NET MERCHANDISE SALES GREW
13.0%
COMPARABLE NET MERCHANDISE SALES INCREASED
8.8%
$1.31 EARNINGS PER DILUTED SHARE &
ADJUSTED EARNINGS PER DILUTED SHARE
SAN
DIEGO, April 9, 2024 /PRNewswire/
-- PriceSmart, Inc. ("PriceSmart" or the "Company") (NASDAQ:
PSMT), operator of 54 warehouse clubs in 12 countries and one U.S.
territory, today announced results for the fiscal
second quarter of 2024, which ended on February 29,
2024.
Second Quarter Financial Results
Total revenues for the second quarter of fiscal year 2024
increased 13.1% to $1.29
billion compared to $1.14
billion in the comparable period of the prior year. For the
second quarter of fiscal year 2024, net merchandise sales
increased 13.0% to $1.26 billion
from $1.12 billion in the second
quarter of fiscal year 2023. Net merchandise sales - constant
currency increased 9.0% over the comparable prior year period.
Foreign currency exchange rate fluctuations impacted net
merchandise sales positively by $44.2 million, or 4.0%, versus the same
period in the prior year.
The Company had 54 warehouse clubs in operation as of
February 29, 2024 compared to 50 warehouse clubs in operation
as of February 28, 2023.
Comparable net merchandise sales for the 50 warehouse clubs that
have been open for greater than 13 ½ calendar months increased 8.8%
for the 13-week period ended March 3, 2024 compared to the
comparable 13-week period of the prior year. Comparable net
merchandise sales - constant currency for the 13 weeks ended
March 3, 2024 increased 5.2%. Foreign currency exchange rate
fluctuations impacted comparable net merchandise sales positively
by 3.6% versus the same period in the prior year.
The Company recorded operating income during the fiscal second
quarter of $63.6 million
compared to operating income of $53.8
million in the prior year period. Net income increased 25.3%
to $39.3 million, or $1.31 per
diluted share, in the second quarter of fiscal year 2024 compared
to $31.3 million, or $1.02 per diluted share, in the second quarter of
fiscal year 2023.
Adjusted net income for the second quarter of fiscal year 2024
was $39.3 million, or an
adjusted $1.31 per diluted
share, compared to adjusted net income of $38.5 million, or an adjusted $1.25 per diluted share, in the comparable prior
year period.
Adjusted EBITDA for the second quarter of fiscal year 2024 was
$84.1 million compared to
$79.4 million in the same period
last year.
Year-to-Date Financial Results
Total revenues for the six months ended February 29, 2024
increased 11.9% to $2.46 billion
compared to $2.20 billion in the
comparable period of the prior year. For the first six months of
fiscal year 2024, net merchandise sales increased 11.9% to
$2.40 billion from $2.14 billion in the comparable prior year
period. Net merchandise sales - constant currency increased 8.0%
over the comparable prior year period. Foreign currency exchange
rate fluctuations impacted net merchandise sales positively by
$84.1 million, or 3.9%, versus
the same period in the prior year.
Comparable net merchandise sales for the 50 warehouse clubs that
have been open for greater than 13 ½ calendar months increased 8.4%
for the 26-week period ended March 3, 2024 compared to the
comparable 26-week period of the prior year. Comparable net
merchandise sales - constant currency for the 26 weeks ended
March 3, 2024 increased 4.7%. Foreign currency exchange rate
fluctuations impacted comparable net merchandise sales positively
by 3.7% versus the same period in the prior year.
The Company recorded operating income during the first six
months of fiscal year 2024 of $121.8 million compared to operating income
of $109.3 million in the prior year
period. Net income increased 20.3% to $77.3 million, or $2.54 per diluted share, in the first six
months of fiscal year 2024 compared to $64.3
million, or $2.07 per diluted
share, in the first six months of fiscal year 2023.
