NET MERCHANDISE SALES GREW
7.1%
COMPARABLE NET MERCHANDISE SALES INCREASED
5.8%
$0.94 EARNINGS PER
DILUTED SHARE
$1.02
ADJUSTED EARNINGS PER DILUTED SHARE
SAN
DIEGO, July 10, 2023 /PRNewswire/ -- PriceSmart,
Inc. (NASDAQ: PSMT), operator of 51 warehouse clubs in 12 countries
and one U.S. territory, today announced results for the fiscal
third quarter of 2023, which ended on May
31, 2023, and announced a $75
million stock repurchase program.
Third Quarter Financial Results
Total revenues for the third quarter of fiscal year 2023
increased 6.4% to $1.10 billion
compared to $1.03 billion in the
comparable period of the prior year. For the third quarter of
fiscal year 2023, net merchandise sales increased 7.1% to
$1.07 billion from $999.0 million in the third quarter of fiscal
year 2022. Net merchandise sales - constant currency increased 5.6%
over the comparable prior year period. Foreign currency exchange
rate fluctuations impacted net merchandise sales positively by
$14.9 million, or 1.5%, versus
the same period in the prior year.
The Company had 51 warehouse clubs in operation as of
May 31, 2023 compared to 50 warehouse clubs in operation as of
May 31, 2022.
Comparable net merchandise sales for the 49 warehouse clubs that
have been open for greater than 13 ½ calendar months increased 5.8%
for the 13-week period ended June 4, 2023 compared to the
comparable 13-week period of the prior year. Comparable net
merchandise sales - constant currency for the 13 weeks ended
June 4, 2023 increased 4.3%. Foreign currency exchange rate
fluctuations impacted comparable net merchandise sales positively
by 1.5% versus the same period in the prior year.
The Company recorded operating income during the fiscal third
quarter of $43.1 million compared to
operating income of $33.8 million in
the prior year period. Net income attributable to PriceSmart
increased 53.6% to $29.6 million, or
$0.94 per diluted share, in the third
quarter of fiscal year 2023 compared to $19.3 million, or $0.62 per diluted share, in the third quarter of
fiscal year 2022.
Adjusted net income attributable to PriceSmart for the
third quarter of fiscal year 2023 was $31.9
million, or an adjusted $1.02
per diluted share, compared to adjusted net income of $19.3 million, or an adjusted $0.62 per diluted share, in the comparable prior
year period.
Adjusted EBITDA for the third quarter of fiscal year 2023 was
$63.2 million compared to
$51.3 million in the same period last
year.
Year-to-Date Financial Results
Total revenues for the nine months ended May 31, 2023
increased 8.2% to $3.29 billion
compared to $3.04 billion in the
comparable period of the prior year. For the first nine months of
fiscal year 2023, net merchandise sales increased 8.7% to
$3.21 billion from $2.95 billion in the comparable prior year
period. Net merchandise sales - constant currency increased 9.0%
over the comparable prior year period. Foreign currency exchange
rate fluctuations impacted net merchandise sales negatively by
$8.6 million, or 0.3%, versus
the same period in the prior year.
Comparable net merchandise sales for the 49 warehouse clubs that
have been open for greater than 13 ½ calendar months increased 6.5%
for the 39-week period ended June 4, 2023 compared to the
comparable 39-week period of the prior year. Comparable net
merchandise sales - constant currency for the 39 weeks ended
June 4, 2023 increased 6.7%. Foreign currency exchange rate
fluctuations impacted comparable net merchandise sales negatively
by 0.2% versus the same period in the prior year.
The Company recorded operating income during the first nine
months of fiscal year 2023 of $152.4
million compared to operating income of $128.1 million in the prior year period. Net
income attributable to PriceSmart increased 15.5% to $93.8 million, or $3.01 per diluted share, in the first nine months
of fiscal year 2023 compared to $81.2
million, or $2.63 per diluted
share, in the first nine months of fiscal year 2022.
Adjusted net income attributable to PriceSmart for the
first nine months of fiscal year 2023 was $103.3 million, or an adjusted $3.32 per diluted share, compared to adjusted net
income of $79.8 million, or an
adjusted $2.58 per diluted share, in
the comparable prior year period.
Adjusted EBITDA for the first nine months of fiscal year 2023
was $215.6 million compared to
$178.3 million in the same period
last year.
