portfolio, we remain confident in our ability to drive profitability and shareholder value over the long term. Operator, we are now ready for questions. We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Joshua Chan from UBS. Please go ahead. Hi, good afternoon, Catherine and Rich. Thanks for taking my questions. Hi there. [crosstalk] Hello. I guess, I, maybe I can start with a two-part question on, on demand. I, I guess first on the reactive side, it, it seems like that business is growing above what it normally grows at, and you, Catherine, you brought out some points on what's driving that, but I guess, do you feel like that above normal growth is sustainable going forward? Secondly, on the proactive side, it, it's hard to tell whether that business maybe decelerated a little bit in Q2. It sounds like it might have, but if there's a way you can kind of ballpark for us, you know, how broad-based the, the choppiness has been, that would be really helpful. Yeah, thanks. Thanks, Josh. You know, first on the reactive side, look, I mean, we see the increasing complexity that is coming around products as a real driver of that reactive work. You know, I did give the example around advanced driver-assistance systems systems. You know, as, as artificial intelligence is, is incorporated even more into products and making those decisions, you know, it could be an automated vehicle, it could be a wearable device that's giving signals about human health. It could be an AR or VR or mixed reality device that's, you know, making decisions as well, whether that's around employee training or, or various things. We are positioning ourselves at the forefront of those questions, you know, through our research and through the professional development of our teams. You know, we, we don't think this is necessarily a b lip in the growth in our reactive work. We think that portfolio has very, very strong market drivers. You know, that in addition to, you know, the, the opportunities for expansion internationally around disputes, changes in the landscape in the EU around product recalls and, and those frameworks. You know, we really are optimistic about the, the, the growth potential for that side of the portfolio. You know, on the proactive side, we did talk about, you know, some of the moderation that's happened. You know, we've got strength in a number of areas, growth around the regulatory side, in agricultural chemicals, for example, growth on the pharma side, in life sciences. The electronics industry, you know, that, that is a place where there is some moderation and, you know, a couple of factors that are weighing into that. You know, there was some disruption caused by the layoffs, you know, that impacted the flow of work in electronics, layoffs in the industry. You know, this is groups that are having to reconfigure and stabilize. You know, that takes a couple of quarters to sort of work its way through. We're seeing signs of that stabilizing, that workflow starting to come back through. But some of our, like, our data collection work, our human subject work, you know, these are, these are impacted in the near term by the product life cycle. It's where our clients are in that product life cycle. You know, there can be a big push in the development phase and a big product launch, and then, you know, that goes into the refinement phase, and it can ebb and flow because of that. You know, we see these clients also managing their budgets a little more tightly, which isn't surprising. You know, we're seeing-- we're expecting that over the next couple of quarters. You know, we saw it in Q2, and, and probably will see it over a couple more quarters. You know, long term, you know, this focus that society has on the, on the quality of the data that's driving and training AI algorithms and the quality of the decisions it's making and the competitive landscape in that industry, that all makes us feel, feel good in the long term about these kinds of offerings that we have. Of course, we'll continue to evolve those offerings to really capture, you know, what we think is a, is a good long-term opportunity. Thanks, Catherine. That's a really good color there, and I appreciate that. I guess, my, my second question on, on margins this quarter. Just conceptually, it, it seems like utilization ticked down from Q1 going to Q2, but somehow you were able to deliver stronger margins this quarter. Could you talk about what's driving that kind of sequential margin improvement, even though you didn't have the utilization help there? Yes. The margin improvement there is coming from the balance on the compensation line. We do tend to have higher compensation costs in the first quarter on a stock-based basis. In the first quarter, you know, that was about $7.5 million, you know, or really about $7 million in the first quarter, where you had about $5.2 million in stock-based compensation in the Q2. That's all around the timing of when we issue our grants and the accounting for those that pushes through. In addition to that, a lot of our hiring has been, you know, very much at the entry level. When you balance that with where the rates are, on bill rates versus, the change in the compensation area, you get the benefit of that, also pushing through. Okay. Yeah, thanks. Thanks for that, Rich. Lastly, how are you seeing the, the impacts between, you know, revenue per billable hour growth and, and wage inflation? I think you gave some color on what you expect for revenue per billable hour for the year, but just wondering how you're thinking about that balance. Thank you. Yeah. On a, on a per consultant basis, what we've seen or, or a per dollar basis there, we haven't we've seen our rate increase on. Even though we gave pretty substantial raises to our existing staff, effective April one, and all those raises were there and in place in the Q2, that was blended down to basically a flat to, you know, 1% sort of rate increase that we saw across because of the mix of employees that we had coming in. The mix of employees that we had generated a flat to slightly up, you know, wage increase. At the same time, that with that mix, generated approximately 5.3% increase in the, in the billing rates. Great. Thank you for that, and, thanks for your time. The next question comes from Tobey Sommer from Truist. Please go ahead. Thanks. I, I wanted to follow up on the, sort of, the, the broad headcount in, in revenue and expense growth. Are you comfortable with this amount of headcount growth and the, the, the near-term demand picture, so that you can, you know, continue to maintain a bottom-line growth rate, you know, sort of in excess of your revenue growth? Thanks, Tobey. Look, we are looking to slow that headcount growth. You know, there are, to make sure that we're