Simulations Plus Reports Second Quarter FY2015 Financial Results

Keywords: financial results, gross profit, quarterly cash dividend
Division: PBPK

Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today reported financial results for its second quarter of fiscal year 2015 ended February 28, 2015 (2QFY15). Simulations Plus acquired Cognigen Corporation through a merger that closed on September 2, 2014. The numbers presented herein represent the consolidated financial results.

2QFY15 highlights compared with 2QFY14:

  • Net revenues increased 48.4%, or $1.5 million, to $4.6 million from $3.1 million. $1.27 million of the increase was from Cognigen consulting revenue.
  • Gross profit increased 33.2%, to $3.5 million from $2.6 million. $737,000 of this increase was due to Cognigen revenues.
  • SG&A increased 46.1%, or $509,000, to $1.6 million. $539,000 was related to operating expenses of Cognigen, Simulations Plus SG&A expenses were down $30,000.
  • Income before taxes increased 26.3% to $1.445 million, and net income was up by 19.8% to $970,000. Cognigen quarterly profits more than tripled from $40,000 in 1QFY15 to $124,000.
  • Diluted earnings per share increased $0.01 to $0.06 from $0.05 per share. If the $250,000 order had not slipped to the following week, earnings would have been $0.07 per share.

6moFY15 highlights compared with 6moFY14:

  • Net revenues increased 51.3%, or $2.9 million, to $8.6 million from $5.7 million. $2.4 million of the increase was from Cognigen consulting revenue.
  • Gross profit increased 36.7%, or $1.7 million, to $6.5 million from $4.8 million. $1.3 million of this increase was due to Cognigen revenue.
  • SG&A increased 69.2%, or $1.5 million, to $3.7 million from $2.2 million. $1.1 million of this increase is from Cognigen operating costs.
    • These expenses included $410,000 of one-time charges related to the acquisition of Cognigen in the first quarter of this fiscal year.
  • R&D expenditures increased 9%, or $114,000, to $1.364 million from $1,250,000 in 6moFY14
    • In 6moFY15, $731,000 was capitalized and $633,000 was expensed
    • In 6moFY14, $733,000 was capitalized and $516,000 was expensed
    • Increases were due to expanded staff, as well as increases in salaries and stock-based compensation for existing employees
  • Income before taxes increased 2.6%, or $332,000, to $2.2 million from $2.136 million
  • Diluted earnings per share was $0.088, a decrease of $0.004 per share from $0.092 in 6moFY14

John Kneisel, chief financial officer of Simulations Plus, said: “Solid revenue growth for the year drove higher profitability, offsetting $410,000 in non-recurring fees and expenses associated with the first quarter acquisition of Cognigen. EPS is up this quarter compared to last year, and Cognigen’s second quarter net income increased $84,000 compared to the first quarter to $124,000.”

Ted Grasela, newly appointed president of the combined Simulations Plus and Cognigen Corporation, added: “I have been impressed with the quality and commitment of the scientists at Simulations Plus and the loyalty and enthusiasm of our client base. We have already seen significant opportunities for collaboration and synergies in terms of our marketing and sales efforts. I am excited about the enhanced scientific capabilities we are offering as a result of the merger. I look forward to offering new and expanded consulting services to clients of the combined companies. In addition, software development activities have continued apace and exciting opportunities are emerging as our scientists gain cross-disciplinary experience during our collaborations.”

John DiBella, vice president for marketing and sales of Simulations Plus, said: “This was a productive quarter for us, as we experienced strong software sales to new clients, as well as an increase in consulting project contracts, in all territories. It is important to note that our top line was impacted by a brief delay in one significant renewal order of approximately $250,000, related to new review requirements on the part of a large pharmaceutical customer. If this renewal order had not been delayed, second quarter revenue for Simulations Plus would have increased more than 15%, with consolidated revenue up over 56%. It was received in the first week of March and will provide a nice bump to the 3QFY15 numbers. With new versions of our two highest revenue-producing programs, GastroPlus™ and ADMET Predictor™, that include features that will introduce our technology to new markets, coupled with continued progress in the cross-promotion of consulting services with Cognigen, we expect this positive momentum in revenue growth to continue.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “Fiscal year 2015 is off to a very good start with this record second quarter. Ted is taking over more and more of the management of the combined company, enabling me to increase my focus on products, services, and business development. I am particularly excited about two new products under development for use in the aerospace and healthcare industries. These products use our artificial neural network ensemble modeling engine, and we intend to pursue customers and funding to develop customized tools and applications.”

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 14, 2015, which may be joined by registering at the following website: https://attendee.gotowebinar.com/register/6758144187651868418. Upon registering, you will receive a confirmation e-mail with instructions for joining the call. Please dial in five to ten minutes prior to the scheduled start time. For listen-only mode, you may dial (415) 655-0059, and enter access code 359-935-318

For complete balance sheets, click here.