8-K
Simulations Plus, Inc. (SLP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
April 7, 2020
(Date of the earliest event reported)
Simulations Plus, Inc.
(Exact name of registrant as specified in its charter)
| California | 001-32046 | 95-4595609 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
42505 10^th^ Street West,Lancaster, California 93534-7059
(Address of principal executive offices) (Zip Code)
661-723-7723
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14z-12 under Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | SLP | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
| Item 7.01 | Regulation FD Disclosure |
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On April 9, 2020, Simulations Plus, Inc., a California corporation (the "Company"), issued a press release announcing that its board of directors has declared a quarterly cash dividend of $0.06 per share of common stock, payable on May 1, 2020 to shareholders of record on April 24, 2020.
A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 8.01 | Other Events |
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On April 9, 2020, Simulations Plus, Inc., a California corporation (the "Company"), issued a press release announcing financial results for its second fiscal quarter of fiscal year 2020 ended February 29, 2020. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On April 9, 2020, Simulations Plus, Inc., a California corporation (the "Company"), held an investor conference call reporting its second fiscal quarter financial results of fiscal year 2020 ended February 29, 2020. The PowerPoint slides, which were used for this Investor Conference Call, are attached herein as exhibit 99.2 to this Current Report on Form 8-K.
The information contained in this Current Report on Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information in this report on Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
This report on Form 8-K (the "Report"), including the disclosures set forth herein, contains certain forward-looking statements that involve substantial risks and uncertainties. When used herein, the terms "anticipates," "expects," "estimates," "believes" and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements.
Forward-looking statements in this Report or hereafter, including in other publicly available documents filed with the Securities and Exchange Commission (the "Commission"), reports to the stockholders of Simulations Plus, Inc., a California corporation (the "Company" or "us," "our" or "we") and other publicly available statements issued or released by us involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. Such future results are based upon management's best estimates based upon current conditions and the most recent results of operations. These risks include, but are not limited to, the risks set forth herein and in such other documents filed with the Commission, each of which could adversely affect our business and the accuracy of the forward-looking statements contained herein. Our actual results, performance or achievements may differ materially from those expressed or implied by such forward-looking statements.
| Item 9.01 | Financial Statements and Exhibits |
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(d) Exhibits
| 99.1 | Press release issued on April 9, 2020. |
|---|---|
| 99.2 | PowerPoint presentation at the Investor Conference Call on April 9, 2020. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SIMULATIONS PLUS, INC. | |
|---|---|
| Dated: April 10, 2020 | By: /s/ John R. Kneisel |
| John R. Kneisel | |
| Chief Financial Officer |
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Exhibit 99.1
For Further Information:
Simulations Plus, Inc.
42505 10^th^ Street West
Lancaster, CA 93534-7059
CONTACT:
| Simulations Plus Investor Relations | Hayden IR |
|---|---|
| Ms. Renée Bouché | Mr. Cameron Donahue |
| 661-723-7723 | 651-653-1854 |
| renee@simulations-plus.com | slp@haydenir.com |
For Immediate Release:
April 9, 2020
SimulationsPlus Reports Record Second Quarter FY2020 Revenue
Quarterly Revenues Up 22%;
Board of Directors Announces QuarterlyDividend of $0.06 Per Share
LANCASTER, CA, April 9, 2020 – Simulations Plus, Inc. (Nasdaq: SLP), the leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its second quarter of fiscal year 2020, the period ended February 29, 2020 (2QFY20).
