Simulations Plus Reports Second Quarter FY2009 Financial Results
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 2009 ended February 28, 2009 (2QFY09).
Ms. Momoko Beran, chief financial officer of Simulations Plus, stated: “In spite of the global economic crisis that has been among the greatest challenges to worldwide business since the end of World War II, Simulations Plus has continued to grow, with a new record for second quarter revenues. Consolidated net sales increased 12.7% to $2,457,000 in 2QFY09 from $2,180,000 in the second fiscal quarter of fiscal 2008 (2QFY08). Pharmaceutical software and services revenues for 2QFY09 increased 14.8% over 2QFY08, while revenues from our Words+ subsidiary increased 7.6% over 2QFY08.”
Ms. Beran continued: “For 2QFY09, consolidated gross profit increased 10.4% to $1,904,000 from $1,724,000 in 2QFY08. R&D expense increased 42.9% to $360,000 in 2QFY09 from $252,000 in 2QFY08; while total R&D expenditures, which include capitalized software development costs, increased by 9.6%, primarily due to expansion of our Life Sciences staff and salary increases. Consolidated SG&A increased 24.5% to $1,037,000 in 2QFY09, compared to $832,000 in 2QFY08. As a percentage of sales, SG&A increased to 42.2% in 2QFY09 from 38.2% in 2QFY08. Travel and trade show expenses accounted for a significant portion of the increase as we have increased our marketing and sales efforts substantially over last year. For 2QFY09, net income before taxes decreased 20.4% or $143,000, to $559,000 compared with $702,000 in 2QFY08. The provision for income taxes increased by 39.4%, or $54,000, to $191,000 for 2QFY09 from $137,000 in 2QFY08. Using our best estimates for the remainder of the year, we anticipate a tax rate for the year to be in the range of 32 ~ 35%; however, this will depend on the amount of R&D tax credits generated during the current fiscal year.
“Consolidated net earnings for 2QFY09 were $368,000, or $0.02 per fully diluted share, a decrease of 34.9% from $565,000, or $0.03 per diluted share in 2QFY08. We attribute this primarily to our increased investment in R&D and marketing and sales. Our cash continues to grow, with cash at the end of 2QFY09 of $7,522,000, up 20.2% from $6,257,000 (including $750,000 in auction rate securities that were later redeemed at full face value plus interest) at the end of 2QFY08. Shareholders’ equity at the end of 2QFY09 was $10,453,000, an increase of 17.4% from $8,900,000 at the end of 2QFY08.”
Ms. Beran added: “For the first six months of FY09, c onsolidated net sales increased 10.2% to $4,590,000 from $4,163,000 in the first six months of FY08. Sales from pharmaceutical software and services increased approximately $221,000, or 7.4%, and revenues from our Words+ subsidiary increased $206,000, or 17.5% over the first half of FY08.
“For the first half of FY09, consolidated gross profit increased 9.0% to $3,511,000 from $3,222,000 in the first half of FY08. R&D expense increased 38.5% to $662,000 from $478,000; while total R&D expenditures, which include capitalized software development costs, increased by 17.1%, primarily due to expansion of our Life Sciences staff and salary increases. Consolidated SG&A increased 10.1% to $1,940,000, compared to $1,763,000 in the first half of FY08. Travel and trade show expenses accounted for a significant portion of the increase as we have increased our marketing and sales efforts substantially over last year. However, as a percentage of sales, SG&A expenses are identical; 42.3% in the first half of FY09 and FY08.
“For the first six months of FY09, net income before taxes was $1,012,000, a decrease of 8.6% from $1,107,000 in the first half of FY08. The provision for income taxes increased by 11.0% to $332,000 for FY09 from $299,000 in the first half of FY08.
“Consolidated net earnings for the first half of FY09 were $680,000, or $0.04 per fully diluted share, a decrease of 15.8% from $808,000, or $0.04 per diluted share in the first six months of FY08.”
Walt Woltosz, chairman and chief executive officer of Simulations Plus, said: “We’re very pleased with our second quarter and first six months results. The global economic situation has had no significant impact on our business to date, and Simulations Plus continues to thrive and grow. Our four funded collaborations with three different major pharmaceutical companies are going very well, and we expect to receive an official go-ahead soon for the Phase II SBIR grant we proposed last year. Such efforts allow us to support and grow our world-class scientific staff, and we continue to interview potential candidates to further expand the team. We have increased our investments into R&D and our marketing and sales efforts that we believe are going to help us continue to expand the business in spite of the current global economic situation. In other words, we’re spending money to make money. For example, in the month of April alone, we will have attended and/or exhibited at eight different scientific meetings. We have just hired a new Director of Business Development which we expect to announce formally when he comes to Lancaster in mid-May. We have major new releases of several of our pharmaceutical software programs coming in the near future. We continue the due diligence process on the acquisition candidate company I mentioned in my 1QFY09 results conference call. Although this process is taking longer than expected, we hope to conclude it one way or another within the next two or three months. As our cash is growing, we are able to consider additional acquisition opportunities as well.”
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