Simulations Plus Reports FY2020 and Fourth Quarter FY2020 Financial Results

Rhea-AI Summary

Simulations Plus reported a strong FY20 with revenues of $41.6 million, up 22.4% from FY19. Gross profit increased 24.0% to $30.9 million. Net income rose 8.7% to $9.3 million, boosting diluted EPS to $0.50. For 4QFY20, revenues climbed 18.9% to $9.5 million, with net income at $2.2 million. The company raised $107.7 million through a follow-on offering, enhancing resources for acquisitions. CEO Shawn O’Connor highlighted robust growth amidst the pandemic, driven by software and consulting services.

Positive

• Revenue increased by 22.4% to $41.6 million in FY20.
• Gross profit rose by 24.0% to $30.9 million.
• Net income increased by 8.7% to $9.3 million, with EPS at $0.50.
• 4QFY20 revenue rose by 18.9% to $9.5 million.
• Successful follow-on offering raised $107.7 million for strategic growth.

Negative

• SG&A expenses increased significantly by 38.7% to $16.4 million.
• One-time transaction costs from the Lixoft acquisition reduced diluted EPS by $0.06.

LANCASTER, Calif.--(BUSINESS WIRE)--Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its 2020 fiscal year (FY20) and fourth quarter (4QFY20) ended August 31, 2020.

Full Year FY20 highlights compared with Full Year FY19:

• Revenues were $41.6 million, up 22.4% over $34.0 million in FY19
• Gross profit was up 24.0%, or $6.0 million, to $30.9 million, from $24.9 million in FY19
• SG&A was $16.4 million, an increase of $4.6 million, or 38.7%, over $11.8 million
• Total R&D expenditures were $5.3 million, an increase of $1.0 million, or 24.8% over $4.3 million
  • For FY20, $2.4 million was capitalized and $3.0 million was expensed
  • For FY19, $1.8 million was capitalized and $2.5 million was expensed
• Income before taxes increased 7.9% to $11.4 million, an increase of $831,000 over $10.6 million
• Net income increased 8.7% to $9.3 million, an increase of $749,000 from $8.6 million
• Diluted earnings per share increased $0.02 to $0.50 from $0.48. 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 diluted earnings per share
• Cash, cash equivalents, and short-term investments were $116.0 million, compared to $11.4 million at the end of FY19 reflecting the follow-on offering completed on August 10, 2020

4QFY20 highlights compared with 4QFY19:

• Revenues increased 18.9% to $9.5 million, an increase of $1.5 million over $8.0 million
• Gross profit was up 19.7% to $6.9 million, an increase of $1.1 million over $5.7 million
• SG&A was $3.7 million, an increase of 16.7%, or $531,000, over $3.2 million
• Total R&D expenditures were $1.6 million, an increase of $559,000, or 55.4%, over $1.0 million
  • For 4QFY20, $621,000 was capitalized and $948,000 was expensed
  • For 4QFY19, $406,000 was capitalized and $603,000 was expensed
• Income before taxes increased 2.6%, or $51,000, and remained at $2.0 million
• Net income increased 6.3% to $2.2 million, an increase of $129,000 over $2.1 million
• Earnings per fully diluted share remained unchanged at $0.11

Shawn O’Connor, chief executive officer of Simulations Plus, said: “Simulations Plus achieved its goal of accelerating organic growth to 15-20%, overcoming headwinds from the COVID-19 pandemic due to continued strong growth from both our software and consulting revenue streams. Our future growth prospects were bolstered by a significant acquisition to expand our software business, growing our European presence, and the recent introductions of new software versions as well as the launch of several important collaborations. We continue to invest in R&D, funded both internally and from leading pharmaceutical and regulatory agencies, building on our leadership position in modelling and simulation for the drug development marketplace.”

John Kneisel, chief financial officer of Simulations Plus, added: “During the fourth quarter, we completed a strategic offering, issuing approximately 2.1 million shares and raising net proceeds of approximately $107.7 million. This follow-on offering gives the Company resources and scale to pursue additional acquisitions to further bolster our growth rates and broaden the value we can deliver to our clients. Once again, in the fourth quarter we benefited from tax deductions from stock compensation expense as employees took advantage of the increased value of their options. Overall, we continue to generate solid profitability and free cash flow, even after paying our regular quarterly dividend.”

Investor Conference Call

The Company invites all interested persons to attend its conference call at 4:15 p.m. Eastern Time on November 16, 2020. The live webcast/teleconference will be accessible by registering here. Please dial in five to 10 minutes prior to the scheduled start time. A live, listen-only webcast will also be available by dialing (213) 929-4232. 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 leading provider of modeling and simulation software and consulting services supporting drug discovery, development research, and regulatory submissions. With our subsidiaries, Cognigen, DILIsym Services, and Lixoft, we offer solutions which bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, chemical, consumer goods companies and regulatory agencies worldwide. 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.