2QFY20 highlights compared with 2QFY19:
| · | Net revenues increased 22.2%, or $1.9 million, to $10.3 million from $8.5 million |
|---|---|
| · | Gross profit was $7.7 million, up $1.4 million, or 22.7%, from $6.3 million |
| --- | --- |
| · | SG&A was $4.1 million, up $1.3 million, or 46.3%, from $2.8 million |
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| · | SG&A as a percentage of revenues increased to 39.7% from 33.2%, inclusive of $350,000 in transaction<br>costs related to the Lixoft acquisition |
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| · | R&D expense increased 3.3%, or $23,600, to $748,000 from $724,000 |
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| · | Income before taxes increased 5.2%, or $140,500, to $2.8 million from $2.7 million |
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| · | Net income increased to $2.2 million from $2.1 million |
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| · | Diluted earnings per share remained unchanged at $0.12 per share |
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6moFY20 highlights compared with 6moFY19:
| · | Net revenues increased 23.4%, or $3.7 million, to $19.8 million from $16.0 million |
|---|---|
| · | Gross profit was $14.4 million, up $2.8 million, or 24.5%, from $11.6 million |
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| · | SG&A was $7.6 million, an increase of $2.1 million, or 37.9%, from $5.5 million |
| --- | --- |
| · | R&D expense increased 1.6%, or $20,300, and remained at $1.3 million |
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| · | Income before taxes increased 18.1%, or $852,300, to $5.6 million from $4.7 million |
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| · | Net income increased $573,000, or 15.8%, to $4.2 million from $3.6 million |
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| · | Diluted earnings per share increased $0.03, to $0.23 from $0.20 per share |
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Shawn O’Connor, chief executive officer of Simulations Plus, said: “This was a strong, productive, and important quarter for Simulations Plus, highlighted by the acquisition of Lixoft, which expands our presence in Europe and bolsters our software revenue mix. Operationally, we grew revenues 22% for the quarter and 23% year-to-date, driving a nearly 16% increase in year-to-date net income and strengthening our balance sheet. Today, Simulations Plus is a strong company with a global presence, more than $40 million in trailing 12 month revenue, much of which is recurring, a service business that operates with a large backlog of project-based business, proven profitability and a balance sheet that gives us flexibility during these challenging times. Our new business sales have slowed, as our customers deal with the Covid-related interruptions and uncertainty. To date, this has resulted in sales pipeline growth, as sales have been mostly delayed but not lost.”
“To proactively contribute to solving this worldwide pandemic, we established the StrategiesPlus™ COVID-19 ACT Program to speed consulting assistance to any organization involved in coronavirus research,” Mr. O’Connor continued. “This program enables each part of our organization to provide tools and expertise to help accelerate drug development and R&D. In particular, we are adding to our consulting services team in an effort to address the growing demand and expanding opportunities we see in the marketplace.”
John Kneisel, chief financial officer of Simulations Plus, added: “We finished the quarter with $12.2 million in cash. Early in the third fiscal quarter, we paid approximately $6 million in net cash for the Lixoft acquisition. We maintain a strong balance sheet with sufficient cash reserves and working capital and access to a line of credit to provide flexibility. The Lixoft acquisition will be immediately accretive, helping boost future cash flows to further strengthen our position.”
Quarterly Dividend Declared
The Company’s Board of Directors has declared a cash dividend of $0.06 per share of the Company’s common stock payable on May 1, 2020, to shareholders of record as of April 24, 2020. The declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements, and other factors.
Investor Conference Call
The Company has announced an investor conference call that will be webcast live on April 9, 2020, at 1:15 p.m. Pacific Time/4:15 p.m. Eastern Time. The live webcast/teleconference will be accessible by registering here. Please dial in five to ten minutes prior to the scheduled start time. A live, listen-only webcast will also be available by dialing (914) 614-3221, and entering access code 938-770-331. A replay of the webcast will be available at the Simulations Plus website following the call.
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About Simulations Plus, Inc.