Adjusted net income for the first six months of fiscal year 2024
was $77.3 million, or an
adjusted $2.54 per diluted
share, compared to adjusted net income of $73.6 million, or an adjusted $2.37 per diluted share, in the comparable prior
year period.
Adjusted EBITDA for the first six months of fiscal year 2024 was
$161.9 million compared to
$154.6 million in the same
period last year.
Special Dividend
The Company has decided to distribute excess cash to
stockholders in the form of a special dividend. On April 3, 2024, the Company's Board of Directors
declared a one-time $1.00 per share
special dividend payable on April 30,
2024 to stockholders of record on April 19, 2024. The declaration of future
dividends (ongoing or otherwise), if any, the amount of such
dividends, and the establishment of record and payment dates is
subject to final determination by the Board of Directors at its
discretion after its review of the Company's financial performance
and anticipated capital requirements.
New Club Growth
The Company has purchased land and plans to open its ninth
warehouse club in Costa Rica,
located in Cartago, approximately
10 miles east from the nearest clubs in the greater San Jose metropolitan area. The club will be
built on a six-acre property and is anticipated to open in early
2025. Once this new club is open, PriceSmart will operate 55
warehouse clubs in total.
Note Regarding Non-GAAP (Generally Accepted Accounting
Principles) Financial Measures
The foregoing discussion of the Company's operating results
includes references to adjusted net income, adjusted net income per
diluted share, adjusted EBITDA, net merchandise sales - constant
currency and comparable net merchandise sales - constant currency,
which are non-GAAP financial measures. We believe these
supplemental measures are useful to investors and analysts because
they exclude items that we do not believe are indicative of our
core operating performance. These non-GAAP financial measures are
defined and reconciled to the most comparable GAAP measures later
in this document.
Conference Call Information
PriceSmart management will host a conference call at
12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Wednesday,
April 10, 2024, to discuss the financial results. Individuals
interested in participating in the conference call may do so by
dialing toll free (800) 549-8228 or (646) 564-2877 for
international callers and asking to join the PriceSmart earnings
call. A digital replay will be available shortly following the
conclusion of the call through Wednesday,
April 17, 2024 by dialing (888) 660-6264 for domestic
callers, or (646) 517-3975 for international callers, and entering
replay passcode 59511#.
About PriceSmart
PriceSmart, headquartered in San
Diego, owns and operates U.S.-style membership shopping
warehouse clubs in Latin America
and the Caribbean, selling high
quality merchandise and services at low prices to PriceSmart
Members. PriceSmart operates 54 warehouse clubs in 12 countries and
one U.S. territory (ten in Colombia; eight in Costa Rica; seven in Panama; six in Guatemala; five in Dominican Republic; four each in Trinidad and El
Salvador; three in Honduras; two each in Nicaragua and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands). In addition,
the Company plans to open one warehouse club in Cartago, Costa
Rica in early 2025. Once this new club is open, the Company
will operate 55 warehouse clubs.
This press release may contain forward-looking statements
concerning PriceSmart, Inc.'s ("PriceSmart", the "Company" or "we")
anticipated future revenues and earnings, adequacy of future cash
flows, future dividends, omni-channel initiatives, proposed
warehouse club openings, the Company's performance relative to
competitors and related matters. These forward-looking statements
include, but are not limited to, statements containing the words
"expect," "believe," "will," "may," "should," "project,"
"estimate," "anticipated," "scheduled," "intend," and like
expressions, and the negative thereof. These statements are subject
to risks and uncertainties that could cause actual results to
differ materially including, but not limited to: various political,
economic and compliance risks associated with our international
operations, adverse changes in economic conditions in our markets,
natural disasters, volatility in currency exchange rates and
illiquidity of certain local currencies in our markets,
competition, consumer and small business spending patterns,
political instability, increased costs associated with the
integration of online commerce with our traditional business,
whether the Company can successfully execute strategic initiatives,
our reliance on third party service providers, including those who
support transaction and payment processing, data security and other
technology services, cybersecurity breaches that could cause
disruptions in our systems or jeopardize the security of Member,
employee or business information, cost increases from product and
service providers, interruption of supply chains, novel coronavirus
(COVID-19) related factors and challenges, exposure to product
liability claims and product recalls, recoverability of moneys owed
to PriceSmart from governments, and other important factors
discussed in the Risk Factors section of the Company's most recent
Annual Report on Form 10-K, and other factors discussed from time
to time in other filings with the SEC, which are accessible on the
SEC's website at www.sec.gov, including Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. Forward-looking statements
speak only as of the date that they are made, and the Company does
not undertake to update them, except as required by law.
