Exponent, Inc. (EXPO) Q3 2026 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Exponent, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Joni Konstantelos with Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's Third Quarter 2026 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.investors.exponent.com. 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, Chief Executive Officer; Dr. John Pye, President; Richard Schlenker, Executive Vice President; and Eric Anderson, 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, 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. Catherine Corrigan, Chief Executive Officer. Catherine?

Thank you, Joni, and thank you, everyone, for joining us today. I will start off by reviewing our third quarter 2026 business performance. John will then share his perspective on innovation and market trends, and Eric will then provide a more detailed review of our financial results and outlook, and we will then open the call for questions. Before I get into our results, I want to thank those of you who joined us in Phoenix last month for our first Investor Day. We focus that day on a theme that is increasingly central to our business. The convergence of technology, infrastructure and humans and the opportunities for Exponent that emerge where they intersect. For those of you who are not able to join us, you can view the non-demonstration portions of the Investor Day on the Investors section of Exponent's website. Our goal in Phoenix was not simply to tell you what makes Exponent different, but to bring that differentiation to life and to make it memorable. And in many ways, our third quarter results provide another illustration of that story. Exponent delivered a strong third quarter with double-digit growth in revenues and earnings, reflecting continued demand for our specialized integrated engineering and scientific expertise. User research continued to be a strong contributor to our growth. And importantly, that work continues to broaden across clients, products and real-world environments. We also saw growth on top of a strong prior year quarter in disputes, failure analysis and product safety-related work across chemicals, consumer products and transportation. While these engagements span broad areas of our business, they increasingly reflect the same underlying forces we discussed at our Investor Day. Technology is advancing rapidly, becoming more deeply embedded in physical products and systems and interacting with people in increasingly complex and consequential ways. We see that convergence particularly clearly in our user research work. As organizations bring new technologies to market, they increasingly need to understand not only whether the technology works, but how it performs when people actually use it in the real world. That is making our studies both more diverse and more technically complex. Wearable devices, for example, are becoming much more sophisticated. A watch cannot directly measure many of the health variables we care about. Instead, it measures signals that it can directly access at the wrist and increasingly uses sophisticated analytics and machine learning to make predictions about things like cardiovascular health. That raises a much more complex question than whether the sensor itself works. Can those predictions be trusted as a basis for health decisions? Answering that question requires novel methodologies, benchmarking performance against clinical reference standards and an understanding of how performance changes across different people and real-world conditions. In consumer electronics, we are increasingly evaluating technology outside of controlled environments. Device users may be riding a bike or driving a car or navigating an airport. Our work in sensory perception is also expanding, analyzing how devices communicate information when users are already processing a complex physical environment. These are not simply questions about a device or algorithm. They are questions about the interaction among technology, human behavior and the physical world. Answering them takes a broader mix of expertise and requires us to design novel ways to measure both human performance and device behavior and then interpret the results within the safety, regulatory and business context our clients face. We see a similar convergence from a different vantage point when products and systems do not perform as intended. During the quarter, we saw increased dispute and failure analysis work across consumer products, chemicals and transportation. In consumer products, this helps clients assess potential and actual product recalls tied to safety concerns as expectations from consumers, regulators and society continue to rise. As the race to embed AI into physical systems accelerates, the interaction among software, hardware, materials, human behavior and the surrounding environment becomes more complex. A single product safety investigation, for example, can bring together thermal scientists, mechanical engineers and materials and polymer experts working together as one team. This is where Exponent's differentiated position stands out. In transportation, we continue to see increased failure analysis work related to advanced driver assistance systems, another area where sophisticated technology must interact reliably with people and the physical environment. And in chemicals, we saw increased demand for dispute work tied to chemicals of concern where evolving science, regulation and societal expectations are creating increasingly complex questions for our clients. Across all these matters, the underlying need is remarkably consistent. Clients need confidence that increasingly complex products, technologies and infrastructure will perform safely and reliably in the real world. When they fall short, the consequences of failure are high and they rely on Exponent for independent evidence-based analysis and expert judgment that can withstand scrutiny, whether in a courtroom before a regulator or in the boardroom. That is why the people and capabilities we highlighted at our Investor Day really matter. We showed you firsthand what sets us apart, our integrated ecosystem of highly talented scientists and engineers and our ability to bring the right combination of expertise together to solve complex, high-consequence challenges. I would now like to turn it over to our President, John Pye, to share his perspective on how AI is moving into the physical world and where he sees innovation heading across our markets. John?