Simulations Plus, Inc., is a premier developer of drug discovery and development software as well as a leading provider of both preclinical and clinical pharmacometric consulting services for regulatory submissions and quantitative systems pharmacology models for drug-induced liver injury and nonalcoholic fatty liver disease. The company is a global leader focused on improving the ways scientists use knowledge and data to predict the properties and outcomes of pharmaceutical, biotechnology, and chemical agents. Our software is licensed to and used in the conduct of drug research by major pharmaceutical, biotechnology, chemical, and consumer goods companies and regulatory agencies worldwide. Our innovations in integrating new and existing science in medicinal chemistry, computational chemistry, pharmaceutical science, biology, and physiology into our software have made us the leading software provider for physiologically based pharmacokinetic modeling and simulation. For more information, visit our website at www.simulations-plus.com.
Safe Harbor Statement Under the PrivateSecurities 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. 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 our new software products as well as 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, 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Audited) | |||
|---|---|---|---|
| August 31, | |||
| 2019 | |||
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 12,248,652 | $ | 11,435,499 |
| Accounts receivable, net of allowance for doubtful accounts of 0 | 7,244,344 | 5,026,558 | |
| Revenues in excess of billings | 4,113,185 | 3,233,659 | |
| Prepaid income taxes | 457,232 | 765,110 | |
| Prepaid expenses and other current assets | 612,505 | 704,316 | |
| Total current assets | 24,675,918 | 21,165,142 | |
| Long-term assets | |||
| Capitalized computer software development costs, | |||
| net of accumulated amortization of 12,983,725 and<br> 12,356,055 | 5,458,837 | 4,959,736 | |
| Property and equipment, net | 335,298 | 341,145 | |
| Operating lease right of use asset | 637,509 | – | |
| Intellectual property, net of accumulated amortization of<br> 4,413,334 and 3,948,750 | 4,561,666 | 5,026,249 | |
| Other intangible assets net of accumulated amortization of 1,383,750 and 1,210,000 | 3,106,250 | 3,280,000 | |
| Goodwill | 10,387,198 | 10,387,198 | |
| Other assets | 37,227 | 37,227 | |
| Total assets | 49,199,903 | $ | 45,196,697 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities | |||
| Accounts payable | 624,645 | $ | 204,075 |
| Accrued payroll and other expenses | 1,526,891 | 1,639,038 | |
| Income taxes payable | – | – | |
| Current portion - Contracts payable | 1,761,028 | 1,761,028 | |
| Billings in excess of revenues | 891,905 | 798,549 | |
| Operating lease liability, current portion | 493,257 | – | |
| Deferred revenue | 183,310 | 380,787 | |
| Total current liabilities | 5,481,036 | 4,783,477 | |
| Long-term liabilities | |||
| Deferred income taxes, net | 2,714,398 | 2,731,616 | |
| Operating Lease Liability | 142,343 | – | |
| Total liabilities | 8,337,777 | 7,515,093 | |
| Commitments and contingencies | |||
| Shareholders' equity | |||
| Preferred stock, 0.001 par value 10,000,000 shares authorized no shares<br> issued and outstanding | – | $ | – |
| Common stock, 0.001 par value 50,000,000 shares authorized 17,648,646 and<br> 17,591,834 shares issued and outstanding | 7,651 | 7,595 | |
| Additional paid-in capital | 16,406,702 | 15,319,474 | |
| Retained earnings | 24,447,773 | 22,354,535 | |
| Total shareholders' equity | 40,862,126 | $ | 37,681,604 |
| Total<br> liabilities and shareholders' equity | 49,199,903 | $ | 45,196,697 |
All values are in US Dollars.
The accompanying notes are an integral part of these financial statements.