For further information, please contact Michael L. McCleary, EVP, Chief Financial
Officer and Principal Accounting Officer (858) 404-8826 or send an
email to ir@pricesmart.com.
|
PRICESMART,
INC.
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED—AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February 29,
2024
|
|
February 28,
2023
|
|
February 29,
2024
|
|
February 28,
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Net merchandise
sales
|
$
1,260,916
|
|
$
1,115,999
|
|
$
2,395,930
|
|
$
2,141,462
|
|
Export sales
|
8,511
|
|
6,882
|
|
18,520
|
|
17,340
|
|
Membership
income
|
18,538
|
|
16,176
|
|
36,287
|
|
32,071
|
|
Other revenue and
income
|
3,985
|
|
3,132
|
|
7,688
|
|
6,122
|
|
Total
revenues
|
1,291,950
|
|
1,142,189
|
|
2,458,425
|
|
2,196,995
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of goods
sold:
|
|
|
|
|
|
|
|
|
Net merchandise
sales
|
1,062,685
|
|
937,462
|
|
2,015,413
|
|
1,796,530
|
|
Export
sales
|
8,178
|
|
6,563
|
|
17,728
|
|
16,552
|
|
Selling, general and
administrative:
|
|
|
|
|
|
|
|
|
Warehouse club and
other operations
|
117,774
|
|
103,630
|
|
227,739
|
|
200,522
|
|
General and
administrative
|
38,809
|
|
32,759
|
|
74,248
|
|
65,931
|
|
Separation costs
associated with Chief Executive Officer departure
|
—
|
|
7,747
|
|
—
|
|
7,747
|
|
Pre-opening
expenses
|
457
|
|
89
|
|
944
|
|
89
|
|
Loss on disposal of
assets
|
429
|
|
139
|
|
522
|
|
297
|
|
Total operating
expenses
|
1,228,332
|
|
1,088,389
|
|
2,336,594
|
|
2,087,668
|
|
Operating
income
|
63,618
|
|
53,800
|
|
121,831
|
|
109,327
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
3,225
|
|
1,942
|
|
6,091
|
|
3,099
|
|
Interest
expense
|
(3,293)
|
|
(2,814)
|
|
(6,109)
|
|
(5,563)
|
|
Other expense,
net
|
(7,036)
|
|
(5,344)
|
|
(9,162)
|
|
(9,910)
|
|
Total other
expense
|
(7,104)
|
|
(6,216)
|
|
(9,180)
|
|
(12,374)
|
|
Income before provision
for income taxes and income (loss) of unconsolidated
affiliates
|
56,514
|
|
47,584
|
|
112,651
|
|
96,953
|
|
Provision for income
taxes
|
(17,259)
|
|
(16,202)
|
|
(35,412)
|
|
(32,628)
|
|
Income (loss) of
unconsolidated affiliates
|
16
|
|
(35)
|
|
79
|
|
(73)
|
|
Net income
|
$
39,271
|
|
$
31,347
|
|
$
77,318
|
|
$
64,252
|
|
Net income per share
available for distribution:
|
|
|
|
|
|
|
|
|
Basic
|
$
1.31
|
|
$
1.02
|
|
$
2.54
|
|
$
2.07
|
|
Diluted
|
$
1.31
|
|
$
1.02
|
|
$
2.54
|
|
$
2.07
|
|
Shares used in per
share computations:
|
|
|
|
|
|
|
|
|
Basic
|
29,920
|
|
30,741
|
|
30,095
|
|
30,727
|
|
Diluted
|
29,920
|
|
30,760
|
|
30,095
|
|
30,740
|
|
PRICESMART,
INC.
