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 third quarter of fiscal year 2020 (3QFY20) and the first nine months of fiscal year 2020 (9moFY20), the period ended May 31, 2020.
3QFY20 highlights compared with 3QFY19:
- Net revenues increased 23.8% to $12.3 million, an increase of $2.4 million over $9.9 million
- Gross profit was up 26.5% to $9.6 million, an increase of $2.0 million over $7.6 million
- SG&A was $5.0 million, an increase of 62.6% or $1.9 million over $3.1 million
- SG&A as a percentage of revenues increased to 40.9% from 31.1%, inclusive of $1.1 million in one-time transaction costs related to the Lixoft acquisition
-
Total R&D expenditures were $1,359,000, an increase of $293,000, or 27.5% over $1,066,000
- In 3QFY20, $606,000 was capitalized and $753,000 was expensed
- In 3QFY19, $422,000 was capitalized and $643,000 was expensed
- Income before taxes remained flat at $3.8 million
- Net income increased 1.6% to $2.9 million, an increase of $47,000 over $2.9 million
- Diluted earnings per share remained unchanged at $0.16. One-time transaction costs related to the Lixoft acquisition of $1.1 million (approx. $837,000 net of tax) effected a decrease of $0.04 diluted earnings per share for the quarter
9moFY20 highlights compared with 9moFY19:
- Net revenues increased 23.5% to $32.0 million, an increase of $6.1 million over $25.9 million
- Gross profit was up 25.3% to $24.1 million, an increase of $4.9 million over $19.2 million
- SG&A was $12.6 million, an increase of $4.0 million, or 46.8%, over $8.6 million
- SG&A as a percentage of revenues increased to 39.5% from 33.2%, inclusive of $1.4 million in one-time transaction costs related to the Lixoft acquisition
-
Total R&D expenditures were $3.8 million, an increase of $500,000, or 15.4% over $3.3 million
- For 9moFY20, $1.7 million was capitalized and $2.0 million was expensed
- For 9moFY19, $1.4 million was capitalized and $1.9 million was expensed
- Income before taxes increased 9.1% to $9.4 million, an increase of $779.000 over $8.6 million
- Net income increased 9.5% to $7.1 million, an increase of $620,000 over $6.5 million
- Diluted earnings per share increased 7.6% to $0.39 from $0.36. One-time transaction costs related to the Lixoft acquisition of $1.4 million (approx. $1.1 million net of tax) effected a $0.06 decrease in 9moFY20 diluted earnings per share
Shawn O’Connor, chief executive officer of Simulations Plus, said: “Keeping with historical seasonality trends, the third quarter was again a strong quarter with revenue increasing 24% year-over-year to $12.3 million, demonstrating the significant progress we have made to accelerate growth. A solid base of recurring revenue and a large backlog of project-based service business have minimized the impact from current economic conditions resulting from the effects of the COVID-19 pandemic. While certain new customer software license and service projects were delayed in recent months, we continue to believe opportunities have been delayed, but not lost. Our backlog remains healthy, and we are encouraged by the pickup of new software license closures and consulting contracts at the end of the quarter. We expect double-digit, year-over-year revenue growth in the fiscal fourth quarter, despite the impact of seasonality on a sequential basis.”
“The integration of Lixoft is going well and initial feedback from the marketplace has been positive as customers acknowledge the strengthening of our offerings with the Monolix Suite,” Mr. O’Connor continued. “We are collaborating across the enterprise to fully integrate our sales and marketing efforts and leverage our existing infrastructure to extract maximum synergies and present a unified approach to our customers.”
John Kneisel, chief financial officer of Simulations Plus, added: “The dependable cash flow generation of our business was further enhanced with the immediately accretive acquisition of Lixoft in the third quarter. Following this cash investment, our financial position remains strong with a solid balance sheet that includes $7 million in unrestricted cash and no outstanding borrowed debt at the end of the third quarter and access to additional capital via a new, undrawn $3.5 million line of credit. Through a steady approach to growth and the prudent allocation of capital, we are able to maintain the economic engine of our business, invest for future growth, and return capital to shareholders in the form of quarterly cash dividends.”
