Simulations Plus Reports Record Second Quarter FY2019 Revenue

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 2019, the period ended February 28, 2019 (2QFY19).

2QFY19 highlights compared with 2QFY18:

• Net revenues increased 15%, or $1.1 million, to $8.5 million from $7.4 million
• Gross profit was $6.3 million, up $1.0 million, or 19.5%, from $5.2 million
• SG&A was $2.8 million, up $470,000, or 20%, from $2.3 million
• SG&A as a percentage of revenues increased to 33.2% from 31.8%
• R&D expense increased 49.5%, or $240,000, to $724,000 from $484,000
• Income before taxes increased 13.0%, or $311,000, to $2.7 million from $2.4 million
• Net income decreased $1.4 million, or 39.6%, to $2.1 million from $3.5 million
  • This decrease is mainly due to the Company recording in the prior year (2QFY18) a $1.5 million one-time adjustment to deferred taxes based on the Tax Cuts and Jobs Act passed in the prior fiscal year

• Diluted earnings per share decreased $0.07, to $0.12 from $0.19 per share; without the effect of the tax adjustment, the change would have been an increase of $0.01 per share as the prior years’ tax benefit effected diluted earnings per share by approximately $0.08 per share

6moFY19 highlights compared with 6moFY18:

• Net revenues increased 11%, or $1.6 million, to $16.0 million from $14.4 million
• Gross profit was $11.6 million, up $1.0 million, or 9.7%, from $10.6 million
• SG&A was $5.5 million, an increase of $782,000, or 16.5%, from $4.7 million
• R&D expenditures were $1.3 million, an increase of $409,000, or 48.3%, over $845,000
• Income before taxes decreased 3.8%, or $184,000, to $4.7 million from $4.9 million
• Net income decreased $1.6 million, or 30.0%, to $3.6 million from $5.2 million
  • This decrease is mainly due to the Company recording in the prior year (2QFY18) a $1.5 million one-time adjustment to deferred taxes based on the Tax Cuts and Jobs Act in 2018
• Diluted earnings per share decreased $0.09, to $0.20 from $0.29 per share; approximately $0.08 per share of the decrease is associated with the prior years’ tax benefit recorded in 2QFY18. Without the effect of the tax adjustment, the change would have been a decrease of $0.01 per share as the prior years’ tax benefit effected diluted earnings per share by approximately $0.08 per share

Shawn O’Connor, chief executive officer of Simulations Plus, said: "As expected, our revenue growth accelerated in the second quarter, in line with historical seasonality and benefiting from double-digit growth in consulting services. This progress reinforced our confidence in our full-year revenue growth outlook of 10-15%, and this does not yet benefit from the ongoing investments in sales and marketing initiatives designed to drive future growth. 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: "Second quarter pretax earnings increased 13% over the prior year. Net income was down compared to the prior year due nearly entirely to the non-recurring $1.5 million tax benefit recorded in the prior year, which boosted the comparable period’s net income.”

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, 2019, to shareholders of record as of April 24, 2019. 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 at 1:15 p.m. PDT/4:15 p.m. EDT on Tuesday, April 9, 2019. 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 (415) 930-5321, and entering access code 271-105-468. A replay of the webcast will be available at the Investors section of the Simulations Plus website following the call.

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 Private Securities 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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