CONSOLIDATED
BALANCE SHEETS
(AMOUNTS IN
THOUSANDS, EXCEPT SHARE DATA)
|
|
|
February 29,
2024
(Unaudited)
|
|
August 31,
2023
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
170,563
|
|
$
239,984
|
|
Short-term restricted
cash
|
2,834
|
|
2,865
|
|
Short-term
investments
|
93,630
|
|
91,081
|
|
Receivables, net of
allowance for doubtful accounts of $64 as of February 29,
2024 and $67 as of August
31, 2023
|
19,819
|
|
17,904
|
|
Merchandise
inventories
|
502,292
|
|
471,407
|
|
Prepaid expenses and
other current assets (includes $3,293 and $0 as of February
29, 2024 and August 31,
2023,
respectively,
for the fair value of derivative
instruments)
|
58,514
|
|
53,866
|
|
Total current
assets
|
847,652
|
|
877,107
|
|
Long-term restricted
cash
|
9,178
|
|
9,353
|
|
Property and equipment,
net
|
925,035
|
|
850,328
|
|
Operating lease
right-of-use assets, net
|
100,175
|
|
114,201
|
|
Goodwill
|
43,131
|
|
43,110
|
|
Deferred tax
assets
|
32,147
|
|
32,039
|
|
Other non-current
assets (includes $1,918 and $7,817 as of February 29, 2024
and August 31, 2023, respectively,
for the
fair
value of derivative
instruments)
|
68,900
|
|
68,991
|
|
Investment in
unconsolidated affiliates
|
10,558
|
|
10,479
|
|
Total Assets
|
$ 2,036,776
|
|
$ 2,005,608
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Short-term
borrowings
|
$
6,101
|
|
$
8,679
|
|
Accounts
payable
|
507,077
|
|
453,229
|
|
Accrued salaries and
benefits
|
36,016
|
|
45,441
|
|
Deferred
income
|
38,277
|
|
32,613
|
|
Income taxes
payable
|
8,302
|
|
9,428
|
|
Other accrued expenses
and other current liabilities (includes $2,870 and $1,913 as
of February 29, 2024 and
August 31,
2023,
respectively, for the fair value of
derivative instruments)
|
50,390
|
|
57,273
|
|
Operating lease
liabilities, current portion
|
7,181
|
|
7,621
|
|
Dividends
payable
|
17,771
|
|
—
|
|
Long-term debt, current
portion
|
37,615
|
|
20,193
|
|
Total current
liabilities
|
708,730
|
|
634,477
|
|
Deferred tax
liability
|
1,744
|
|
1,936
|
|
Long-term income taxes
payable, net of current portion
|
5,010
|
|
5,045
|
|
Long-term operating
lease liabilities
|
107,835
|
|
122,195
|
|
Long-term debt, net of
current portion
|
102,350
|
|
119,487
|
|
Other long-term
liabilities (includes $4,259 and $3,321 for the fair value of
derivative instruments and
$12,974 and $12,105
for post-employment plans as of February 29,
2024 and August 31, 2023,
respectively)
|
17,233
|
|
15,425
|
|
Total
Liabilities
|
942,902
|
|
898,565
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
Common stock $0.0001
par value, 45,000,000 shares authorized; 32,578,542 and
31,934,900 shares
issued and 30,656,141 and 30,976,941 shares outstanding (net
of treasury shares) as of February
29,
2024
and August 31, 2023,
respectively
|
3
|
|
3
|
|
Additional paid-in
capital
|
505,349
|
|
497,434
|
|
Accumulated other
comprehensive loss
|
(155,289)
|
|
(163,992)
|
|
Retained
earnings
|
859,325
|
|
817,559
|
|
Less: treasury stock at
cost, 1,922,401 shares as of February 29, 2024 and
957,959 shares as of August
31, 2023
|
(115,514)
|
|
(43,961)
|
|
Total Stockholders'
Equity
|
1,093,874
|
|
1,107,043
|
|
Total Liabilities and
Equity
|
$ 2,036,776
|
|
$ 2,005,608
|
Reconciliation of Non-GAAP Financial Measures
The following tables calculate the Company's adjusted net
income, adjusted net income per diluted share, adjusted EBITDA, net
merchandise sales - constant currency and comparable net
merchandise sales - constant currency, all of which are considered
non-GAAP financial measures. Generally, a non-GAAP financial
measure is a numerical measure of a company's performance,
financial position or cash flows that either excludes or includes
amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance
with GAAP. These measures are customary for our industry and
commonly used by competitors. However, these non-GAAP financial
measures should not be reviewed in isolation or considered as an
alternative to any other performance measure derived in accordance
with GAAP and may not be comparable to similarly titled measures
used by other companies in our industry or across different
industries.