In addition, the Company today filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-3 (the “Registration Statement”) filed pursuant to the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement was filed as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act, using an automatic “shelf” registration process and, thus, was immediately effective. No securities were sold in connection with its filing, but, by using a shelf registration statement, the Company may sell securities from time to time in the future and as described in a subsequently filed prospectus supplement.
Shawn O’Connor, chief executive officer of Simulations Plus, said: “The Company’s filing of its shelf registration provides the company the flexibility required to support any future need to issue securities for any working capital, mergers and acquisitions, or general corporate purposes in the future. Our recent qualification under the well-known seasoned issuer standard made this undertaking timely and efficient.”
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 August 3, 2020, to shareholders of record as of July 27, 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 invites all interested persons to attend its conference call at 4:15 p.m. Eastern Time on July 9, 2020. The live webcast/teleconference will be accessible by registering here. A live, listen-only teleconference will also be available by dialing (562) 247-8422. Please dial in five to ten minutes prior to the scheduled start time. A replay of the webcast will be available at the Investors section of 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/toxicology 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 research by major pharmaceutical, biotechnology, chemical, consumer goods companies, and regulatory agencies worldwide. Our innovations in integrating new and existing science in medicinal chemistry, computational chemistry, artificial intelligence, pharmaceutical science, biology, and physiology into our software have made us the leading software provider for molecular property prediction from structure and 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. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so 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 new software and 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, our ability to identify and close acquisitions on terms favorable to the Company, 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.
Disclaimer
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
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SIMULATIONS PLUS, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
| (Unaudited) | (Audited) | |||||||
| May 31 | August 31, | |||||||
| ASSETS | ||||||||
|
2020 |
|
2019 |
|||||
| Current assets | ||||||||
| Cash and cash equivalents | $ |
7,354,496 |
$ |
11,435,499 |
||||
| Accounts receivable, net of allowance for doubtful accounts of $25,000 and $0 |
|
10,853,452 |
|
5,026,558 |
||||
| Revenues in excess of billings |
|
2,838,072 |
|
3,233,659 |
||||
| Prepaid income taxes |
|
392,099 |
|
765,110 |
||||
| Prepaid expenses and other current assets |
|
745,468 |
|
704,316 |
||||
| Total current assets |
|
22,183,587 |
|
21,165,142 |
||||
| Long-term assets | ||||||||
| Capitalized computer software development costs, | ||||||||
| net of accumulated amortization of $13,293,943 and $12,356,055 |
|
5,754,971 |
|
4,959,736 |
||||
| Property and equipment, net |
|
356,784 |
|
341,145 |
||||
| Operating lease right of use asset |
|
1,019,408 |
|
- |
||||
| Intellectual property, net of accumulated amortization of $4,729,270 and $3,948,750 |
|
12,275,730 |
|
5,026,249 |
||||