Stock Repurchases
The Board of Directors of PriceSmart, Inc. has authorized the
Company to repurchase up to $75
million of common stock. The timing and total amount of
stock repurchases will depend upon business, economic and market
conditions, prevailing stock prices, and other considerations. The
repurchase program has no time limit, may be suspended for periods
or discontinued at any time and does not obligate the Company to
acquire any amount of common stock. The repurchases are expected to
be executed from time to time through open market purchases or
privately negotiated transactions, including through Rule 10b5-1
plans.
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 and 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 Tuesday, July 11, 2023, to discuss the financial
results. Individuals interested in participating in the conference
call may do so by dialing toll free (888) 886-7786 or (416)
764-8658 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 July 18, 2023 by dialing (877) 674-7070 for
domestic callers, or (416) 764-8692 for international callers, and
entering replay passcode 780477#.
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 51 warehouse clubs in 12 countries and
one U.S. territory (nine in Colombia; eight in Costa Rica; seven in Panama; five in the Dominican Republic and Guatemala, four in Trinidad; three in Honduras and El
Salvador, two in Nicaragua
and Jamaica; and one each in
Aruba, Barbados and the United States Virgin Islands). In addition,
the Company plans to open a warehouse club in Medellín,
Colombia in August 2023, a club in Escuintla, Guatemala in the fall of 2023 and a warehouse
club in Santa Ana, El Salvador in early 2024. Once these three
new clubs are open, the Company will operate 54 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, 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 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, risks associated with our leadership transition, 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 SHARE
DATA)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
May 31,
2023
|
|
May 31,
2022
|
|
May 31,
2023
|
|
May 31,
2022
|
Revenues:
|
|
|
|
|
|
|
|
Net merchandise
sales
|
$ 1,070,263
|
|
$
999,011
|
|
$ 3,211,725
|
|
$ 2,954,950
|
Export sales
|
6,347
|
|
13,396
|
|
23,687
|
|
32,604
|
Membership
income
|
16,735
|
|
15,440
|
|
48,806
|
|
45,302
|
Other revenue and
income
|
3,309
|
|
2,963
|
|
9,431
|
|
11,867
|
Total
revenues
|
1,096,654
|
|
1,030,810
|
|
3,293,649
|
|
3,044,723
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of goods
sold:
|
|
|
|
|
|
|
|
Net merchandise
sales
|
906,613
|
|
856,812
|
|
2,703,143
|
|
2,503,638
|
Export
sales
|
5,981
|
|
12,805
|
|
22,533
|
|
31,087
|
Non-merchandise
|
—
|
|
—
|
|
—
|
|
1,809
|
Selling, general and
administrative:
|
|
|
|
|
|
|
|
Warehouse club and
other operations
|
106,172
|
|
96,081
|
|
306,694
|
|
281,270
|
General and
administrative
|
34,343
|
|
30,887
|
|
100,274
|
|
96,531
|
Separation costs
associated with Chief Executive
Officer departure
|
—
|
|
—
|
|
7,747
|
|
—
|
Pre-opening
expenses
|
495
|
|
306
|
|
584
|
|
1,406
|
Loss (gain) on
disposal of assets
|
(2)
|
|
157
|
|
295
|
|
881
|
Total operating
expenses
|
1,053,602
|
|
997,048
|
|
3,141,270
|
|
2,916,622
|
Operating
income
|
43,052
|
|
33,762
|
|
152,379
|
|
128,101
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
income
|
3,161
|
|
473
|
|
6,260
|
|
1,540
|
Interest
expense
|
(2,747)
|
|
(2,796)
|
|
(8,310)
|
|
(6,824)
|
Other expense,
net
|
(1,885)
|
|
(2,423)
|
|
(11,795)
|
|
(1,833)
|
Total other
expense
|
(1,471)
|
|
(4,746)
|
|
(13,845)
|
|
(7,117)
|
Income before provision
for income taxes and loss of
unconsolidated affiliates
|
41,581
|
|
29,016
|
|
138,534
|
|
120,984
|
Provision for income
taxes
|
(12,019)
|
|
(9,776)
|
|
(44,647)
|
|
(39,729)
|
Income (loss) of
unconsolidated affiliates
|
10
|
|
18
|
|
(63)
|
|
(6)
|
Net income
|
29,572
|
|
19,258
|
|
93,824
|
|
81,249
|
Less: Net income
attributable to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
(19)
|
Net income attributable
to PriceSmart, Inc.