The adjusted net income and adjusted net income per diluted
share metrics are important measures used by management to compare
the performance of our core operations between periods. We define
adjusted net income as net income, as reported, adjusted for:
separation costs associated with the departure of our former Chief
Executive Officer, the write-off of certain Aeropost receivables,
and the tax impact of the foregoing adjustments on net income. We
define adjusted net income per diluted share as adjusted net income
divided by the weighted-average diluted shares outstanding.
We believe adjusted net income and adjusted net income per
diluted share are useful metrics to investors and analysts because
they present more accurate year-over-year comparisons for our net
income and net income per diluted share because adjusted items are
not the result of our normal operations.
The following table shows the Company's reconciliation of net
income to adjusted net income and adjusted net income per diluted
share for the periods indicated:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February 29,
2024
|
|
February 28,
2023
|
|
February 29,
2024
|
|
February 28,
2023
|
|
Net income as
reported
|
$
39,271
|
|
$
31,347
|
|
$
77,318
|
|
$
64,252
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Separation costs
associated with Chief Executive Officer departure
(1)
|
—
|
|
7,747
|
|
—
|
|
7,747
|
|
Aeropost-related
write-offs (2)
|
—
|
|
—
|
|
—
|
|
2,125
|
|
Tax impact of
adjustments to net income (3)
|
—
|
|
(550)
|
|
—
|
|
(550)
|
|
Adjusted net
income
|
$
39,271
|
|
$
38,544
|
|
$
77,318
|
|
$
73,574
|
|
|
|
|
|
|
|
|
|
Net income per diluted
share
|
$
1.31
|
|
$
1.02
|
|
$
2.54
|
|
$
2.07
|
|
Separation costs
associated with Chief Executive Officer departure
|
—
|
|
0.23
|
|
—
|
|
0.23
|
|
Aeropost-related
write-offs
|
—
|
|
—
|
|
—
|
|
0.07
|
|
Adjusted net income per
diluted share
|
$
1.31
|
|
$
1.25
|
|
$
2.54
|
|
$
2.37
|
|
|
|
(1)
|
Reflects
$7.7 million of separation costs associated with the departure
of our former Chief Executive Officer in February 2023.
|
|
(2)
|
Reflects
$2.1 million of Aeropost-related write-offs in the first
quarter of fiscal year 2023.
|
|
(3)
|
Reflects the tax effect
of the above-mentioned adjustments.