Thank you, Catherine. At Investor Day, we described AI as a stack with 5 layers, starting at the bottom with the electrons that power everything, the chips, the data centers that house them, the models and at the top, the applications where AI interprets and acts on the physical world. Exxon has worked at every layer of this stack. We draw upon our 60 years of science and engineering experience to help our clients extract the highest level of reliability out of supply chains that are under immense stress, delivering traditional products like generators, connectors, cables, even the concrete going into the buildings that make up a data center. We are also helping those same clients deliver the innovative products that stretch the performance of technology in things like sensor network switches and advanced cooling systems. Today, however, most of our AI-related work sits at the top of the stack in the applications where we deliver the data that trains these systems and where we test how they perform in real-world conditions. In total, we estimate that AI is a direct element of roughly 15% to 20% of our business this year. That figure is an estimate because AI is embedded in so much of the technology our clients build that its influence reaches well beyond those engagements. What we are seeing today is that questions that were hypothetical a year ago are becoming real projects. Clients using AI to design new materials and formulations are then asking us to evaluate those AI-generated recommendations that raise real safety questions. Others want to understand why an AI system made a particular decision in a vehicle, a device or a piece of equipment. These engagements are still early, but they are real work and the inquiries are growing. As AI moves into the physical world, the question is no longer whether it works, it is what happened, why it happened and now more than ever, whether the answer can be trusted. When intelligent products behave unexpectedly, people turn to Exponent for explainability, clarity and trust. I'll now turn the call over to Eric to provide more detail on our third quarter results as well as discuss our outlook for the fourth quarter and the full year 2026. Eric?

