Third Quarter and 9MoFY20 Revenues Grow 24%
Board of Directors Announces Quarterly Dividend of $0.06 per Share
Company Files Shelf Registration Statement

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.”

For a condensed consolidated statement of operations & consildated balance sheets table visit businesswire.com