|
$
29,572
|
|
$
19,258
|
|
$
93,824
|
|
$
81,230
|
Net income attributable
to PriceSmart, Inc. per share
available for distribution:
|
|
|
|
|
|
|
|
Basic
|
$
0.95
|
|
$
0.62
|
|
$
3.02
|
|
$
2.63
|
Diluted
|
$
0.94
|
|
$
0.62
|
|
$
3.01
|
|
$
2.63
|
Shares used in per
share computations:
|
|
|
|
|
|
|
|
Basic
|
30,800
|
|
30,615
|
|
30,752
|
|
30,582
|
Diluted
|
30,829
|
|
30,629
|
|
30,770
|
|
30,588
|
PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE
DATA)
|
|
|
May 31,
2023
(Unaudited)
|
|
August 31,
2022
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
222,668
|
|
$
237,710
|
Short-term restricted
cash
|
2,965
|
|
3,013
|
Short-term
investments
|
112,629
|
|
11,160
|
Receivables, net of
allowance for doubtful accounts of $57 as of May 31, 2023 and
$103
as of August 31, 2022, respectively
|
15,031
|
|
13,391
|
Merchandise
inventories
|
442,580
|
|
464,411
|
Prepaid expenses and
other current assets (includes $0 and $2,761 as of May 31,
2023
and August 31, 2022, respectively, for the fair value of
derivative instruments)
|
51,317
|
|
43,894
|
Total current
assets
|
847,190
|
|
773,579
|
Long-term restricted
cash
|
10,739
|
|
10,650
|
Property and equipment,
net
|
816,973
|
|
757,241
|
Operating lease
right-of-use assets, net
|
106,411
|
|
111,810
|
Goodwill
|
43,152
|
|
43,303
|
Deferred tax
assets
|
28,278
|
|
28,355
|
Other non-current
assets (includes $10,759 and $11,884 as of May 31, 2023
and
August 31, 2022, respectively, for the fair value of
derivative instruments)
|
70,132
|
|
72,928
|
Investment in
unconsolidated affiliates
|
10,471
|
|
10,534
|
Total Assets
|
$ 1,933,346
|
|
$ 1,808,400
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Short-term
borrowings
|
$
10,414
|
|
$
10,608
|
Accounts
payable
|
417,210
|
|
408,407
|
Accrued salaries and
benefits
|
44,551
|
|
44,097
|
Deferred
income
|
32,507
|
|
29,228
|
Income taxes
payable
|
7,365
|
|
7,243
|
Other accrued expenses
and other current liabilities (includes $1,240 and $82 as of
May 31, 2023 and August 31, 2022, respectively, for the
fair value of derivative
instruments)
|
34,106
|
|
38,667
|
Operating lease
liabilities, current portion
|
6,929
|
|
7,491
|
Dividends
payable
|
14,426
|
|
—
|
Long-term debt, current
portion
|
19,757
|
|
33,715
|
Total current
liabilities
|
587,265
|
|
579,456
|
Deferred tax
liability
|
1,967
|
|
2,165
|
Long-term income taxes
payable, net of current portion
|
4,833
|
|
5,215
|
Long-term operating
lease liabilities
|
114,377
|
|
118,496
|
Long-term debt, net of
current portion
|
124,631
|
|
103,556
|
Other long-term
liabilities (includes $1,164 and $0 for the fair value of
derivative
instruments and $9,416 and $8,440 for post-employment plans as of
May 31, 2023 and
August 31, 2022, respectively)
|
10,580
|
|
8,439
|
Total
Liabilities
|
843,653
|
|
817,327
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Common stock $0.0001
par value, 45,000,000 shares authorized; 31,934,824 and
31,697,590 shares issued and 31,064,154 and 30,904,826 shares
outstanding (net of
treasury shares) as of May 31, 2023 and August 31, 2022,
respectively
|
3
|
|
3
|
Additional paid-in
capital
|
494,382
|
|
481,406
|
Accumulated other
comprehensive loss
|
(169,603)
|
|
(195,586)
|
Retained
earnings
|
802,002
|
|
736,894
|
Less: treasury stock at
cost, 870,670 shares as of May 31, 2023 and 792,764 shares as
of
August 31, 2022
|
(37,091)
|
|
(31,644)
|
Total Stockholders'
Equity
