Simulations Plus Reports Record Second Quarter FY2020 Revenue

Quarterly Revenues Up 22%;

Board of Directors Announces Quarterly Dividend of $0.06 Per Share

LANCASTER, Calif.–(BUSINESS WIRE)–Simulations Plus, Inc. (Nasdaq: SLP), the leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its second quarter of fiscal year 2020, the period ended February 29, 2020 (2QFY20).

2QFY20 highlights compared with 2QFY19:

  • Net revenues increased 22.2%, or $1.9 million, to $10.3 million from $8.5 million
  • Gross profit was $7.7 million, up $1.4 million, or 22.7%, from $6.3 million
  • SG&A was $4.1 million, up $1.3 million, or 46.3%, from $2.8 million
  • SG&A as a percentage of revenues increased to 39.7% from 33.2%, inclusive of $350,000 in transaction costs related to the Lixoft acquisition
  • R&D expense increased 3.3%, or $23,600, to $748,000 from $724,000
  • Income before taxes increased 5.2%, or $140,500, to $2.8 million from $2.7 million
  • Net income increased to $2.2 million from $2.1 million
  • Diluted earnings per share remained unchanged at $0.12 per share

6moFY20 highlights compared with 6moFY19:

  • Net revenues increased 23.4%, or $3.7 million, to $19.8 million from $16.0 million
  • Gross profit was $14.4 million, up $2.8 million, or 24.5%, from $11.6 million
  • SG&A was $7.6 million, an increase of $2.1 million, or 37.9%, from $5.5 million
  • R&D expense increased 1.6%, or $20,300, and remained at $1.3 million
  • Income before taxes increased 18.1%, or $852,300, to $5.6 million from $4.7 million
  • Net income increased $573,000, or 15.8%, to $4.2 million from $3.6 million
  • Diluted earnings per share increased $0.03, to $0.23 from $0.20 per share

Shawn O’Connor, chief executive officer of Simulations Plus, said: “This was a strong, productive, and important quarter for Simulations Plus, highlighted by the acquisition of Lixoft, which expands our presence in Europe and bolsters our software revenue mix. Operationally, we grew revenues 22% for the quarter and 23% year-to-date, driving a nearly 16% increase in year-to-date net income and strengthening our balance sheet. Today, Simulations Plus is a strong company with a global presence, more than $40 million in trailing 12 month revenue, much of which is recurring, a service business that operates with a large backlog of project-based business, proven profitability and a balance sheet that gives us flexibility during these challenging times. Our new business sales have slowed, as our customers deal with the Covid-related interruptions and uncertainty. To date, this has resulted in sales pipeline growth, as sales have been mostly delayed but not lost.”

“To proactively contribute to solving this worldwide pandemic, we established the StrategiesPlus™ COVID-19 ACT Program to speed consulting assistance to any organization involved in coronavirus research,” Mr. O’Connor continued. “This program enables each part of our organization to provide tools and expertise to help accelerate drug development and R&D. In particular, we are adding to our consulting services team in an effort to address the growing demand and expanding opportunities we see in the marketplace.”

John Kneisel, chief financial officer of Simulations Plus, added: “We finished the quarter with $12.2 million in cash. Early in the third fiscal quarter, we paid approximately $6 million in net cash for the Lixoft acquisition. We maintain a strong balance sheet with sufficient cash reserves and working capital and access to a line of credit to provide flexibility. The Lixoft acquisition will be immediately accretive, helping boost future cash flows to further strengthen our position.”

Quarterly Dividend Declared

The Company’s Board of Directors has declared a cash dividend of $0.06 per share of the Company’s common stock payable on May 1, 2020, to shareholders of record as of April 24, 2020. The declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements, and other factors.

Investor Conference Call

The Company has announced an investor conference call that will be webcast live on April 9, 2020, at 1:15 p.m. Pacific Time/4:15 p.m. Eastern Time. The live webcast/teleconference will be accessible by registering here. Please dial in five to ten minutes prior to the scheduled start time. A live, listen-only webcast will also be available by dialing (914) 614-3221, and entering access code 938-770-331. A replay of the webcast will be available at the Simulations Plus website following the call.

About Simulations Plus, Inc.

Simulations Plus, Inc., is a premier developer of drug discovery and development software as well as a leading provider of both preclinical and clinical pharmacometric consulting services for regulatory submissions and quantitative systems pharmacology models for drug-induced liver injury and nonalcoholic fatty liver disease. The company is a global leader focused on improving the ways scientists use knowledge and data to predict the properties and outcomes of pharmaceutical, biotechnology, and chemical agents. Our software is licensed to and used in the conduct of drug research by major pharmaceutical, biotechnology, chemical, and consumer goods companies and regulatory agencies worldwide. Our innovations in integrating new and existing science in medicinal chemistry, computational chemistry, pharmaceutical science, biology, and physiology into our software have made us the leading software provider for physiologically based pharmacokinetic modeling and simulation. For more information, visit our website at www.simulations-plus.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of our new software products as well as improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.