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SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended February29, 2020 and February 28, 2019
| Three months ended | Six months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenues | $ | 10,349,863 | $ | 8,471,720 | $ | 19,750,968 | $ | 16,007,623 | ||||
| Cost of revenues | 2,666,388 | 2,207,831 | 5,309,297 | 4,406,952 | ||||||||
| Gross margin | 7,683,475 | 6,263,889 | 14,441,671 | 11,600,671 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general, and administrative | 4,110,018 | 2,809,691 | 7,623,381 | 5,530,093 | ||||||||
| Research and development | 747,612 | 724,034 | 1,273,965 | 1,253,670 | ||||||||
| Total operating expenses | 4,857,630 | 3,533,725 | 8,897,346 | 6,783,763 | ||||||||
| Income from operations | 2,825,845 | 2,730,164 | 5,544,325 | 4,816,908 | ||||||||
| Other income (expense) | ||||||||||||
| Interest income | 12,073 | 5,573 | 23,349 | 9,245 | ||||||||
| Interest expense | – | (38,188 | ) | – | (76,376 | ) | ||||||
| (Loss) income on currency exchange | (1,825 | ) | (1,916 | ) | 1,886 | (32,526 | ) | |||||
| Total other income (expense) | 10,248 | (34,531 | ) | 25,235 | (99,657 | ) | ||||||
| Income before provision for income taxes | 2,836,093 | 2,695,633 | 5,569,560 | 4,717,251 | ||||||||
| Provision for income taxes | (686,013 | ) | (596,184 | ) | (1,361,203 | ) | (1,081,855 | ) | ||||
| Net Income | $ | 2,150,080 | **** | $ | 2,099,449 | **** | $ | 4,208,357 | **** | $ | 3,635,396 | **** |
| Earnings per share | ||||||||||||
| Basic | $ | 0.12 | $ | 0.12 | $ | 0.24 | $ | 0.21 | ||||
| Diluted | $ | 0.12 | $ | 0.12 | $ | 0.23 | $ | 0.20 | ||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 17,638,406 | 17,476,603 | 17,623,699 | 17,449,069 | ||||||||
| Diluted | 18,315,824 | 18,002,741 | 18,305,645 | 17,984,078 |
The accompanying notes are an integral part of these financial statements.
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Exhibit 99.2
Q2FY2020 Investor Conference Call Shawn O’Connor, CEO John Kneisel, CFO April 9, 2020 (NASDAQ:SLP)
With the exception of historical information, the matters discussed in this presentation are forward - looking statements that involve a number of risks and uncertainties . The actual results of the Company could differ significantly from those statements . Factors that could cause or contribute to such differences include but are not limited to : continuing demand for the Company’s products, competitive factors, the Company’s ability to finance future growth, the Company’s ability to produce and market new products in a timely fashion, the Company’s ability to continue to attract and retain skilled personnel, and the Company’s ability to sustain or improve current levels of productivity . Further information on the Company’s risk factors is contained in the Company’s quarterly and annual reports and filed with the Securities and Exchange Commission . 2 Safe Harbor Statement
HIGHLIGHTS 3
