November 26, 2020

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Simulations Plus Reports FY2020 and Fourth Quarter FY2020 Financial Results

Full-Year Revenue Increased 22.4% to $41.6 Million; Fourth Quarter Revenue Increased 18.9% to $9.5 Million; Fourth Quarter Diluted EPS of $0.11 and Full-Year Diluted EPS of $0.50 LANCASTER, Calif.--(BUSINESS WIRE)--Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its 2020 fiscal year (FY20) and fourth quarter (4QFY20) ended August 31, 2020. Full Year FY20 highlights compared with Full Year FY19: Revenues were $41.6 million, up 22.4% over $34.0 million in FY19 Gross profit was up 24.0%, or $6.0 million, to $30.9 million, from $24.9 million in FY19 SG&A was $16.4 million, an increase of $4.6 million, or 38.7%, over $11.8 million Total R&D expenditures were $5.3 million, an increase of $1.0 million, or 24.8% over $4.3 million For FY20, $2.4 million was capitalized and $3.0 million was expensed For FY19, $1.8 million was capitalized and $2.5 million was expensed Income before taxes increased 7.9% to $11.4 million, an increase of $831,000 over $10.6 million Net income increased 8.7% to $9.3 million, an increase of $749,000 from $8.6 million Diluted earnings per share increased $0.02 to $0.50 from $0.48. One-time transaction costs related to the Lixoft acquisition of $1.4 million (approx. $1.1 million net of tax) effected a $0.06 decrease in diluted earnings per share Cash, cash equivalents, and short-term investments were $116.0 million, compared to $11.4 million at the end of FY19 reflecting the follow-on offering completed on August 10, 2020 4QFY20 highlights compared with 4QFY19: Revenues increased 18.9% to $9.5 million, an increase of $1.5 million over $8.0 million Gross profit was up 19.7% to $6.9 million, an increase of $1.1 million over $5.7 million SG&A was $3.7 million, an increase of 16.7%, or $531,000, over $3.2 million Total R&D expenditures were $1.6 million, an increase of $559,000, or 55.4%, over $1.0 million For 4QFY20, $621,000 was capitalized and $948,000 was expensed For 4QFY19, $406,000 was capitalized and $603,000 was expensed Income before taxes increased 2.6%, or $51,000, and remained at $2.0 million Net income increased 6.3% to $2.2 million, an increase of $129,000 over $2.1 million Earnings per fully diluted share remained unchanged at $0.11 Shawn O’Connor, chief executive officer of Simulations Plus, said: “Simulations Plus achieved its goal of accelerating organic growth to 15-20%, overcoming headwinds from the COVID-19 pandemic due to continued strong growth from both our software and consulting revenue streams. Our future growth prospects were bolstered by a significant acquisition to expand our software business, growing our European presence, and the recent introductions of new software versions as well as the launch of several important collaborations. We continue to invest in R&D, funded both internally and from leading pharmaceutical and regulatory agencies, building on our leadership position in modelling and simulation for the drug development marketplace.” John Kneisel, chief financial officer of Simulations Plus, added: “During the fourth quarter, we completed a strategic offering, issuing approximately 2.1 million shares and raising net proceeds of approximately $107.7 million. This follow-on offering gives the Company resources and scale to pursue additional acquisitions to further bolster our growth rates and broaden the value we can deliver to our clients. Once again, in the fourth quarter we benefited from tax deductions from stock compensation expense as employees took advantage of the increased value of their options. Overall, we continue to generate solid profitability and free cash flow, even after paying our regular quarterly dividend.” Investor Conference Call The Company invites all interested persons to attend its conference call at 4:15 p.m. Eastern Time on November 16, 2020. The live webcast/teleconference will be accessible by registering here. Please dial in five to 10 minutes prior to the scheduled start time. A live, listen-only webcast will also be available by dialing (213) 929-4232. 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 leading provider of modeling and simulation software and consulting services supporting drug discovery, development research, and regulatory submissions. With our subsidiaries, Cognigen, DILIsym Services, and Lixoft, we offer solutions which bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, chemical, consumer goods companies and regulatory agencies worldwide. 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. