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TheStreet Open House

Simulations Plus Reports Second Quarter And First Six Months FY2012 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 2012 ended February 29, 2012 (2QFY12). Results below are reported for continuing operations (without the discontinued operations of the Company’s former Words+ subsidiary), except as noted.

2QFY12 highlights compared with 2QFY11:

  • Net sales increased 6.4% to new record $2.789 million from $2.622 million
  • Gross profit increased 8.3% to $2.393 million from $2.209 million
  • SG&A increased 43.7% to $0.956 million from $0.666 million
    • Final payment to our M&A consultants for the sale of Words+
    • Increased costs for health, dental, liability, and workers’ compensation insurance
    • Increased investor relations costs
    • Expanded staff, as well as increased salaries and bonuses to existing staff
    • All facility rent and related expenses charged to Simulations Plus SG&A after sale of Words+
  • As a percent of revenues, SG&A increased to 34.3% from 25.4%
  • R&D expense increased 13.1% to $265,000 from $234,000
  • Income before taxes decreased 5.9% to $1.260 million from $1.338 million
  • Net income from continuing operations decreased 3.7% to $839,000 from $871,000
  • Diluted earnings per share were equal to 2QFY11 at $0.05
  • Cash increased 51.2% to $13.241 million from $8.759 million
  • Shareholders’ equity increased 9.9% to $15.425 million from $14.037 million

For the first six months of fiscal year 2012 (6moFY12) compared to the first six months of FY2011 (6moFY11):

  • Net sales increased 7.8% to a new midyear record $5.037 million from $4.672 million
  • Gross profit increased 9.8% to $4.288 million from $3.906 million
  • SG&A increased 22.5% to $1.656 million from $1.352 million for the reasons cited above
  • As a percent of revenues, SG&A increased to 32.9% from 28.9%
  • R&D expenditures increased 18.8% to $517,000 from $435,000
  • Income before taxes increased 7.0% to $2.323 million from $2.172 million
  • Net income from continuing operations increased 10.4% to $1.594 million from $1.444 million
  • Net income including discontinued operations increased 22.7% to $1.810 million from $1.475 million
  • Total diluted earnings per share increased 25.5% to $0.11 from $0.09

Ms. Momoko Beran, chief financial officer of Simulations Plus, said: “Nonrecurring charges and other elements of the increased SG&A had a significant impact on gross profit and pretax earnings for the second quarter. SG&A increases over last year’s second quarter included a one-time charge for our M&A consultants with respect to the sale of our former Words+ subsidiary, increases in overhead staff and salaries, increased marketing and sales expenses, increased year-end bonuses, and the fact that we now accrue all building lease and facility-related expenses to SG&A, which includes the half that had previously been paid by Words+. The income we receive from Words+ for their smaller (now 20%) portion of the building and related costs is not included in SG&A, but is reported as Other Income and so does not offset SG&A. We expect that SG&A will be somewhat higher going forward by approximately $130,000 per quarter. In spite of this increase in SG&A, our earnings per share remained at $0.05 for the second quarter, and earnings per share for the first six months increased to $0.11 from $0.09. Cash at the end of the second quarter was up 51.2% from 2QFY11. Shortly after the end of the quarter we paid our first ongoing quarterly cash dividend of $0.05 per share per quarter, totaling just under $791,000. After paying out the dividend, cash as of yesterday was back up to $13.408 million.”

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