Thank you, John, and good afternoon, everyone. Let me start by saying all comparisons will be on a year-over-year basis, unless otherwise noted. For the third quarter of 2026, total revenues increased 18% to $173.7 million and revenues before reimbursements or net revenues, as I will refer to them from here on, increased 12% to $153.1 million as compared to the same period of 2025. Total revenues grew faster than net revenues due to a higher level of reimbursable expenses that are included in total revenues. Because reimbursable expenses can fluctuate quarter-to-quarter based on the mix and nature of client engagements, we believe that net revenue is a more meaningful measure of our underlying performance. Net income for the third quarter increased 10% to $30.9 million as compared to $28 million during the same period in 2025. Diluted earnings per share increased 16% to $0.64 per share as compared to $0.55 per share during the same period last year. Over the past 12 months, we utilized $171 million for repurchases of our common stock, which resulted in a 5% decrease in our average diluted shares outstanding of 48.4 million shares during the third quarter of 2026 as compared to 51.2 million shares during the same period in 2025. These repurchases also reduced our interest income. We did not repurchase any of our common stock during the third quarter of 2026. Exponent's consolidated tax rate was 28% in the third quarter of 2026 compared to 27.4% for the same period in 2025. The tax impact associated with share-based awards was immaterial in both the third quarter of 2026 and 2025. EBITDA for the quarter increased 16% to $45 million, producing a margin of 29.4% of net revenues as compared to $38.8 million or 28.3% of net revenues in the same period of 2025. Billable hours in the third quarter were approximately $405,000, an increase of 8% year-over-year. Average technical full-time equivalent employees in the third quarter were 1,016, up 4% as compared to 1 year ago. This increase was a result of our recruiting and retention efforts. Utilization in the third quarter was 76.7%, up from 74.1% in the same period of 2025. The realized rate increase during the third quarter was approximately 4%. In the third quarter, compensation expense after adjusting for gains and losses in deferred compensation increased 11%. Included in total compensation expense is a deferred compensation gain of $159,000 as compared to a gain of $7 million in the third quarter of 2025. As a reminder, gains and losses in deferred compensation are offset to miscellaneous income and have no impact on the bottom line. Stock-based compensation expense in the third quarter was $6.7 million as compared to $5.3 million in the prior year period. Other operating expenses in the third quarter were up 9% to $13.8 million due to investments in our corporate infrastructure. Included in other operating expenses is depreciation and amortization expense of $2.7 million. G&A expenses decreased 4% to $7.3 million for the third quarter, primarily reflecting lower travel and meal expenses associated with the smaller firm-wide principles meeting held during the third quarter of 2026 as compared to the larger managers meeting held during the third quarter of 2025. Interest income decreased to $668,000 for the third quarter, driven by a decrease in cash. Regarding capital allocation, during the quarter, capital expenditures were $1.2 million, and we distributed $14.7 million to shareholders through dividend payments. Turning to our segments. Exponent's Engineering and Other Scientific segment represented 85% of net revenues in the third quarter. Net revenues in this segment increased 13%, driven by strong user research activity spanning a broad set of challenges, including health applications, dynamic and unstructured real-world environments and sensory perception, along with dispute-related services involving chemical facilities, consumer products and advanced transportation technologies. Exponent's Environmental and Health segment represented 15% of net revenues in the third quarter. Net revenues in this segment increased 3%, driven by increased projects assessing the effects of chemicals on human health and the environment. Turning to our outlook. For the fourth quarter of 2026, as compared to 1 year prior, we expect net revenues to grow 8% to 10% and EBITDA to be 26.3% to 26.8% of net revenues. For the full year of 2026, we are raising our net revenue and margin guidance. We now expect net revenue growth of 10% to 11% and EBITDA to be 28% to 28.3% of net revenues as compared to 27.6% in 2025. We expect our average technical full-time equivalent employees to increase approximately 4% to 5% year-over-year in the fourth quarter of 2026 and 4.7% to 5% for the full year. We expect utilization in the fourth quarter to be 69% to 70% as compared to 69% in the same quarter last year. As a reminder, utilization is seasonally lower in the fourth quarter due to more holidays and vacations compared to other quarters. We expect the full year utilization to be 73.5% to 74% as compared to 72.5% in 2025. We expect the year-over-year realized rate increase to be 3% to 3.5% for the fourth quarter of 2026 and 3.7% to 4% for the full year. For the fourth quarter, we expect stock-based compensation to be $5.7 million to $5.9 million. For the full year 2026, we expect stock-based compensation to be $28.1 million to $28.4 million. We continue to believe that our stock-based compensation program is a key element to how we effectively attract, motivate and retain our top talent. For the fourth quarter, we expect other operating expenses to be $13.5 million to $14 million. For the full year, we expect other operating expenses to be $53 million to $53.5 million. For the fourth quarter, we expect G&A expense to be $7.2 million to $7.7 million. And for the full year, we expect G&A expenses to be $28.1 million to $28.6 million. We expect interest income to be $700,000 to $900,000 for the fourth quarter. In addition, we anticipate miscellaneous income to be approximately $300,000. For the remainder of 2026, we do not anticipate any additional tax benefit associated with share-based awards. For the fourth quarter of 2026, we expect our tax rate to be approximately 28% as compared to 27.4% in the same quarter a year ago. For the full year 2026, the tax rate is expected to be 28.5% as compared to 28% in 2025. Capital expenditures for the full year 2026 are expected to be $10 million to $12 million. We are pleased with the momentum we are carrying into the fourth quarter, and we are well positioned to finish 2026 on a strong note. I will now turn the call back to Catherine for closing remarks.

Thank you, Eric. At Investor Day, we asked you to keep 3 questions in mind. Why is this market growing? Why does Exponent win? And why can Exponent continue to grow with it? This quarter's results reinforce the answers to those questions. The market is growing because more is being asked of technology, infrastructure and the people who depend on them. Artificial intelligence and other digital technologies are moving into the physical world, demand for power and critical infrastructure is rising and expectations for safety, reliability and performance continue to grow. As these worlds converge, our clients' questions are getting harder, not easier. And Exponent wins because we are built for hard questions. Our approximately 1,000 consultants, more than 700 of whom hold doctoral degrees, work as an integrated ecosystem across engineering and the sciences. We start with real-world evidence, bring together the expertise each problem requires and apply independent judgment to deliver conclusions that stand up to scrutiny. And that same complexity gives us confidence in the opportunity ahead. The forces driving demand for our expertise are strengthening. The range of problems our clients bring to us continues to expand, and our investments in talent and capabilities keep us at the leading edge. That is the foundation of our long-term growth framework and our confidence in Exponent's ability to deliver sustainable long-term value for our shareholders. Operator, we are now ready for questions.