Lixoft Acquired April 1 st , 2020 4 • Founded in 2011 with headquarters in Paris, France • Monolix Suite: • Datxplore: • PKanalix: • Mlxplore: • Monolix : • Simulx : PKPD Modeling functionality Exploration and visualization of data Non - compartmental and compartmental analysis Exploration and visualization of complex models Non - linear mixed effects modeling (NLME) engine Clinical trial pharmacometrics simulations • Company Profile • Founded in 2011 and headquartered in Paris, France • 12 employees • 2019 calendar year revenues of approximately $3.4 million and $1.7 million in net earnings • Acquisition benefits x Immediately accretive x Product/Culture fit x Good valuation x Adds fast growing high margin software revenue stream x Provides greater presence in EU geography x Consulting service upside x Adds experienced executive leadership
Steady and Consistent Revenue Growth $6.7 $7.2 $8 .0 $8.9 $10.0 2 0 16 2 0 17 2 0 18 2 0 19 2 0 20 S o f t ware 6 Months Revenue • Operational Highlights $ in millions $19.8 – Software revenue: 52% of total revenue, 12% y/y growth $14.4 $16.0 – Service revenue: 48% of total revenue, 35% y/y growth $10.0 $3.3 $11.1 $6.4 $3.9 $7.1 $9.8 – 119 Employees (including 82 with advanced degrees) up 19% y/y (73% of that growth is billable consulting staff) Consulting Key Highlights • Q2 FY2020 Financial Highlights – Revenue up 22.2% for Q2FY20 vs Q2FY19 – Gross profit 74.2% for Q2FY20 vs 73.9% Q2FY19 – Net income before taxes 27.4% Q2FY20 vs 31.8% Q2FY19 – EPS $0.12 Q2FY20 vs $0.12 Q2FY19 Cash generated from operations during the quarter of $1.2M with cash on hand at end of quarter of $12.2M $3.5 5 $3 .8 $4 .2 $4.7 $5.3 $1.7 $1 .9 $3 .2 $3.8 $5.0 $5.2 $5.7 $7.4 $8.5 $10.3 – 16.2 17.2 18.2 19.2 20.2 Organic Revenue Growth accelerating to new 15 - 20% range Second Quarter Revenue $ in millions
COVID - 19 Impact 6 • Financial Stability – Operational transition has been effected smoothly; workforce is engaged in support of our clients productively and efficiently. – Strong balance sheet with ample cash – High percentage of revenues based upon software renewals for which we have seen no impact to date; Lixoft adds to this profile – Service business operates off large backlog which has been reviewed in detail with anticipated Covid impact of less than 10% • New business impact – Slowdown in new business closures both in terms of new software licenses and new service business – Software delays especially in our Asian market – New service contracts, often tied to clinical trial preparation or post trial analysis, have slowed somewhat – However, both software and service sales cycles continue in regard to lead generation, virtual meetings and presentations and our pipeline of business is growing – Recently introduced service offerings in regulatory guidance and Covid rapid response have generated new opportunities