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so 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 new software and 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, our ability to identify and close acquisitions on terms favorable to the Company, 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. Follow us on Twitter | LinkedIn | YouTube Tables follow SIMULATIONS PLUS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME For the three months and years ended August 31, Three months ended Years ended (Unaudited) (Unaudited) 2020 2019 2020 2019 2018 Revenues $ 9,540,081 $ 8,025,895 $ 41,589,084 $ 33,970,440 $ 29,666,524 Cost of revenues 2,674,528 2,290,813 10,649,230 9,025,704 7,994,228 Gross margin 6,865,553 5,735,082 30,939,854 24,944,736 21,672,296 Operating expenses Selling, general, and administrative 3,713,543 3,182,238 16,360,053 11,796,027 9,583,852 Research and development 947,938 603,053 2,974,623 2,499,980 1,790,656 Total operating expenses 4,661,481 3,785,291 19,334,676 14,296,007 11,374,508 Income from operations 2,204,072 1,949,791 11,605,178 10,648,729 10,297,788 Other income (expense) Interest income 1,653 13,225 29,468 33,522 27,122 Change in value of contingent consideration (121,500 ) - (202,500 ) (109,078 ) (153,034 ) (Loss) income on currency exchange (46,380 ) 23,769 (45,097 ) (16,697 ) (32,934 ) Total other income (expense) (166,227 ) 36,993 (218,129 ) (92,253 ) (158,846 ) Income before provision for income taxes 2,037,845 1,986,784 11,387,049 10,556,476 10,138,942 Provision for income taxes 150,287 72,443 (2,054,989 ) (1,973,147 ) (1,204,130 ) Net Income $ 2,188,132 $ 2,059,227 $ 9,332,060 $ 8,583,329 $ 8,934,812 Earnings per share Basic $ 0.12 $ 0.12 $ 0.52 $ 0.49 $ 0.52 Diluted $ 0.11 $ 0.11 $ 0.50 $ 0.48 $ 0.50 Weighted-average common shares outstanding Basic 18,289,256 17,549,636 17,819,064 17,492,258 17,328,707 Diluted 19,151,857 18,265,585 18,538,373 18,057,431 17,860,392 Other comprehensive Income (Loss), net of tax Foreign currency translation adjustments 28,007 - 58,467 - - Comprehensive Income (Loss) $ 2,216,139 $ 2,059,227 $ 9,390,527 $ 8,583,329 $ 8,934,812 SIMULATIONS PLUS, INC. CONSOLIDATED BALANCE SHEETS (Audited) (Audited) August 31, August 31, ASSETS 2020 2019 Current assets Cash and cash equivalents $ 49,207,314 $ 11,435,499 Accounts receivable, net of allowance for doubtful accounts of $50,000 and $0 7,421,970 5,026,558 Revenues in excess of billings 3,093,343 3,233,659 Prepaid income taxes 969,688 765,110 Prepaid expenses and other current assets 1,595,447 704,316 Short-term investments 66,803,595 - Total current assets 129,091,357 21,165,142 Long-term assets Capitalized computer software development costs, net of accumulated amortization of $13,581,599 and $12,356,055 6,087,378 4,959,736 Property and equipment, net 437,787 341,145 Operating lease right of use asset 926,600 - Intellectual property, net of accumulated amortization of $5,087,031 and $3,948,750 11,897,970 5,026,249 Other intangible assets net of accumulated amortization of $1,641,725 and $1,210,000 7,008,275 3,280,000 Goodwill 12,921,185 10,387,198 Other assets 50,965 37,227 Total assets $ 168,421,517 $ 45,196,697 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 349,940 $ 204,075 Accrued payroll and other expenses 2,250,692 1,639,038 Current portion - Contracts payable 2,000,000 1,761,028 Billings in excess of revenues 140,991 798,549 Operating lease liability, current portion 463,465 - Deferred revenue 299,482 380,787 Total current liabilities 5,504,570 4,783,477 Long-term liabilities Deferred income taxes, net 2,353,857 2,731,616 Operating Lease Liability 463,312 - Payments due under Contracts payable 4,063,833 - Other long-term liabilities - - Total liabilities 12,385,572 7,515,093 Commitments and contingencies Shareholders' equity Preferred stock, $0.001 par value 10,000,000 shares authorized no shares issued and outstanding $ - $ - Common stock, $0.001 par value 50,000,000 shares authorized 19,923,277 and 17,591,834 shares issued and outstanding 9,926 7,595 Additional paid-in capital 128,531,428 15,319,474 Accumulated Other Comprehensive Income (Loss) 58,467 - Retained earnings 27,436,124 22,354,535 Total shareholders' equity 156,035,945 37,681,604 Total liabilities and shareholders' equity $ 168,421,517 $ 45,196,697 Contacts Simulations Plus Investor RelationsMs. Renee Bouche 661-723-7723 [email protected] Hayden IRMr. Cameron Donahue 651-653-1854 [email protected]

Full-Year Revenue Increased 22.4% to $41.6 Million;

Fourth Quarter Revenue Increased 18.9% to $9.5 Million;

Fourth Quarter Diluted EPS of $0.11 and Full-Year Diluted EPS of $0.50

LANCASTER, Calif.–(BUSINESS WIRE)–Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its 2020 fiscal year (FY20) and fourth quarter (4QFY20) ended August 31, 2020.