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SIMULATIONS PLUS, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
         

 (Unaudited) 

(Audited)

 February 29, 

August 31,

ASSETS

 

 

2020

 2019 

Current assets
Cash and cash equivalents

 $         12,248,652

 $        11,435,499

Accounts receivable, net of allowance for doubtful accounts of $0

              7,244,344

             5,026,558

Revenues in excess of billings

              4,113,185

             3,233,659

Prepaid income taxes

                 457,232

                765,110

Prepaid expenses and other current assets

                 612,505

                704,316

Total current assets

            24,675,918

           21,165,142

Long-term assets
Capitalized computer software development costs,
net of accumulated amortization of  $12,983,725 and $12,356,055

              5,458,837

             4,959,736

Property and equipment, net

                 335,298

                341,145

Operating lease right of use asset

                 637,509

                            –

Intellectual property, net of accumulated amortization of  $4,413,334 and $3,948,750

              4,561,666

             5,026,249

Other intangible assets net of accumulated amortization of $1,383,750 and $1,210,000

              3,106,250

             3,280,000

Goodwill

            10,387,198

           10,387,198

Other assets

                   37,227

                  37,227

Total assets

 $         49,199,903

 $        45,196,697

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable

 $              624,645

 $             204,075

Accrued payroll and other expenses

              1,526,891

             1,639,038

Income taxes payable

                             –

                            –

Current portion –  Contracts payable

              1,761,028

             1,761,028

Billings in excess of revenues

                 891,905

                798,549

Operating lease liability, current portion

                 493,257

                            –

Deferred revenue

                 183,310

                380,787

Total current liabilities

              5,481,036

             4,783,477

 
Long-term liabilities
Deferred income taxes,net

              2,714,398

             2,731,616

Operating Lease Liability

                 142,343

                            –

Total liabilities

              8,337,777

             7,515,093

 
Commitments and contingencies
 
Shareholders’ equity
Preferred stock, $0.001 par value
10,000,000 shares authorized
no shares issued and outstanding

 $                          –

 $                         –

Common stock, $0.001 par value
50,000,000 shares authorized
17,648,646 and 17,591,834 shares issued and outstanding

                     7,651

                    7,595

Additional paid-in capital

            16,406,702

           15,319,474

Retained earnings

            24,447,773

           22,354,535

Total shareholders’ equity

 $         40,862,126

 $        37,681,604

Total liabilities and shareholders’ equity

 $         49,199,903

 $        45,196,697

 
SIMULATIONS PLUS, INC.   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended February 29, 2020 and February 28, 2019
 

Three months ended

 

Six months ended

(Unaudited)

 

(Unaudited)

2020

 

2019

 

2020

 

2019

 
Revenues

$    10,349,863

 

 $      8,471,720

 

 $  19,750,968

 

 $  16,007,623

 

Cost of revenues

2,666,388

 

         2,207,831

 

       5,309,297

 

       4,406,952

 

Gross margin

7,683,475

 

         6,263,889

 

     14,441,671

 

     11,600,671

 

Operating expenses
Selling, general, and administrative

4,110,018

 

         2,809,691

 

       7,623,381

 

       5,530,093

 

Research and development

747,612

 

            724,034

 

       1,273,965

 

       1,253,670

 

Total operating expenses

4,857,630

 

         3,533,725

 

       8,897,346

 

       6,783,763

 

 
Income from operations

2,825,845

 

         2,730,164

 

       5,544,325

 

       4,816,908

 

 
Other income (expense)
Interest income

12,073

 

                5,573

 

            23,349

 

              9,245

 

Interest expense

 

            (38,188

)

                      –

 

          (76,376

)

(Loss) income on currency exchange

(1,825

)

              (1,916

)

              1,886

 

          (32,526

)

Total other income (expense) 

10,248

 

            (34,531

)

            25,235

 

          (99,657

)

               
Income before provision for income taxes 

2,836,093

 

         2,695,633

 

       5,569,560

 

       4,717,251

 

Provision for income taxes

(686,013

)

          (596,184

)

     (1,361,203

)

     (1,081,855

)

Net Income

 $      2,150,080

 

 $      2,099,449

 

 $    4,208,357

 

 $    3,635,396

 

 
Earnings per share
Basic

 $               0.12

 

 $               0.12

 

 $             0.24

 

 $             0.21

 

Diluted

 $               0.12

 

 $               0.12

 

 $             0.23

 

 $             0.20

 

 
Weighted-average common shares outstanding 
Basic

       17,638,406

 

       17,476,603

 

     17,623,699

 

     17,449,069

 

Diluted

       18,315,824

 

       18,002,741

 

     18,305,645

 

     17,984,078

 

 

Contacts

Simulations Plus Investor Relations
Ms. Renee Bouche

661-723-7723

renee@simulations-plus.com

Hayden IR
Mr. Cameron Donahue

651-653-1854

slp@haydenir.com

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