aligning that with the near-term and longer-term demand and the, and the opportunities that we're seeing. You know, there are two, really two prongs to that approach, right? I mean, we've got the recruiting side. You know, we've got a number of areas of the many areas in the business. In fact, most of them are growing and strong, right? You know, we need to be recruiting in those areas. We're very focused on surgically recruiting strategically to make sure, you know, when our resources are constrained, that we can meet the market and meet that demand. You know, for example, the reactive side of the business and like that advanced driver assistance area, right? This is a place where we want to be recruiting to, to capture that. The other side of managing that headcount and working to bring that down is through performance management. Rich mentioned a little bit about this. You know, we're always, we're always looking for that best talent, right? That's what we're all about. We have this rigorous process of acquiring them, a paradigm that puts them on a growth path from day one. Making it all the way to principal at Exponent as a consultant, it's hard. It's not for everyone. You know, many employees can reach a point in their career where there are better opportunities for them elsewhere, right? We can counsel them about that, and that's what our performance management process is all about. As Rich said, you know, sequentially bringing that headcount down by 2, 2-3% per quarter over the next couple of quarters, is what we're doing in order to bring those two things back into balance again. Appreciate that. Could you speak to artificial intelligence in all its forms and what you think it means internally for your company, how you engage with your customers, and ultimately, how it may impact demand for your services? Yeah. Yeah. I mean, there are... We are engaged and have been engaged sort of across the life cycle of artificial intelligence algorithms. You, you know, you start with the data that you feed into them in order to create them, right? The training datasets. It's very important to make sure that those have the right diversity, demographics, you know, the curation of those datasets is an important part of that first step. We talk to clients about that. You know, we talk about the sort of ontologies that are used and the cleaning of the data, because real-world data are messy, right? We all know that, Exponent has a history of being able to take real-world data and gain insights from that because of our subject matter expertise, right? The, the theme, Toby, when we're talking to clients, is really about, this is where AI meets the laws of physics, right? Exponent has a long history of, you know, applying their understanding of the laws of physics to understand the consequences of all kinds of different decisions. That, you know, design decisions, for products, you know, decisions around the management of assets for a utility, you know, whatever the case may be. It's that combination of the data you're using to drive the algorithm, fit the laws of physics that you are applying to make it real, and then the decision that is coming out the other end. We have opportunities at every stage of that process, you know, because of the foundation we've laid in, you know, working around the product life cycle for, for many, many years. You know, the key is where it meets the laws of physics, where it meets human behavior, and our ability to cross industries with that, with those assessments, I think is an incredible value proposition that positions us really well to capture, to capture growth there. You know, as Catherine had said earlier, you know, where we've already done this work and, and are gaining, you know, top recognition in the marketplace by key players, you know, over the last even year or two, you know, is in the, the automated vehicle or really actually in the ADAS systems, the subsystems within those vehicles. You don't need to be fully autonomous to have a braking decision or a steering decision or, or those other things. It's been in the risk models and decision models that utilities out here on the West Coast are doing to make a decision about the resiliency of their system, or particular lines in making a decision at what wind speed or what environment to make a decision, and do that. To have that happen real time as the weather's changing, as those inputs are coming in, and have that model built in an engineering basis so that you can rely upon those decisions you're doing. Over into what we're seeing our clients develop in their health applications and wearable technologies, where they want their customers to ultimately be able to rely upon the feedback coming from that wearable device to understand when they really need to seek medical attention and, and do such. Then finally, as we're moving into the AR and VR area, clients who want to have a true real-world experience and deal with the safety and reliability and quality of those experiences, are wanting to make sure that they're utilizing curated data to have those experiences. Those are examples of what we've already done. You know, I think the future is, you know, quite significant for us in in going forward. Thanks. If I could sneak a last one in, could you update us on the large contract exposure or, or opportunity, should there not be kind of classically defined large contracts? My question comes in the context of having observed all the news around legacy telco cables with lead, which at least bond and stock markets are assuming represents pretty significant liabilities and exposures for those firms. Yeah, I think so, you know, we have not had a, you know, single project recently, that is, of that 4%-5% of revenues. We've had, you know, collections of different areas, some of that in, in this data collection area, that accumulate up near there, but not a, you know, a single engagement around it. But you are right, in the history, our history, a few of those projects that have achieved that 4% or 5% of revenues, have been around health exposures and environmental contaminants. You know, if you recall, back in the mid-2010s here, you know, we had our work for BP related to the Deepwater Horizon fit in that, and such. Issues, you know, we've, you know, we haven't had a project of this size, but, you know, we've done a lot of work over the past two decades related to asbestos and talc and, and other exposures there. We have, you know, some of the leading experts in environmental and health exposure, and, and, the consequences of that, and, you know, we'll see where this issue for industry goes. Thank you. This concludes our question and answer session. The conference has now concluded. 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