Simulations Plus Division (Lancaster) $6.6 $7.2 $7.5 $8.3 $9.5 2 0 16 2 0 17 2 0 18 2 0 19 2 0 20 S o f t ware Consulting Simulations Plus represented 57% of total revenue and 70% of EBITDA for Q2 FY2020 • GastroPlus® X (GPX) • ADMET Predictor® X (APX) • AIDD (Artificial Intelligence - driven Drug Design) • Funded software R&D projects (FDA, large pharmaceutical companies) – New funded software R&D project to enhance cheminformatic functionality in ADMET Predictor® – Added VP, Regulatory Affairs, with 20 years of FDA experience $ in millions $5.9 • Q2 FY2020 Financial Highlights $3.7 $0.2 $4.5 $4.1 $0.3 $0.5 $5.0 $0.8 $0.5 – Revenue up 18% for the quarter – Q2 Revenue breakdown: 71% Renewal; 16% New; 13% Services – Software: renewal 88% (accounts), 94% (fees), and licensing $3.5 $4.0 $4.5 $5.1 units up 11% y/y – 12 new commercial companies added software licenses in U.S., Europe, Japan and Brazil 16.2 17.2 18.2 19.2 20.2 – 16 non - profit research groups added software licenses; 6 Months Revenue $ in millions $10.8 expansion of licenses at the U.S. FDA, Health Canada and NMPA (China FDA) $7.1 $0.5 $8.5 $7.8 $0.6 $1.0 $9.4 $1.4 $1.1 • – Projects with 19 companies and 10 funded collaborations Operational Highlights – Significant progress on several research initiatives: 7 $3.8 The genesis of the company… providing software, training and consulting services Key Highlights Second Quarter Revenue
Key Highlights • Q2 FY2020 Financial Highlights – Revenue up 20% for the quarter – 21 contracts signed, including 14 new projects initiated during quarter 64 active projects in 2QFY20 across 34 companies • Operational Highlights – 18 proposals outstanding with 18 companies at the start of 3QFY20 – Recruited Director, Quantitative Clinical Pharmacology, to focus on traditional pharmacology consulting support – Hired a Senior Clinical Pharmacologist to increase capacity to support early - stage clinical development advice and services Cognigen Division (Buffalo) $0.1 $0.1 $0.1 $0.1 $0.1 $2 . 9 $3 . 3 $3 . 7 $4 . 3 $5 . 1 $2 . 9 $3 . 4 $5 . 1 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 20 6 Months Revenue $ in millions $4 . 4 $3.8 Software Consulting Cognigen represented 27% of total revenue and 10% of EBITDA for Q2 FY2020 $0.03 8 $0.04 $0.04 $0.04 $0.03 $1 .5 $1.6 $1.8 $2.3 $2.7 $1.5 $1.6 $1.8 $2.3 $2.8 1 6 .2 1 7 .2 1 8 .2 1 9 .2 2 0 .2 A leading provider of population modeling and simulation services for the pharma and biotech industries Second Quarter Revenue $ in millions
$3.3 $2.1 $2.3 $3.8 $1.7 $0.4 $1.8 $0.5 $0 .4 2018 2019 2 0 20 Software Co n sulting DILIsym Division (RTP) Key Highlights • Q2 FY2020 Financial Highlights – Revenue up 44.8% for the quarter – Revenue breakdown: 48% DILIsym software and projects; 12% RADAsym™; 10% IPFsym™ software; 12% NAFLDsym software and projects; 6% RENAsym grant; 12% Heart Failure Software • Operational Highlights – 20 active DILIsym consulting projects – 7 active consortium DILIsym contracts – Broadly available NAFLDsym version 2A licensed to another company – NIH small business grant for development of new kidney injury product – Idiopathic pulmonary fibrosis (IPF) model under development – Started work in a new area of pharmacology, heart failure DILIsym represented 16% of total revenue and 20% of EBITDA for Q2 FY2020 $0.8 9 $0.2 $0.2 $0.2 $1.0 $1.5 $1.0 $1.2 $1.7 1 8 .2 19.2 6 Months Revenue $ in millions 2 0 .2 A leading provider of software products and services in QST and QSP Second Quarter Revenue $ in millions