| Other intangible assets net of accumulated amortization of $1,503,481 and $1,210,000 |
|
7,146,519 |
|
3,280,000 |
||||
| Goodwill |
|
12,792,171 |
|
10,387,198 |
||||
| Other assets |
|
49,957 |
|
37,227 |
||||
| Total assets | $ |
61,579,127 |
$ |
45,196,697 |
||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ |
663,337 |
$ |
204,075 |
||||
| Accrued payroll and other expenses |
|
2,137,383 |
|
1,639,038 |
||||
| Current portion - Contracts payable |
|
3,761,028 |
|
1,761,028 |
||||
| Billings in excess of revenues |
|
269,232 |
|
798,549 |
||||
| Operating lease liability, current portion |
|
525,454 |
|
- |
||||
| Deferred revenue |
|
428,611 |
|
380,787 |
||||
| Total current liabilities |
|
7,785,045 |
|
4,783,477 |
||||
| Long-term liabilities | ||||||||
| Deferred income taxes, net |
|
2,775,398 |
|
2,731,616 |
||||
| Operating Lease Liability |
|
489,463 |
|
- |
||||
| Payments due under Contracts payable |
|
3,942,333 |
|
- |
||||
| Total liabilities |
|
14,992,239 |
|
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 | ||||||||
| 17,788,498 and 17,591,834 shares issued and outstanding |
|
7,791 |
|
7,595 |
||||
| Additional paid-in capital |
|
20,231,443 |
|
15,319,474 |
||||
| Accumulated Translation Adjustment |
|
30,460 |
|
- |
||||
| Retained earnings |
|
26,317,194 |
|
22,354,535 |
||||
| Total shareholders' equity | $ |
46,586,888 |
$ |
37,681,604 |
||||
|
|
|||||||
| Total liabilities and shareholders' equity | $ |
61,579,127 |
$ |
45,196,697 |
||||
SIMULATIONS PLUS, INC. |
||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||||
For the three and nine months ended May 31, 2020 and 2019 |
||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||||
| Revenues | $ |
12,298,036 |
|
$ |
9,936,921 |
|
$ |
32,049,003 |
|
$ |
25,944,545 |
|
||||||
| Cost of revenues |
|
2,665,405 |
|
|
2,324,188 |
|
|
7,974,702 |
|
|
6,734,890 |
|
||||||
| Gross margin |
|
9,632,630 |
|
|
7,612,733 |
|
|
24,074,301 |
|
|
19,209,655 |
|
||||||
| Operating expenses | ||||||||||||||||||
| Selling, general, and administrative |
|
5,023,132 |
|
|
3,087,445 |
|
|
12,646,512 |
|
|
8,613,788 |
|
||||||
| Research and development |
|
752,719 |
|
|
643,255 |
|
|
2,026,684 |
|
|
1,896,926 |
|
||||||
| Total operating expenses |
|
5,775,851 |
|
|
3,730,700 |
|
|
14,673,197 |
|
|
10,510,714 |
|
||||||
| Income from operations |
|
3,856,779 |
|
|
3,882,033 |
|
|
9,401,104 |
|
|
8,698,941 |
|
||||||
| Other income (expense) | ||||||||||||||||||
| Interest income |
|
4,465 |
|
|
11,050 |
|
|
27,814 |
|
|
20,296 |
|
||||||
| Interest expense |
|
- |
|
|
(32,702 |
) |
|
- |
|
|
(109,078 |
) |
||||||
| Change in value of contingent consideration |
|
(81,000 |
) |
|
- |
|
|
(81,000 |
) |
|
- |
|
||||||
| (Loss) income on currency exchange |
|
(602 |
) |
|
(7,941 |
) |
|
1,283 |
|
|
(40,467 |
) |
||||||
| Total other income (expense) |
|
(77,137 |
) |
|
(29,593 |
) |
|
(51,902 |
) |
|
(129,249 |
) |
||||||
| Income before provision for income taxes |
|
3,779,642 |
|
|
3,852,440 |
|
|
9,349,202 |
|
|
8,569,692 |
|
||||||
| Provision for income taxes |
|
(844,073 |
) |
|
(963,734 |
) |
|
(2,205,276 |
) |
|
(2,045,590 |
) |
||||||
| Net Income | $ |
2,935,569 |
|
$ |
2,888,706 |
|
$ |
7,143,925 |
|
$ |
6,524,102 |
|
||||||
| Earnings per share | ||||||||||||||||||
| Basic | $ |
0.17 |
|
$ |
0.16 |
|
$ |
0.40 |
|
$ |
0.37 |
|
||||||
| Diluted | $ |
0.16 |
|
$ |
0.16 |
|
$ |
0.39 |
|
$ |
0.36 |
|
||||||
| Weighted-average common shares outstanding | ||||||||||||||||||
| Basic |
|
17,735,354 |
|
|
17,519,849 |
|
|
17,661,189 |
|
|
17,472,922 |
|
||||||
| Diluted |
|
18,426,872 |
|
|
18,096,195 |
|
|
18,333,596 |
|
|
18,008,336 |
|
||||||