Full Year FY20 highlights compared with Full Year FY19:

  • Revenues were $41.6 million, up 22.4% over $34.0 million in FY19
  • Gross profit was up 24.0%, or $6.0 million, to $30.9 million, from $24.9 million in FY19
  • SG&A was $16.4 million, an increase of $4.6 million, or 38.7%, over $11.8 million
  • Total R&D expenditures were $5.3 million, an increase of $1.0 million, or 24.8% over $4.3 million

    • For FY20, $2.4 million was capitalized and $3.0 million was expensed
    • For FY19, $1.8 million was capitalized and $2.5 million was expensed
  • Income before taxes increased 7.9% to $11.4 million, an increase of $831,000 over $10.6 million
  • Net income increased 8.7% to $9.3 million, an increase of $749,000 from $8.6 million
  • Diluted earnings per share increased $0.02 to $0.50 from $0.48. One-time transaction costs related to the Lixoft acquisition of $1.4 million (approx. $1.1 million net of tax) effected a $0.06 decrease in diluted earnings per share
  • Cash, cash equivalents, and short-term investments were $116.0 million, compared to $11.4 million at the end of FY19 reflecting the follow-on offering completed on August 10, 2020

4QFY20 highlights compared with 4QFY19:

  • Revenues increased 18.9% to $9.5 million, an increase of $1.5 million over $8.0 million
  • Gross profit was up 19.7% to $6.9 million, an increase of $1.1 million over $5.7 million
  • SG&A was $3.7 million, an increase of 16.7%, or $531,000, over $3.2 million
  • Total R&D expenditures were $1.6 million, an increase of $559,000, or 55.4%, over $1.0 million

    • For 4QFY20, $621,000 was capitalized and $948,000 was expensed
    • For 4QFY19, $406,000 was capitalized and $603,000 was expensed
  • Income before taxes increased 2.6%, or $51,000, and remained at $2.0 million
  • Net income increased 6.3% to $2.2 million, an increase of $129,000 over $2.1 million
  • Earnings per fully diluted share remained unchanged at $0.11

Shawn O’Connor, chief executive officer of Simulations Plus, said: “Simulations Plus achieved its goal of accelerating organic growth to 15-20%, overcoming headwinds from the COVID-19 pandemic due to continued strong growth from both our software and consulting revenue streams. Our future growth prospects were bolstered by a significant acquisition to expand our software business, growing our European presence, and the recent introductions of new software versions as well as the launch of several important collaborations. We continue to invest in R&D, funded both internally and from leading pharmaceutical and regulatory agencies, building on our leadership position in modelling and simulation for the drug development marketplace.”

John Kneisel, chief financial officer of Simulations Plus, added: “During the fourth quarter, we completed a strategic offering, issuing approximately 2.1 million shares and raising net proceeds of approximately $107.7 million. This follow-on offering gives the Company resources and scale to pursue additional acquisitions to further bolster our growth rates and broaden the value we can deliver to our clients. Once again, in the fourth quarter we benefited from tax deductions from stock compensation expense as employees took advantage of the increased value of their options. Overall, we continue to generate solid profitability and free cash flow, even after paying our regular quarterly dividend.”

Investor Conference Call

The Company invites all interested persons to attend its conference call at 4:15 p.m. Eastern Time on November 16, 2020. The live webcast/teleconference will be accessible by registering here. Please dial in five to 10 minutes prior to the scheduled start time. A live, listen-only webcast will also be available by dialing (213) 929-4232. 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 leading provider of modeling and simulation software and consulting services supporting drug discovery, development research, and regulatory submissions. With our subsidiaries, Cognigen, DILIsym Services, and Lixoft, we offer solutions which bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, chemical, consumer goods companies and regulatory agencies worldwide. 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. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so 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 new software and 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, our ability to identify and close acquisitions on terms favorable to the Company, 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.

