Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today reported financial results for its first quarter of fiscal year 2013 ended November 30, 2012 (1QFY13). Results below for the first quarter of FY2012 (1QFY12) are reported for continuing operations (without the discontinued operations of the Company’s former Words+ subsidiary, which was sold on November 30, 2011), except as noted.
1QFY13 highlights compared with 1QFY12:
- Net sales increased 1.9% to first-quarter record $2.290 million from $2.248 million
- Gross profit increased 0.4% to $1.903 million from $1.896 million
- SG&A increased 8.3% to $0.931 million from $0.860 million
- This apparent increase was due to reclassification of M&A consultant fees for 1QFY12 from SG&A to Selling Expense with the sale of the former Words+ subsidiary, reducing SG&A for 1QFY12
- R&D expense increased 95.2% to $180,000 from $92,000
- Income before taxes decreased 15.8% to $0.896 million from $1.064 million
- Net income decreased 22.3% to $587,000 from $755,000
- Diluted earnings per share decreased 33% to $0.04 from $0.06
Ms. Momoko Beran, chief financial officer of Simulations Plus, said: “Increased Selling, General and Administrative (SG&A) expenses for 1QFY13 were in part due to increased commissions on sales, but mostly due to a reclassification of M&A consultant fees from SG&A to Selling Expense with the sale of our former Words+ subsidiary last year. Those fees had accrued as SG&A last year until the sale was completed, but with the sale, they became Selling Expense, resulting in a large reduction in the reclassified SG&A for 1QFY12. R&D expenses increased due to increased scientific staff time spent to support marketing and sales and due to expenses for our malaria new chemical entity (NCE) project. Increased income tax rates for FY2013 resulted in a provision for income taxes of $309,000, nearly the same dollar amount as for 1QFY12, but caused by an increase in tax rate to 34% for 1QFY13 compared to 29% in 1QFY12. In spite of distributing a total of just under $3.2 million in dividends during calendar 2012, cash remained at $11.4 million on November 30, 2012, compared to $12.7 million on November 30, 2011. Shareholders’ equity was $15.0 million at the end of 1QFY13 compared to $15.1 million at the end of 1QFY12. The subsequent accelerated dividend of $0.14 per share distributed on December 28, 2012, reduced cash to about $9.5 million on December 29.”
Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “A ‘perfect storm’ of site closures for four large customers and major reorganizations within three other customers resulted in nearly $450,000 in lost revenues over 1QFY12; however, exclusive of these closures and reorganizations, our renewal rate remained over 90% for our remaining customers, and we added a number of software licenses at new customer sites as well as increased services revenues. In fact, we were successful in generating enough new sales to offset these reductions and still show a slight increase in revenues over 1QFY12. At this point, we do not foresee a recurrence of such a large drop in renewal revenues, although there can be no assurance that such a drop will not occur at some time in the future.”
Woltosz continued: “The resounding success we’ve had in our malaria NCE (new chemical entity) project has created increased interest in our software products that we used to design these new molecules. And we are pursuing additional funding to take this project to the next level. We’re also selecting a new disease target for another NCE project this year, and we hope to announce our selection soon.”
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