Simulations Plus Inc (SLP, Financial) filed Quarterly Report for the period ended 2009-05-31.
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 $28.4 million; its shares were traded at around $1.77 with a P/E ratio of 19.7 and P/S ratio of 3.1. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Consolidated cost of sales decreased $81,000, or 12.9%, to $543,000 in 3QFY09 from $624,000 in 3QFY08. Cost of sales as a percentage of revenue for 3QFY09 slightly decreased by 1.0% to 20.0% from 21.0% in 3QFY08. For Simulations Plus, cost of sales increased $25,000, or 11.8%. As a percentage of revenue, cost of sales also increased to 12.0% in 3QFY09 from 10.8% in 3QFY08. 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 $31,000, or 35.8%, in 3QFY09 compared with 3QFY08. 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, decreased approximately $6,000, or 4.5%, in 3QFY09 compared with 3QFY08 due to decreases in sales from those products.
Consolidated gross profit decreased $174,000, or 7.4%, to $2,170,000 in 3QFY09 from $2,344,000 in 3QFY08. We attribute this decrease to an increase in sales of pharmaceutical software was not large enough to cover an increase in cost of goods sold in addition to a decrease in gross profit from Words+ products.
Consolidated selling, general and administrative (SG&A) expenses increased $47,000, or 5.0%, to $989,000 in 3QFY09 from $942,000 in 3QFY08. For Simulations Plus, SG&A increased $73,000, or 13.1%. As a percentage of sales, SG&A also increased to approximately 31.9% in 3QFY09 from approximately 28.4% in 3QFY08. The major increases in SG&A expenses were expanded trade show expenses, travel expenses, and consultant fees which outweighed decreases in commissions and professional fees.
We incurred approximately $472,000 of consolidated research and development costs during 3QFY09. Of this amount, $138,000 was capitalized and $334,000 was expensed. In 3QFY08, we incurred $428,000 of consolidated research and development costs, of which $206,000 was capitalized and $222,000 was expensed. The increase of $44,000, or 10.3%, in total research and development expenditures from 3QFY08 to 3QFY09 was due primarily to salaries of new hires and salary increases to existing staff.
Consolidated net income decreased by $184,000, or 24.4%, to $569,000 in 3QFY09 from $753,000 in 3QFY08. We attribute this decrease in profit primarily to the increases in operating expenses, tax provision and a decrease in gross profit.
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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 $28.4 million; its shares were traded at around $1.77 with a P/E ratio of 19.7 and P/S ratio of 3.1. Simulations Plus Inc had an annual average earning growth of 16.7% over the past 5 years.
Highlight of Business Operations:
Consolidated net sales decreased $255,000, or 8.6%, to $2,713,000 in the third fiscal quarter of 2009 (3QFY09) from $2,968,000 in the third fiscal quarter of 2008 (3QFY08). Our sales from pharmaceutical and educational software increased approximately $10,000, or 0.5%; and our Words+, Inc. subsidiary s sales decreased approximately $265,000, or 26.7%, for the quarter. We attribute the increase in pharmaceutical software sales primarily to new software licensing, new customers, and sale of new modules to existing customers as well as increases in the number of licenses with existing customers, and our funded collaborations with large pharmaceutical companies that outweighed the loss of a few small customers and a decline in renewal license revenues of approximately $124,000 that resulted in an order from one large pharmaceutical company that was received late, and so was unlocked and its revenue recognized in the 4th fiscal quarter vs. the 3rd quarter.Consolidated cost of sales decreased $81,000, or 12.9%, to $543,000 in 3QFY09 from $624,000 in 3QFY08. Cost of sales as a percentage of revenue for 3QFY09 slightly decreased by 1.0% to 20.0% from 21.0% in 3QFY08. For Simulations Plus, cost of sales increased $25,000, or 11.8%. As a percentage of revenue, cost of sales also increased to 12.0% in 3QFY09 from 10.8% in 3QFY08. 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 $31,000, or 35.8%, in 3QFY09 compared with 3QFY08. 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, decreased approximately $6,000, or 4.5%, in 3QFY09 compared with 3QFY08 due to decreases in sales from those products.
Consolidated gross profit decreased $174,000, or 7.4%, to $2,170,000 in 3QFY09 from $2,344,000 in 3QFY08. We attribute this decrease to an increase in sales of pharmaceutical software was not large enough to cover an increase in cost of goods sold in addition to a decrease in gross profit from Words+ products.
Consolidated selling, general and administrative (SG&A) expenses increased $47,000, or 5.0%, to $989,000 in 3QFY09 from $942,000 in 3QFY08. For Simulations Plus, SG&A increased $73,000, or 13.1%. As a percentage of sales, SG&A also increased to approximately 31.9% in 3QFY09 from approximately 28.4% in 3QFY08. The major increases in SG&A expenses were expanded trade show expenses, travel expenses, and consultant fees which outweighed decreases in commissions and professional fees.
We incurred approximately $472,000 of consolidated research and development costs during 3QFY09. Of this amount, $138,000 was capitalized and $334,000 was expensed. In 3QFY08, we incurred $428,000 of consolidated research and development costs, of which $206,000 was capitalized and $222,000 was expensed. The increase of $44,000, or 10.3%, in total research and development expenditures from 3QFY08 to 3QFY09 was due primarily to salaries of new hires and salary increases to existing staff.
Consolidated net income decreased by $184,000, or 24.4%, to $569,000 in 3QFY09 from $753,000 in 3QFY08. We attribute this decrease in profit primarily to the increases in operating expenses, tax provision and a decrease in gross profit.
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