Simulations Plus Inc (SLP, Financial) filed Quarterly Report for the period ended 2008-11-30.
Simulations Plus Inc. is a premier developer of groundbreaking drug discovery and development simulation software which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. They have two other businesses Words+ Inc. and FutureLab which are based on its proprietary software technologies. Simulations Plus Inc has a market cap of $16.23 million; its shares were traded at around $1.08 with a P/E ratio of 10.9 and P/S ratio of 1.81. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Consolidated cost of sales increased $40,000, or 8.3%, to $526,000 in 1QFY09 from $486,000 in 1QFY08; however, the percentage of cost of sales in 1QFY09 and 1QFY08 is almost the same, with a slight increase of 0.2% in 1QFY09 from 1QFY08. For Simulations Plus, cost of sales increased $2,000, or 1.0%. As a percentage of revenues, cost of sales is almost the same, with a slight increase of 0.2% in 1QFY09 from 1QFY08. A significant portion of cost of sales for pharmaceutical software products is the systematic amortization of capitalized software development costs, which is an independent fixed cost rather than a variable cost related to sales. As more new products became available for sale, this amortization cost increased by approximately $6,000, or 5.3%, in 1QFY09 compared with 1QFY08. Another significant portion of cost of sales is Royalty expense, which is a percentage of revenues generated from the GastroPlus basic program without modules as well as the ADMET Predictor Toxicity module. Royalty expense decreased approximately $4,000, or 4.6%, in 1QFY09 compared with 1QFY08 due to a decline in GastroPlus license sales, resulting from one renewal that was received after the end of the quarter, as well as a special discount to a one of large pharmaceutical customer who has been a valued collaborator for over five years.
Consolidated gross profit increased $109,000, or 7.3%, to $1,607,000 in 1QFY09 from $1,498,000 in 1QFY08. We attribute this increase to the increase in Words+ revenues, which outweighed a slight decrease in the Simulations Plus revenues.
Consolidated selling, general and administrative (SG&A) expenses decreased $26,000, or 2.9%, to $904,000 in 1QFY09 from $930,000 in 1QFY08. For Simulations Plus, SG&A decreased $8,000, or 1.4%. The major decrease in SG&A expense was in investor relations fees, due to expenses associated with a stock split in FY08, while no such expenses were incurred in 1QFY09. This decrease outweighed increases in expenses for trade shows, salaries, and payroll-related expenses.
We incurred approximately $503,000 of research and development costs for both companies during 1QFY09. Of this amount, $202,000 was capitalized and $301,000 was expensed. In 1QFY08, we incurred $400,000 of research and development costs, of which $174,000 was capitalized and $183,000 was expensed. The increase of $103,000, or 25.8%, in total research and development expenditures from 1QFY08 to 1QFY09 was due primarily to increases in salaries because of new hires as well as salary increases to existing staff.
Consolidated net income increased by $68,000, or 28.1%, to $312,000 in 1QFY09 from $243,000 in 1QFY08. We attribute this increase in profit primarily to the increases in revenue from Words+ revenues and decrease in SG&A expenses, which outweighed an increase in R&D expense, a lower provision for income taxes, which offset a decrease in other income.
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Simulations Plus Inc. is a premier developer of groundbreaking drug discovery and development simulation software which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. They have two other businesses Words+ Inc. and FutureLab which are based on its proprietary software technologies. Simulations Plus Inc has a market cap of $16.23 million; its shares were traded at around $1.08 with a P/E ratio of 10.9 and P/S ratio of 1.81. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Highlight of Business Operations:
Our consolidated net sales increased $149,000, or 7.5%, to $2,133,000 in the first fiscal quarter of Fiscal Year 2009 (β1QFY09β) from $1,984,000 in the first fiscal quarter of Fiscal Year 2008 (β1QFY08)β. Sales from pharmaceutical software and services decreased approximately $9,000, or 0.6%, while our Words+, Inc. subsidiary s sales increased approximately $158,000, or 29.0%, for the quarter. We attribute the decrease in pharmaceutical software sales primarily to a reduction in the number of ClassPharmer licenses from one large pharmaceutical company due to budget constraints, an additional discount provided to a long-standing collaboration partner, and a shift of approximately $260,000 out of the first quarter, both because some licenses were renewed earlier in 4QFY08 and because some were renewed later in 2QFY09. Our ADMET Predictor software revenues increased due to orders for new module licenses as well as an increase in the number of users. Revenues from contract studies increased over $100,000; however total increases were slightly lower than total declines in pharmaceutical sales.Consolidated cost of sales increased $40,000, or 8.3%, to $526,000 in 1QFY09 from $486,000 in 1QFY08; however, the percentage of cost of sales in 1QFY09 and 1QFY08 is almost the same, with a slight increase of 0.2% in 1QFY09 from 1QFY08. For Simulations Plus, cost of sales increased $2,000, or 1.0%. As a percentage of revenues, cost of sales is almost the same, with a slight increase of 0.2% in 1QFY09 from 1QFY08. A significant portion of cost of sales for pharmaceutical software products is the systematic amortization of capitalized software development costs, which is an independent fixed cost rather than a variable cost related to sales. As more new products became available for sale, this amortization cost increased by approximately $6,000, or 5.3%, in 1QFY09 compared with 1QFY08. Another significant portion of cost of sales is Royalty expense, which is a percentage of revenues generated from the GastroPlus basic program without modules as well as the ADMET Predictor Toxicity module. Royalty expense decreased approximately $4,000, or 4.6%, in 1QFY09 compared with 1QFY08 due to a decline in GastroPlus license sales, resulting from one renewal that was received after the end of the quarter, as well as a special discount to a one of large pharmaceutical customer who has been a valued collaborator for over five years.
Consolidated gross profit increased $109,000, or 7.3%, to $1,607,000 in 1QFY09 from $1,498,000 in 1QFY08. We attribute this increase to the increase in Words+ revenues, which outweighed a slight decrease in the Simulations Plus revenues.
Consolidated selling, general and administrative (SG&A) expenses decreased $26,000, or 2.9%, to $904,000 in 1QFY09 from $930,000 in 1QFY08. For Simulations Plus, SG&A decreased $8,000, or 1.4%. The major decrease in SG&A expense was in investor relations fees, due to expenses associated with a stock split in FY08, while no such expenses were incurred in 1QFY09. This decrease outweighed increases in expenses for trade shows, salaries, and payroll-related expenses.
We incurred approximately $503,000 of research and development costs for both companies during 1QFY09. Of this amount, $202,000 was capitalized and $301,000 was expensed. In 1QFY08, we incurred $400,000 of research and development costs, of which $174,000 was capitalized and $183,000 was expensed. The increase of $103,000, or 25.8%, in total research and development expenditures from 1QFY08 to 1QFY09 was due primarily to increases in salaries because of new hires as well as salary increases to existing staff.
Consolidated net income increased by $68,000, or 28.1%, to $312,000 in 1QFY09 from $243,000 in 1QFY08. We attribute this increase in profit primarily to the increases in revenue from Words+ revenues and decrease in SG&A expenses, which outweighed an increase in R&D expense, a lower provision for income taxes, which offset a decrease in other income.
Read the The complete ReportMore on SLP:
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10-year financial history of SLP.
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