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SIMULATIONS PLUS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three months and years ended August 31,
		Three months ended							Years ended
		(Unaudited)				(Unaudited)
		2020				2019			2020				2019				2018
Revenues		$	9,540,081			$	8,025,895		$	41,589,084			$	33,970,440			$	29,666,524
Cost of revenues			2,674,528				2,290,813			10,649,230				9,025,704				7,994,228
Gross margin			6,865,553				5,735,082			30,939,854				24,944,736				21,672,296
Operating expenses
Selling, general, and administrative			3,713,543				3,182,238			16,360,053				11,796,027				9,583,852
Research and development			947,938				603,053			2,974,623				2,499,980				1,790,656
Total operating expenses			4,661,481				3,785,291			19,334,676				14,296,007				11,374,508
Income from operations			2,204,072				1,949,791			11,605,178				10,648,729				10,297,788
Other income (expense)
Interest income			1,653				13,225			29,468				33,522				27,122
Change in value of contingent consideration			(121,500	)			-			(202,500	)			(109,078	)			(153,034	)
(Loss) income on currency exchange			(46,380	)			23,769			(45,097	)			(16,697	)			(32,934	)
Total other income (expense)			(166,227	)			36,993			(218,129	)			(92,253	)			(158,846	)
Income before provision for income taxes			2,037,845				1,986,784			11,387,049				10,556,476				10,138,942
Provision for income taxes			150,287				72,443			(2,054,989	)			(1,973,147	)			(1,204,130	)
Net Income		$	2,188,132			$	2,059,227		$	9,332,060			$	8,583,329			$	8,934,812
Earnings per share
Basic		$	0.12			$	0.12		$	0.52			$	0.49			$	0.52
Diluted		$	0.11			$	0.11		$	0.50			$	0.48			$	0.50
Weighted-average common shares outstanding
Basic			18,289,256				17,549,636			17,819,064				17,492,258				17,328,707
Diluted			19,151,857				18,265,585			18,538,373				18,057,431				17,860,392
Other comprehensive Income (Loss), net of tax
Foreign currency translation adjustments			28,007				-			58,467				-				-
Comprehensive Income (Loss)		$	2,216,139			$	2,059,227		$	9,390,527			$	8,583,329			$	8,934,812

SIMULATIONS PLUS, INC.
CONSOLIDATED BALANCE SHEETS
		(Audited)			(Audited)
		August 31,			August 31,
ASSETS
		2020			2019
Current assets
Cash and cash equivalents		$	49,207,314		$	11,435,499
Accounts receivable, net of allowance for doubtful accounts of $50,000 and $0			7,421,970			5,026,558
Revenues in excess of billings			3,093,343			3,233,659
Prepaid income taxes			969,688			765,110
Prepaid expenses and other current assets			1,595,447			704,316
Short-term investments			66,803,595			-
Total current assets			129,091,357			21,165,142
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $13,581,599 and $12,356,055			6,087,378			4,959,736
Property and equipment, net			437,787			341,145
Operating lease right of use asset			926,600			-
Intellectual property, net of accumulated amortization of $5,087,031 and $3,948,750			11,897,970			5,026,249
Other intangible assets net of accumulated amortization of $1,641,725 and $1,210,000			7,008,275			3,280,000
Goodwill			12,921,185			10,387,198
Other assets			50,965			37,227
Total assets		$	168,421,517		$	45,196,697
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable		$	349,940		$	204,075
Accrued payroll and other expenses			2,250,692			1,639,038
Current portion - Contracts payable			2,000,000			1,761,028
Billings in excess of revenues			140,991			798,549
Operating lease liability, current portion			463,465			-
Deferred revenue			299,482			380,787
Total current liabilities			5,504,570			4,783,477
Long-term liabilities
Deferred income taxes, net			2,353,857			2,731,616
Operating Lease Liability			463,312			-
Payments due under Contracts payable			4,063,833			-
Other long-term liabilities		-				-
Total liabilities			12,385,572			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
19,923,277 and 17,591,834 shares issued and outstanding			9,926			7,595
Additional paid-in capital			128,531,428			15,319,474
Accumulated Other Comprehensive Income (Loss)			58,467			-
Retained earnings			27,436,124			22,354,535
Total shareholders' equity			156,035,945			37,681,604
Total liabilities and shareholders' equity		$	168,421,517		$	45,196,697