Financial Results
11 Income Statement: 2QFY20 Versus 2QFY19 (in millions) Lancaster Buffalo North C a rolina 2Q20 2Q19 Diff % chg Net sales $ 5 .9 $ 2.8 $ 1.7 $ 1 0.3 $ 8.5 $ 1.9 22. 2 % Gross profit $ 5.1 $ 1.4 $ 1.2 $ 7 .7 $ 6.3 $ 1.4 22. 7 % Gross profit margin 85. 7 % 51. 2 % 71. 7 % 74. 2 % 73. 9 % 0. 3 % 0. 4 % SG&A $ 2 .5 $ 1.1 $ 0.5 $ 4.1 $ 2 .8 $ 1.3 4 6 .3% R&D $ 0.6 $ 0.0 $ 0.1 0.7 $ 0.7 0.0 3. 3 % Total operating expenses $ 3.1 $ 1.1 $ 0.7 4.9 $ 3.5 1.3 37. 5 % Income from operations $ 2 .0 $ 0.3 $ 0.5 2.8 $ 2 .7 0.1 3.5% Other income (expense) $ 0.0 $ - $ 0.0 0.0 $ (0. 0 ) 0.0 - 129. 7 % Income before income taxes $ 2.0 $ 0.3 $ 0.5 2.8 $ 2.7 0.1 5. 2 % Net income $ 1.5 $ 0.2 $ 0.4 $ 2 .2 $ 2.1 $ 0.1 2. 4 % Diluted earnings per share (in dollars) $ 0 . 1 2 $ 0. 1 2 $ 0. 0 0 0. 7 % EBITDA $ 2.4 $ 0.3 $ 0.7 $ 3 .5 $ 3.4 $ 0.0 1. 1 % Note: some numbers may not foot or crossfoot due to rounding
Income Statement: 6MoFY20 Versus 6MoFY19 (in millions) 12 Lancaster Buffalo North Carolina FY20 FY19 Diff % chg Net sales $ 10.8 $ 5.1 $ 3.8 $ 1 9.8 $ 1 6.0 $ 3.7 23. 4 % Gross profit 9.2 2.5 2.7 14.4 1 1.6 2.8 24. 5 % Gross profit margin 85. 3 % 49. 2 % 70. 7 % 73 . 1 % 72. 5 % 0. 7 % 0. 9 % SG&A $ 4 .4 $ 2.2 $ 1.1 $ 7.6 5.5 $ 2.1 3 7 .9% R&D 0.9 0.1 0.3 1.3 1.3 0.0 1. 6 % Total operating expenses 5.3 2.2 1.4 8.9 6.8 2.1 31. 2 % Income from operations 3.9 0.3 1.3 5.5 4.8 0.7 1 5 .1% Other income (expense) 0.0 0.0 0.0 0.0 (0. 1 ) 0.1 - 125. 3 % Income before income taxes 3.9 0.3 1.3 5.6 4.7 0.9 18. 1 % Net income $ 3.0 $ 0.2 $ 1.0 $ 4.2 $ 3 .6 $ 0.6 15. 8 % Diluted earnings per share (in dollars) $ 0 . 2 3 $ 0 . 2 0 $ 0. 0 3 13. 7 % EBITDA $ 4.8 $ 0.4 $ 1.6 $ 6.8 $ 6 .2 $ 0.6 10. 5 %
Consolidated Revenues: Fiscal Quarter ( in millions) $4.8 $5.2 $6.0 $4.0 $5.4 $5.7 $6.8 $6.3 $7.1 $7.4 $8.6 $6.7 $7.5 $8.5 $9.9 $8.0 $9.4 $10.3 $4 $3 $2 $1 $0 $5 $6 $7 $8 $9 $ 1 0 $ 1 1 Q1 Q2 Q3 Q4 201 6 2017 201 8 201 9 2020 13
Consolidated Income from Operations: Fiscal Quarter (in millions) $1.7 $1.7 $2.8 $1.0 $1.9 $1.8 $3.1 $1.4 $2.6 $2.4 $3 .4 $1.9 $2.1 $3.9 $2.0 $2.7 $2.7 $2.8 $ 1 .0 $ 0 .5 $ 0 .0 $ 1 .5 $ 2 .0 $ 2 .5 $ 3 .0 $ 3 .5 $ 4 .0 $ 4 .5 Q1 Q4 Q 2 Q3 2016 2017 2018 2019 2020 14
$1.1 $1.9 $0.8 $1.4 $1.2 $1.2 $2.1 $1 .2 $1.7 $3.5 $2.4 $1.3 $1.5 $2.9 $2.1 $2.1 $2.1 $2.2 $0.5 $0.0 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 Q1 Q3 Q4 Q2 2 0 16 2 0 17 2 0 18 2 0 19 2 0 20 $2.0 15 Note: 2Q18 $1.5M tax benefit of deferred tax adjustment Consolidated Net Income: Fiscal Quarter (in millions)
16 Consolidated Diluted Earnings Per Share: Fiscal Quarter $0.06 $0 . 1 1 $0.05 $0.08 $0.07 $0.07 $0.10 $0.19 $0.13 $0.12 $0.07 $0.06 $0.09 $0.16 $0.11 $0 . 1 1 $0.12 $0.12 $ 0 .00 $ 0 .04 $ 0 .02 $ 0 .06 $ 0 .08 $ 0 .10 $ 0 . 1 2 $ 0 .14 $ 0 .16 $ 0 .18 $ 0 .20 Q1 Q4 Q2 Q3 F Y 16 F Y 17 F Y 18 F Y 19 F Y 20 $0.11 Note: 2Q18 $0.08 tax benefit of deferred tax adjustment
Consolidated EBITDA: Fiscal Quarter (in millions) $2.2 $3.3 $1.5 $2.5 $2.3 $2.2 $3.6 $2.0 $3.2 $3.1 $2.8 $4.6 $4.1 $2.6 $2.7 $3.4 $3.4 $3.5 $0 $1 $2 $3 $4 $5 Q1 Q2 Q3 Q4 2 0 1 6 2 0 1 7 2 0 18 2 0 1 9 2 0 2 0 17