Follow us on Twitter | LinkedIn | YouTube

Tables follow

SIMULATIONS PLUS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three months and years ended August 31,
Three months ended Years ended

(Unaudited)

(Unaudited)

2020

2019

2020

2019

2018

Revenues

$

9,540,081

$

8,025,895

$

41,589,084

$

33,970,440

$

29,666,524

Cost of revenues

2,674,528

2,290,813

10,649,230

9,025,704

7,994,228

Gross margin

6,865,553

5,735,082

30,939,854

24,944,736

21,672,296

Operating expenses
Selling, general, and administrative

3,713,543

3,182,238

16,360,053

11,796,027

9,583,852

Research and development

947,938

603,053

2,974,623

2,499,980

1,790,656

Total operating expenses

4,661,481

3,785,291

19,334,676

14,296,007

11,374,508

Income from operations

2,204,072

1,949,791

11,605,178

10,648,729

10,297,788

Other income (expense)
Interest income

1,653

13,225

29,468

33,522

27,122

Change in value of contingent consideration

(121,500

)

(202,500

)

(109,078

)

(153,034

)

(Loss) income on currency exchange

(46,380

)

23,769

(45,097

)

(16,697

)

(32,934

)

Total other income (expense)

(166,227

)

36,993

(218,129

)

(92,253

)

(158,846

)

Income before provision for income taxes

2,037,845

1,986,784

11,387,049

10,556,476

10,138,942

Provision for income taxes

150,287

72,443

(2,054,989

)

(1,973,147

)

(1,204,130

)

Net Income

$

2,188,132

$

2,059,227

$

9,332,060

$

8,583,329

$

8,934,812

Earnings per share
Basic

$

0.12

$

0.12

$

0.52

$

0.49

$

0.52

Diluted

$

0.11

$

0.11

$

0.50

$

0.48

$

0.50

Weighted-average common shares outstanding
Basic

18,289,256

17,549,636

17,819,064

17,492,258

17,328,707

Diluted

19,151,857

18,265,585

18,538,373

18,057,431

17,860,392

Other comprehensive Income (Loss), net of tax
Foreign currency translation adjustments

28,007

58,467

Comprehensive Income (Loss)

$

2,216,139

$

2,059,227

$

9,390,527

$

8,583,329

$

8,934,812

SIMULATIONS PLUS, INC.
CONSOLIDATED BALANCE SHEETS
(Audited) (Audited)
August 31, August 31,
ASSETS

2020

2019

Current assets
Cash and cash equivalents

$

49,207,314

$

11,435,499

Accounts receivable, net of allowance for doubtful accounts of $50,000 and $0

7,421,970

5,026,558

Revenues in excess of billings

3,093,343

3,233,659

Prepaid income taxes

969,688

765,110

Prepaid expenses and other current assets

1,595,447

704,316

Short-term investments

66,803,595

Total current assets

129,091,357

21,165,142

Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $13,581,599 and $12,356,055

6,087,378

4,959,736

Property and equipment, net

437,787

341,145

Operating lease right of use asset

926,600

Intellectual property, net of accumulated amortization of $5,087,031 and $3,948,750

11,897,970

5,026,249

Other intangible assets net of accumulated amortization of $1,641,725 and $1,210,000

7,008,275

3,280,000

Goodwill

12,921,185

10,387,198

Other assets

50,965

37,227

Total assets

$

168,421,517

$

45,196,697

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable

$

349,940

$

204,075

Accrued payroll and other expenses

2,250,692

1,639,038

Current portion – Contracts payable

2,000,000

1,761,028

Billings in excess of revenues

140,991

798,549

Operating lease liability, current portion

463,465

Deferred revenue

299,482

380,787

Total current liabilities

5,504,570

4,783,477

Long-term liabilities
Deferred income taxes, net

2,353,857

2,731,616

Operating Lease Liability

463,312

Payments due under Contracts payable

4,063,833

Other long-term liabilities

Total liabilities

12,385,572

7,515,093

Commitments and contingencies
Shareholders' equity
Preferred stock, $0.001 par value
10,000,000 shares authorized
no shares issued and outstanding

$

$

Common stock, $0.001 par value
50,000,000 shares authorized
19,923,277 and 17,591,834 shares issued and outstanding

9,926

7,595

Additional paid-in capital

128,531,428

15,319,474

Accumulated Other Comprehensive Income (Loss)

58,467

Retained earnings

27,436,124

22,354,535

Total shareholders' equity

156,035,945

37,681,604

Total liabilities and shareholders' equity

$

168,421,517

$

45,196,697

Contacts

Simulations Plus Investor Relations
Ms. Renee Bouche

661-723-7723

[email protected]

Hayden IR
Mr. Cameron Donahue

651-653-1854

[email protected]

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