[Operator Instructions] Today's first question comes from Josh Chan at UBS.

I guess utilization was really strong in Q3, even though it's usually a strong quarter anyways. Is it a function of kind of a structural productivity that you've been able to generate? Or is there some calendar effects that kind of contributed into the utilization in the quarter?

Yes, Josh, this is Eric. There wasn't -- it wasn't really a structural calendar type thing. It was really just broad-based demand across the business. So the third quarter had very few holidays and vacations like we have in the fourth quarter. So that utilization really just reflected dispute-related services across a broad set of industries, the ones we talked about in the press release, consumer products, chemicals, transportation and just good business flow across most areas of our business. On the proactive side, on the studies, we did a little bit better than expected there. We had talked about a large project that represented 4% of revenues in the second quarter. That project stepped down to 2.5% of revenues in the third quarter. We were expecting it to drop below 2%. So a little bit better than expected there, but that's really what's driving it. So it's not associated with the calendar holiday vacations, just the business flow.

Okay. That's helpful. And then I think you made a comment on the prepared remarks about 15% to 20% of your business being directly related to AI now. I was wondering what that percentage would have been like a few years ago? And just kind of curious how the trajectory of this business has been kind of evolving?

I'm going to defer to Eric on the few years ago since I'm newer to the seat here. But I can tell you, as you look into the future, you talk about the 5 layers of the stack, all of those layers are growing, Josh, whether it's the traditional work where it's coding or a building catching on fire or an HVAC system not working, or whether it's the newer stuff that you're pressing on the technology, all of that is working. And then, of course, our user research work that Catherine talked about fits in there, too, where we're delivering the data and helping think about what is the right data to push forward on those new applications. So looking forward, you see continued growth there and perhaps even some accelerated growth in certain areas. But I'll defer to Eric on the looking backward piece of what that might be.

Yes. Looking back, Josh, we've been doing work in this area for a number of years. So it wasn't a small number 2, 3, 4, 5 years ago. Our work with advanced driver assistance systems and autonomous vehicles, we've been doing that for many years. And our risk management work for the utilities, machine learning, that's also a flow of work that's been going on for probably the last 5 to 10 years. So I don't have a number to give you, but it wasn't something close to 0. We've been doing this work and building these capabilities over time.

Sure. That's make a lot sense. Congrats on the quarter.

And our next question today comes from Andrew Nicholas at William Blair.

I wanted to circle back to the utilization number in the quarter. I think the highest you've had for several years, if I'm not mistaken. Curious on kind of how you view that from a headcount growth ambitions perspective or maybe even a pricing perspective. Obviously, demand is really good. Your challenge is in demand as are the specialties that you focused on. Just wondering if this is an opportunity to really lean into the higher end of your kind of headcount growth aspirations or maybe lean a little bit further into pricing in '27. Any comments on kind of the interplay of utilization and pricing and headcount growth would be great.

Yes. Thank you, Andrew. And I think you've really hit the nail on the head. I mean you can see the demand that is pushing on the business, and you see that in the utilization. And that's very typically the first place where it shows up. But we are -- what we say about the drivers is not a short-term thing, right? We see the demand drivers continuing to be strong. And so we're absolutely pushing that recruiting effort, those hiring efforts. We always want to balance the headcount growth with the demand. In a perfect world, you sort of bring them along perfectly calibrated together. But look, our practices and our teams are very motivated to hire right now, as you might imagine. They are very busy, and they see even more opportunity on the horizon. So it does give us an opportunity to say, hey, as we go into planning and as we're doing now, we're bringing the people in for the interviews. We're out at the schools, especially in the fall recruiting season. This is a very important time of year for us when we talk about our university recruiting. We are looking at lateral type of hires from competitors, from industry, from the regulators. And so it's really all those facets of our recruiting strategy. We are -- we have turned up the dials on those and so are working to sort of balance those things. And I think, look, we're still heading into the -- we're in the midst of the planning process. We will obviously have more to say about things like pricing and specific headcount growth. But those are things that we are working very hard with our different business units on and look forward to sharing with you in another quarter.

