Simulations Plus Reports Second Quarter FY2014 Financial Results

Keywords: financial results, gross profit, net sales
Division: Simulations Plus

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 2014 ended February 28, 2014 (2QFY14) and first six months of fiscal year 2014 (6moFY14).

2QFY14 highlights compared with 2QFY13:

  • Net sales were $3.081 million, a decrease of $37,000 or 1.2% from $3.118 million
    • A large renewal order and one study contract, representing approximately $350,000 in aggregate, slipped into the third quarter due to customer timing requests. Both orders have been recognized during the third quarter.
  • Gross profit was $2.589 million, a decrease of $30,000 from $2.619 million
  • SG&A was $1.104 million, an increase of $249,000 or 29.1% from $0.855 million
    • Increased commissions to dealers in Japan and China, increased marketing labor and travel, increased consulting and professional fees, and increases in salaries and wages over 2QFY13
  • R&D expenditures were $714,000, an increase of $146,000 over $568,000 in 2QFY13
    • In 2QFY14, $360,000 was capitalized and $354,000 was expensed
    • In 2QFY13, $320,000 was capitalized and $248,000 was expensed
    • Increases were due to expanded staff, and increases in salaries and stock-based compensation for existing employees
  • Income before taxes was $1.144 million, a decrease of $428,000, or 27.2% from $1.572 million
  • Net income was $810,000, a decrease of $252,000 or 23.7% from $1.062 million
  • Diluted earnings per share decreased 23.1% to $0.050 from $0.065

6moFY14 highlights compared with 6moFY13:

  • Net sales were $5.722 million, an increase of $314,000 or 5.8% from $5.408 million
    • As noted above, a large renewal order and one study contract slipped into the third quarter
  • Gross profit was $4.782 million, an increase of $259,000 or 5.7% from $4.523 million
  • SG&A was $2.175 million, an increase of $389,000 or 21.8% from $1.786 million
    • Increased commissions to dealers in Japan and China, increased marketing labor and travel, increased consulting and professional fees, and increases in salaries and wages over 6moFY13
  • R&D expenditures were $1,250,000, an increase of $240,000, or 23.8% over $1,010,000 in 6moFY13
    • In 6moFY14, $733,000 was capitalized and $516,000 was expensed
    • In 6moFY13, $582,000 was capitalized and $428,000 was expensed
    • Increases were due to expanded staff, and increases in salaries and stock-based compensation for existing employees
  • Income before taxes was $2.136 million, a decrease of $332,000, or 13.4% from $2.468 million
  • Net income was $1,495,000, a decrease of $154,000 or 9.3% from $1,649,000
  • Diluted earnings per share was $0.092, a decrease of $0.0095 per share from $0.101 in 6moFY13

Mr. John Kneisel, chief financial officer of Simulations Plus, said: “Increased Selling, General and Administrative (SG&A) expenses for 2QFY14 were due to increased commissions on sales to dealers in Asia, increases in salaries and wages, increases in costs related to trade shows and travel, and increases in consulting and professional fees. R&D expenses increased due to expansion of our scientific staff, as we add talent to improve our technological lead and bolster our consultative sales operations. A lower income tax rate for 2QFY14 resulted in a provision for income taxes of $334,000, compared to $511,000 in 2QFY13. In spite of distributing just over $800,000 in dividends during 2QFY14, cash today is nearly $11 million. Shareholders’ equity was $14.431 million at the end of 2QFY14 compared to $14.242 million on August 31, 2013.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “As we announced with our preliminary revenues release on March 5, a customer decided to move a renewal order for a software license to the third quarter to synchronize it with their other licenses, and one study contract was delayed for legal review by another customer, for a total impact of approximately $350,000. Both of those orders have now been received and will, of course, bolster our third quarter. We have released ADMET Predictor™ 7.0, added another Ph.D. to our scientific team, and continue to interview to expand our staff and to seek opportunities to grow the business via acquisition. Our second NCE (new chemical entity) project for COX-2 (cyclooxygenase-2) and COX-1 enzyme targets was another resounding success, with all four molecules that were synthesized hitting both COX-2 and COX-1, and one having the desired attribute of significantly greater potency against COX-2 than COX-1.”

For complete balance sheets, click here.