Simulations Plus Inc (SLP, Financial) filed Quarterly Report for the period ended 2009-02-28.
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 $16.2 million; its shares were traded at around $1.01 with a P/E ratio of 10.1 and P/S ratio of 1.9. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Consolidated cost of sales increased $97,000, or 21.4%, to $553,000 in 2QFY09 from $456,000 in 2QFY08. Cost of sales as a percentage of revenue for 2QFY09 increased 1.6% to 22.5% from 20.9% in 2QFY08. For Simulations Plus, cost of sales increased $28,000, or 12.8%. However, as a percentage of revenue, cost of sales decreased to 13.8% in 2QFY09 from 14.1% in 2QFY08. 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. This amortization cost increased approximately $7,000, or 6.4%, in 2QFY09 compared with 2QFY08. Royalty expense, which is a variable cost, relates to sales of our GastroPlus core program as well as our new ADMET Predictor Enslein Metabolism module, increased approximately $21,000, or 19.2%, in 2QFY09 compared with 2QFY08 due to increases in sales from those products.
Consolidated gross profit increased $180,000, or 10.4%, to $1,904,000 in 2QFY09 from $1,724,000 in 2QFY08. We attribute this increase to an increase in sales of pharmaceutical software and services in addition to an increase in sales of Words+ products, which outweighed the increase in Words+ cost of goods sold.
Consolidated selling, general and administrative (SG&A) expenses increased $204,000, or 24.5%, to $1,037,000 in 2QFY09 from $832,000 in 2QFY08. For Simulations Plus, SG&A increased $55,000, or 10.2%; however, as a percentage of sales, SG&A decreased to approximately 33.5% in 2QFY09 from approximately 34.9% in 2QFY08. The major increases in SG&A expenses were commissions, expanded trade show expenses, travel expenses, and professional fees which outweighed decreases in contract labor, bonus to Company s Secretary, hiring expense, and vacation expense.
We incurred approximately $512,000 of research and development costs for both companies during 2QFY09. Of this amount, $152,000 was capitalized and $360,000 was expensed. In 2QFY08, we incurred $467,000 of research and development costs, of which $215,000 was capitalized and $252,000 was expensed. The increase of $45,000, or 9.6%, in total research and development expenditures from 2QFY08 to 2QFY09 was due primarily to salaries of a new hire and salary increases to existing staff.
Consolidated net income decreased by $197,000, or 34.9%, to $368,000 in 2QFY09 from $565,000 in 2QFY08. We attribute this decrease in profit primarily to the increases in cost of sales, operating expenses, tax provision and a decrease in other income which outweighed increases in revenue from both pharmaceutical software and Words+ products.
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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 $16.2 million; its shares were traded at around $1.01 with a P/E ratio of 10.1 and P/S ratio of 1.9. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Highlight of Business Operations:
Consolidated net sales increased $277,000, or 12.7%, to $2,457,000 in the second fiscal quarter of 2009 (2QFY09) from $2,180,000 in the second fiscal quarter of 2008 (2QFY08). Our sales from pharmaceutical and educational software increased approximately $229,000, or 14.8%; and our Words+, Inc. subsidiary s sales also increased approximately $48,000, or 7.6%, for the quarter. We attribute the increase in pharmaceutical software sales primarily to new study contracts with large pharmaceutical companies, new customers, and sale of new modules to existing customers as well as increases in number of licenses with existing customers that outweighed the loss of some customers and revenues from an SBIR grant which were reported in 2QFY08.Consolidated cost of sales increased $97,000, or 21.4%, to $553,000 in 2QFY09 from $456,000 in 2QFY08. Cost of sales as a percentage of revenue for 2QFY09 increased 1.6% to 22.5% from 20.9% in 2QFY08. For Simulations Plus, cost of sales increased $28,000, or 12.8%. However, as a percentage of revenue, cost of sales decreased to 13.8% in 2QFY09 from 14.1% in 2QFY08. 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. This amortization cost increased approximately $7,000, or 6.4%, in 2QFY09 compared with 2QFY08. Royalty expense, which is a variable cost, relates to sales of our GastroPlus core program as well as our new ADMET Predictor Enslein Metabolism module, increased approximately $21,000, or 19.2%, in 2QFY09 compared with 2QFY08 due to increases in sales from those products.
Consolidated gross profit increased $180,000, or 10.4%, to $1,904,000 in 2QFY09 from $1,724,000 in 2QFY08. We attribute this increase to an increase in sales of pharmaceutical software and services in addition to an increase in sales of Words+ products, which outweighed the increase in Words+ cost of goods sold.
Consolidated selling, general and administrative (SG&A) expenses increased $204,000, or 24.5%, to $1,037,000 in 2QFY09 from $832,000 in 2QFY08. For Simulations Plus, SG&A increased $55,000, or 10.2%; however, as a percentage of sales, SG&A decreased to approximately 33.5% in 2QFY09 from approximately 34.9% in 2QFY08. The major increases in SG&A expenses were commissions, expanded trade show expenses, travel expenses, and professional fees which outweighed decreases in contract labor, bonus to Company s Secretary, hiring expense, and vacation expense.
We incurred approximately $512,000 of research and development costs for both companies during 2QFY09. Of this amount, $152,000 was capitalized and $360,000 was expensed. In 2QFY08, we incurred $467,000 of research and development costs, of which $215,000 was capitalized and $252,000 was expensed. The increase of $45,000, or 9.6%, in total research and development expenditures from 2QFY08 to 2QFY09 was due primarily to salaries of a new hire and salary increases to existing staff.
Consolidated net income decreased by $197,000, or 34.9%, to $368,000 in 2QFY09 from $565,000 in 2QFY08. We attribute this decrease in profit primarily to the increases in cost of sales, operating expenses, tax provision and a decrease in other income which outweighed increases in revenue from both pharmaceutical software and Words+ products.
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