Very helpful. And then I was hoping you could maybe break out the growth between proactive and reactive in the quarter, at least at a high level quantitatively. I think, as you mentioned in the release, it was a pretty tough comp on reactive in particular. So any color on how both of those parts of your business grew would be helpful.

Yes. I can give you a little color on that. So on the proactive side, it grew in the, call it, the high teens and the reactive side in the high single digits. And like you said and Catherine said in her prepared remarks, that number on the reactive side was on top of a very strong quarter in Q3 of last year.

Yes. And I would add, Andrew, the reactive work, the disputes work, it's not a scenario where we had sort of one big project or 2 big projects. It really was kind of diversified across a number of these different areas and seeing that strong utilization in our disputes folks.

Our next question today comes from Tobey Sommer at Truist.

I want to start with just a small tactical question. The 4% project that went to 2.5%, what's the assumption in 4Q for the contribution from that project?

Yes. Tobey, that project, we expect to wind down to under 1% of revenues in the fourth quarter. So it's not a big part of our forecast.

Sure. I appreciate that. I wanted to ask a question about AI-specific work in reactive engagements that looked like -- at the Investor Day, it sounded like more opportunity currently exists and at least we heard more examples about sort of proactive opportunities. But on the reactive side, AI breaks something in the physical world and causes damages and creates exposures. Is that already out there in the market? Is that something you're involved in? Or is that a prospective opportunity?

Tobey, this is John. No, I think AI has been in products in one shape or form for several years now. You saw it probably most early in the transportation industry as you started getting into advanced driver assistance systems and then in automated vehicles. And there's a large portion of what we do in that industry that is reactive. And so what did the machine do? When did it see what it was supposed to see? Did it do the right thing upon seeing that? Did it turn right or left? As Catherine always respond to saying in her examples. So that part of the work is not a future-looking expectation. That's here right now. And then as AI makes it into other areas where decisions are being made and their safety consequences, the example I gave around chemical formulations and things like that. Those are examples that are happening right now. Have they moved into the litigation stage where there's a dispute around them? Well, that's maybe a little bit early, but you can continue to see the pace of that moving forward.

Yes. And I would just add that the next place where we're starting to see more is going to be the medical device arena. When you think about that wearable or that technology, that's giving a health-related decision. That is not at the level of the advanced driver assistance piece that John was talking about, but that's kind of as I see it on the reactive side, maybe the next kind of sort of ramp that we have to think about.

Yes. Tobey, this is Rich. Just a little bit to add here that's really the related part that we've been talking of traditional parts of the AI stack, which are that we are already seeing construction disputes related to AI systems. We are already working on significant events that have occurred fires and at data centers around the world. We are being called in to help clients on failure analysis of components. So that's everything from corrosion on related to liquid cooling systems. It is failures of routers. Those have really been helping people at that level just get over the hump and push the thing aside and get the feedback into their vendors. History would tell us eventually, those end up with -- when people slow down a little, they end up with the dispute between the supplier and the OEM that needs to be worked out as where the finances get paid for those corrections. We saw that across almost every automotive manufacturer in the electric vehicle area. Every one of them had product recalls around the battery systems that were out there, eventually worked through it. Many of them ended up having to work things out financially with their suppliers related to that. So these are the things that are in the early days that are building up, but they're all the things that we've been working on, as John said, for 60 years.

Is there much of a track record of examples of reactive projects where the actual AI firms developing the models and new models as those models sometimes go rogue or do something unintended? Is that kind of stuff percolating in the judicial system or in the regulatory environment?

Well, I mean, it's every news article you read these days, and that makes it certainly through the regulatory side as you try to figure out where it's going and ultimately, into the disputes world. I think it shows up in all of those things, Tobey. Our exposure to that is, I think, more on the earlier stages rather than in the dispute that will ultimately come up when the AI shuts down your travel reservation system or the cybersecurity is maybe not where you wanted it to and something happens there. But I think that's just a matter of time how it works its way into more significant portion of our workflow.