|
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest
expense, net, provision for income taxes and depreciation and
amortization, adjusted for the impact of certain other items,
including interest income; other income (expense), net; separation
costs associated with Chief Executive Officer departure; and
Aeropost-related write-offs. The following is a reconciliation of
our Net income to Adjusted EBITDA for the periods presented:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February 29,
2024
|
|
February 28,
2023
|
|
February 29,
2024
|
|
February 28,
2023
|
|
Net income as
reported
|
$
39,271
|
|
$
31,347
|
|
$
77,318
|
|
$
64,252
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest
expense
|
3,293
|
|
2,814
|
|
6,109
|
|
5,563
|
|
Provision for income
taxes
|
17,259
|
|
16,202
|
|
35,412
|
|
32,628
|
|
Depreciation and
amortization
|
20,491
|
|
17,875
|
|
39,985
|
|
35,443
|
|
Interest
income
|
(3,225)
|
|
(1,942)
|
|
(6,091)
|
|
(3,099)
|
|
Other expense,
net (1)
|
7,036
|
|
5,344
|
|
9,162
|
|
9,910
|
|
Separation costs
associated with Chief Executive Officer departure
(2)
|
—
|
|
7,747
|
|
—
|
|
7,747
|
|
Aeropost-related
write-offs (3)
|
—
|
|
—
|
|
—
|
|
2,125
|
|
Adjusted
EBITDA
|
$
84,125
|
|
$
79,387
|
|
$
161,895
|
|
$
154,569
|
|
|
|
(1)
|
Primarily consists of
transaction costs of converting the local currencies into available
tradable currencies in some of our countries with liquidity issues
and foreign currency losses or gains due to the revaluation of
monetary assets and liabilities (primarily U.S. dollars) for the
three and six months ended February 29, 2024. Primarily consists of
foreign currency losses or gains due to the revaluation of monetary
assets and liabilities (primarily U.S. dollars) for the three and
six months ended February 28, 2023.
|
|
(2)
|
Reflects
$7.7 million of separation costs associated with the departure
of our former Chief Executive Officer in February 2023.
|
|
(3)
|
Reflects
$2.1 million of Aeropost-related write-offs in the first
quarter of fiscal year 2023.
|
Net Merchandise Sales - Constant Currency and Comparable Net
Merchandise Sales – Constant Currency
As a multinational enterprise, we are exposed to changes in
foreign currency exchange rates. The translation of the operations
of our foreign-based entities from their local currencies into U.S.
dollars is sensitive to changes in foreign currency exchange rates
and can have a significant impact on our reported financial
results. We believe that constant currency is a useful measure,
indicating the actual growth of our operations. When we use the
term "net merchandise sales - constant currency," it means that we
have translated current year net merchandise sales at prior year
monthly average exchanges rates. Net merchandise sales - constant
currency results exclude the effects of foreign currency
translation. Similarly, when we use the term "comparable net
merchandise sales - constant currency," it means that we have
translated current year comparable net merchandise sales at prior
year monthly average exchanges rates. Comparable net merchandise
sales - constant currency results exclude the effects of foreign
currency translation.
Net merchandise sales growth rate on a net merchandise sales -
constant currency basis is calculated as follows:
|
February 29,
2024
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Net
merchandise
sales
|
|
%
Growth
|
|
Net
merchandise
sales
|
|
%
Growth
|
|
Net merchandise
sales
|
$
1,260,916
|
|
13.0 %
|
|
$
2,395,930
|
|
11.9 %
|
|
Favorable impact of
foreign currency exchange
|
44,151
|
|
4.0 %
|
|
84,141
|
|
3.9 %
|
|
Net merchandise sales
on a constant-currency basis
|
$
1,216,765
|
|
9.0 %
|
|
$
2,311,789
|
|
8.0 %
|
Comparable net merchandise sales growth rate on a net
merchandise sales - constant currency basis is calculated as
follows:
|
March 3,
2024
|
|
Thirteen Weeks
Ended
|
Twenty-Six Weeks
Ended
|
|
%
Growth
|
|
%
Growth
|
|
Comparable net
merchandise sales
|
8.8 %
|
|
8.4 %
|
|
Favorable impact of
foreign currency exchange
|
3.6 %
|
|
3.7 %
|
|
Comparable net
merchandise sales on a constant-currency basis
|
5.2 %
|
|
4.7 %
|
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SOURCE PriceSmart, Inc.