Revenue by Region – YTD 2020 Europe 16 % Americas 68 % Asia 16 % Japan = 43% China = 26% Korea = 15% India = 15% A global and diversified base of revenue 18
19 Cash Position Excellent $0.9 $0.9 $0.9 $0.9 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 $1.1 $1.1 $1.1 $1.1 17.1 17.2 1 7 .3 17.4 18.1 18.2 1 8 .3 18.4 19.1 19.2 1 9 .3 1 9 .4 20.1 20.2 4 / 6 / 2 0 2 0 $1.0 $5.0 $1.6 $1.0 $1.7 $6.0 $8.8 $7.4 $8.2 $6.2 $7.0 $7.5 $7.2 $9.4 $9.4 $9.9 $10.3 $11.4 $12.6 $12.2 $8.0 (in millions) Accumulating Cash while funding Acquisitions and Dividends Dividend Paid Acquisitions Cash on Hand Cash paid for DILIsym Earnout in 19 . 1 ( $ 1 . 6 ) in Dec 2018 ( $ 1 . 0 M) Cash paid for DILIsym earnout Cash paid for DILIsym Final cash paid to TSRL * Chart covers period starting September 2016 . Net Cash paid for Lixoft ($ 6.0M)
Selected Consolidated Balance Sheet Items (in millions, except where indicated) 20 February 29, 2020 August 31, 2019 Cash and cash equivalents $ 12.2* $ 1 1.4 Cash per share ( in Dollars ) $ 0.69 $ 0.65 Total current assets 24.7 21.2 Total assets 49.2 45.2 Total current liabilities 5.5 4.8 Total liabilities 8.3 7.5 Current ratio 4.50 4.42 Shareholders’ equity 40.9 37.7 Total liabilities and shareholders’ equity 49.2 45.2 Shareholders’ equity per diluted share ( in Dollars ) $2.2 $2.1 * Cash as of April 6, 2020 ~$8.0 million.
1 Dividend ratio for FY2019; No assurances of future cash dividends can be made as the BOD makes its decision on a quarterly basis based on current financial condition and strategic plans. Products & Services Software Portfolio • Modeling & simulation platform for drug R&D • Predictive software for >140 properties of chemical formulations • Analytical software for certain biological or disease states • Cloud - based web app for drug development lifecycle management Consulting Services • Provide multi - disciplinary modeling and simulation support Operating Divisions • Simulations Plus, Inc. • Cognigen • DILIsym • Lixoft Consistent Financial Results • > 10 years of consistent revenue growth • > 10 years of profitability • Cash generated from operations during six months ended 2/29/20 of $3.8 million with cash on hand of $8.0 Million at 4/6/2020 • Dividend payout ratio of 49% 1. • Quarterly dividend of $0. 0 6 per s ha r e 1 Customers and Market Pharmaceutical and biotech companies ranging from the largest in the world to a number of medium - sized and smaller companies in the U.S., Europe and Japan Corporate Information 21 • The company was founded in 1996 and now has 119 employees* worldwide. • Primary offices located in Lancaster, CA; Buffalo, NY; Raleigh, NC; and Paris, France. * As of 2/29/2020 Simulations Plus Our mission is to improve the productivity of science - based research & development enterprises by delivering innovative modeling and simulation software and insightful consulting services
Thank you! 22 https://www.linkedin.com/company/simulations - plus https://ww w .li n k e d in . c o m/comp a n y /co g nig e n https://www.linkedin.com/company/dilisym https://www.linkedin.com/company/lixoft/