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Simulations Plus Reports Record Second Quarter FY2019 Revenue

April 9, 2019 Off By BusinessWire

Quarterly Revenues Up 15%; 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 2019, the period ended
February 28, 2019 (2QFY19).

2QFY19 highlights compared with 2QFY18:

Net revenues increased 15%, or $1.1 million, to $8.5 million from $7.4
million
Gross profit was $6.3 million, up $1.0 million, or 19.5%, from $5.2
million
SG&A was $2.8 million, up $470,000, or 20%, from $2.3 million
SG&A as a percentage of revenues increased to 33.2% from 31.8%
R&D expense increased 49.5%, or $240,000, to $724,000 from $484,000
Income before taxes increased 13.0%, or $311,000, to $2.7 million from
$2.4 million
Net income decreased $1.4 million, or 39.6%, to $2.1 million from $3.5
million
- This decrease is mainly due to the Company recording in the prior
  year (2QFY18) a $1.5 million one-time adjustment to deferred taxes
  based on the Tax Cuts and Jobs Act passed in the prior fiscal year

Diluted earnings per share decreased $0.07, to $0.12 from $0.19 per
share; without the effect of the tax adjustment, the change would have
been an increase of $0.01 per share as the prior years’ tax benefit
effected diluted earnings per share by approximately $0.08 per share

6moFY19 highlights compared with 6moFY18:

Net revenues increased 11%, or $1.6 million, to $16.0 million from
$14.4 million
Gross profit was $11.6 million, up $1.0 million, or 9.7%, from $10.6
million
SG&A was $5.5 million, an increase of $782,000, or 16.5%, from $4.7
million
R&D expenditures were $1.3 million, an increase of $409,000, or 48.3%,
over $845,000
Income before taxes decreased 3.8%, or $184,000, to $4.7 million from
$4.9 million
Net income decreased $1.6 million, or 30.0%, to $3.6 million from $5.2
million
- This decrease is mainly due to the Company recording in the prior
  year (2QFY18) a $1.5 million one-time adjustment to deferred taxes
  based on the Tax Cuts and Jobs Act in 2018
Diluted earnings per share decreased $0.09, to $0.20 from $0.29 per
share; approximately $0.08 per share of the decrease is associated
with the prior years’ tax benefit recorded in 2QFY18. Without the
effect of the tax adjustment, the change would have been a decrease of
$0.01 per share as the prior years’ tax benefit effected diluted
earnings per share by approximately $0.08 per share

Shawn O’Connor, chief executive officer of Simulations Plus, said: “As
expected, our revenue growth accelerated in the second quarter, in line
with historical seasonality and benefiting from double-digit growth in
consulting services. This progress reinforced our confidence in our
full-year revenue growth outlook of 10-15%, and this does not yet
benefit from the ongoing investments in sales and marketing initiatives
designed to drive future growth. 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:
“Second quarter pretax earnings increased 13% over the prior year. Net
income was down compared to the prior year due nearly entirely to the
non-recurring $1.5 million tax benefit recorded in the prior year, which
boosted the comparable period’s net income.”

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, 2019, to
shareholders of record as of April 24, 2019. 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 at 1:15 p.m. PDT/4:15 p.m. EDT on Tuesday, April 9, 2019.
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 (415)
930-5321, and entering access code 271-105-468. 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 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.


SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of February 28, 2019 and 2018

	(Unaudited)		(Audited)
	February 28,		August 31,
ASSETS
	2019		2018
Current assets
Cash and cash equivalents		9,893,953	$	9,400,701
Accounts receivable, net of allowance for doubtful accounts of $0		6,227,555		5,514,528
Revenues in excess of billings		2,264,518		1,985,596
Prepaid income taxes		–		312,593
Prepaid expenses and other current assets		518,512		610,439
Total current assets		18,904,538		17,823,857
Long-term assets
Capitalized computer software development costs,
net of accumulated amortization of $11,708,089 and $11,095,903		4,779,575		5,152,594
Property and equipment, net		302,977		335,224
Intellectual property, net of accumulated amortization of $3,484,168 and $3,019,584		5,490,833		5,905,416
Other intangible assets net of accumulated amortization of $1,031,250 and $852,500		3,458,750		3,637,500
Goodwill		10,387,198		10,387,198
Other assets		37,227		37,227
Total assets	$	43,361,098	$	43,279,016

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		289,762	$	351,605
Accrued payroll and other expenses		1,135,579		1,152,176
Income taxes payable		106,845		–
Current portion – Contracts payable		1,750,000		2,556,644
Billings in excess of revenues		958,948		384,603
Deferred revenue		891,650		381,928
Total current liabilities		5,132,784		4,826,956

Long-term liabilities
Deferred income taxes,net		2,814,535		3,195,139
Payments due under Contracts payable		1,660,672		3,334,296
Total liabilities		9,607,991		11,356,391

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
17,499,958 and 17,416,445 shares issued and outstanding		7,501		7,417
Additional paid-in capital		14,435,574		13,453,668
Retained earnings		19,310,032		18,461,540
Total shareholders’ equity		33,753,107	$	31,922,625

Total liabilities and shareholders’ equity	$	43,361,098	$	43,279,016


SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended February 28, 2019 and 2018

	Three months ended						Six months ended
	(Unaudited)						(Unaudited)
	2019			2018			2019			2018

Revenues	$	8,471,720		$	7,356,714		$	16,007,623		$	14,425,496
Cost of revenues		2,207,831			2,115,483			4,406,952			3,851,090
Gross margin		6,263,889			5,241,231			11,600,671			10,574,406
Operating expenses
Selling, general, and administrative		2,809,691			2,339,721			5,530,093			4,748,237
Research and development		724,034			484,329			1,253,670			845,146
Total operating expenses		3,533,725			2,824,050			6,783,763			5,593,383

Income from operations		2,730,164			2,417,181			4,816,908			4,981,023

Other income (expense)
Interest income		5,573			6,180			9,245			10,489
Interest expense		(38,188	)		(38,188	)		(76,376	)		(76,658	)
Miscellanous income		–			–			–			–
Gain (loss) from sale of assets		–			–			–			–
Loss on currency exchange		(1,916	)		(585	)		(32,526	)		(13,262	)
Total other income (expense)		(34,531	)		(32,593	)		(99,657	)		(79,431	)

Income before provision for income taxes		2,695,633			2,384,588			4,717,251			4,901,592
Provision for income taxes		(596,184	)		1,090,198			(1,081,855	)		289,198
Net Income	$	2,099,449		$	3,474,786		$	3,635,396		$	5,190,790

Earnings per share
Basic	$	0.12		$	0.20		$	0.21		$	0.30
Diluted	$	0.12		$	0.19		$	0.20		$	0.29

Weighted-average common shares outstanding
Basic		17,476,603			17,302,763			17,449,069			17,292,391
Diluted		18,002,741			17,855,351			17,984,078			17,843,345