And I think, look, the perfect example, which Exponent has been executing on here for a number of years, but is now cases that are related to fully autonomous is in the vehicle area. This is where these systems have come in. There is actual product liability suits. There are actual regulatory investigations into each of these questions of why the vehicle didn't stop? Or why did the cruise vehicle make the decision it made nearly 2 years ago in San Francisco? Those are the questions Exponent being asked to answer. We've written the reports that are public in some of these matters. Others are maybe a litigation matter and might not be out there, but some of these are out there in the public. So that is what's happened in that environment. It will play out across the rest of the product areas over time.

You've been generous of your time. I just like to ask one more. In your hiring outlook, what either areas of the business or practices or even scientific specialties do you expect to hire the most in?

Yes, I can jump in on that. Look, it's a lot of different areas. Human factors is one example. When you think about the human machine interface and that convergence that we've been talking about, that's going to pull in your human factors. It's pulling in your biomechanics as well. When you think about the data center infrastructure side of what's going on and also the energy side of the market drivers for us, there, you're talking about your thermal scientists. You're talking about your polymer folks. You're talking about your metallurgists. You're also talking about people with energy storage type of experience. And look, we also have to think about that Health and Environmental side. This has been a place where we have invested in senior talent, and we will continue to do that when you think about things like PFAS. You think about other emerging chemicals. And those are places where we not only are hiring in Health and Environmental, but we're hiring on the engineering side and the material side because it's those questions of where are the replacements for these materials, and why are they useful in products are the kinds of questions that are arising. So those are some of the examples of places where when we're at the universities, we're looking at the different laboratories, the different departments where we're very focused.

And our next question today comes from Tomo Sano at JPMorgan.

Maybe on the Q4 outlook, you're guiding to 8% to 10% growth versus 12% in Q3 despite the easier year-over-year comp. Could you talk about what's driving that moderation? Is it project timing? Or are there any areas that where you are assuming some slowing in demand?

Yes. Tomo, on a sequential basis, it's not really moderating. So we guided to 69% to 70% utilization. Josh earlier asked a question about the holidays and vacation sort of the structural part of that. That 69% to 70% utilization in the fourth quarter is roughly equivalent to the 77% that we just did in the third quarter. So we're expecting this robust level of activity to continue into the fourth quarter. When I look back at the fourth quarter last year, that was also a very busy quarter, 69.2% utilization in the fourth quarter is strong. So we've got a tough comparable is why you're seeing that at 8% to 10% versus low double digits like we just did in the third quarter.

And if we could talk about Environmental and Health, that was actually up 3%, well below Engineering and Scientific. What would you say that need to change for the growth in that segment to reaccelerate? Are you seeing any early signs of that today?

Yes. Thanks, Tomo. And I was alluding to that a little bit in my comments just a minute ago. This is a place where we are very focused on recruiting and in particular, senior recruiting. We've brought on some principal level folks in the last 12 to 18 months. They continue to ramp, and we continue to make those investments. So that's a key element of making sure that we can see sustainable growth over time because what you can then do when you have those principles is you are building additional teams underneath of them, you're able to expand your capabilities maybe across to different emerging chemicals and different issues, both on the reactive and the proactive side. And look, this business very much splits across those 2 pieces, right? We have the dispute-related work around chemicals in the environment, but there's also the proactive regulatory piece of that business. And that is a place where, again, we continue to seed with hires. We are taking those out of regulators, for example, and we continue to work with clients on what their latest technologies are. So look, it's about building the capability, envisioning what the emerging trends are and positioning ourselves with the talent to then capture that work.

And if I could squeeze just one more on capital allocation. So you repurchased about $146 million of the stock year-to-date. How are you thinking about the pace of buybacks from here versus preserving capital for investment or M&A?

Yes. So our philosophy on that hasn't changed. We are going to continue to pay a dividend. We're going to buy back shares when there's pullbacks in the stock price like we did during the first half of this year. We've still got that $50 million that the Board authorized for share repurchases. So going forward, our philosophy is not going to change. We're obviously going to evaluate opportunities for maybe a small acquisition here or there and other investments that we can make into the business and deploy cash consistent with how we have in the past.

Thank you. Thanks, everyone. That concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.