|
1,089,693
|
|
991,073
|
Total Liabilities and
Equity
|
$ 1,933,346
|
|
$ 1,808,400
|
Reconciliation of Non-GAAP Financial Measures
The following tables calculate the Company's adjusted net
income, adjusted net income per diluted share, adjusted EBITDA and
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. 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 core operating results 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, gain on the sale of our Aeropost
subsidiary, the write-off of certain VAT receivables following
unfavorable court rulings, 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 by excluding 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
|
|
Nine Months
Ended
|
|
May 31,
2023
|
|
May 31,
2022
|
|
May 31,
2023
|
|
May 31,
2022
|
Net income attributable
to PriceSmart as reported
|
$
29,572
|
|
$
19,258
|
|
$
93,824
|
|
$
81,230
|
Adjustments:
|
|
|
|
|
|
|
|
Separation costs
associated with Chief Executive
Officer departure (1)
|
—
|
|
—
|
|
7,747
|
|
—
|
Gain on sale of
Aeropost subsidiary (2)
|
—
|
|
—
|
|
—
|
|
(2,736)
|
VAT receivable
write-off (3)
|
2,309
|
|
—
|
|
2,309
|
|
—
|
Tax impact of
adjustments to net income (4)
|
—
|
|
—
|
|
(550)
|
|
1,280
|
Adjusted net income
attributable to PriceSmart
|
$
31,881
|
|
$
19,258
|
|
$
103,330
|
|
$
79,774
|
|
|
|
|
|
|
|
|
Net income attributable
to PriceSmart per diluted
share
|
$
0.94
|
|
$
0.62
|
|
$
3.01
|
|
$
2.63
|
Separation costs
associated with Chief Executive
Officer departure
|
—
|
|
—
|
|
0.23
|
|
—
|
Gain on sale of
Aeropost subsidiary
|
—
|
|
—
|
|
—
|
|
(0.05)
|
VAT receivable
write-off
|
0.08
|
|
—
|
|
0.08
|
|
—
|
Adjusted net income
attributable to PriceSmart per
diluted share
|
$
1.02
|
|
$
0.62
|
|
$
3.32
|
|
$
2.58
|
|
|
(1)
|
Reflects $7.7 million
of separation costs associated with the departure of our former
Chief Executive Officer in February 2023.
|
(2)
|
Reflects a gain of $2.7
million associated with the sale of our Aeropost subsidiary on
October 1, 2021.
|
(3)
|
Reflects $2.3 million
of VAT receivables deemed not recoverable and written-off in the
third quarter of fiscal year 2023 following unfavorable court
rulings.
|
(4)
|
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 VAT
receivable write-off. The following is a reconciliation of our Net
income to Adjusted EBITDA for the periods presented:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
May 31,
2023
|
|
May 31,
2022
|
|
May 31,
2023
|
|
May 31,
2022
|
Net income attributable
to PriceSmart as reported
|
$
29,572
|
|
$
19,258
|
|
$
93,824
|
|
$
81,230
|
Adjustments:
|
|
|
|
|
|
|
|
Interest
expense
|
2,747
|
|
2,796
|
|
8,310
|
|
6,824
|
Provision for income
taxes
|
12,019
|
|
9,776
|
|
44,647
|
|
39,729
|
Depreciation and
amortization
|
17,821
|
|
17,557
|
|
53,264
|
|
50,258
|
Interest
income
|
(3,161)
|
|
(473)
|
|
(6,260)
|
|
(1,540)
|
Other expense, net
(1)
|
1,885
|
|
2,423
|
|
11,795
|
|
1,833
|
Separation costs
associated with Chief Executive
Officer departure (2)
|
—
|
|
—
|
|
7,747
|
|
—
|
VAT receivable
write-off (3)
|
2,309
|
|
—
|
|
2,309
|
|
—
|
Adjusted
EBITDA
|
$
63,192
|
|
$
51,337
|
|
$
215,636
|
|
$
178,334
|
|
|
(1)
|
Primarily consists of
foreign currency losses or gains due to the revaluation of monetary
assets and liabilities (primarily U.S. dollars). This line item
includes a gain of $2.7 million associated with the sale of
our Aeropost subsidiary on October 1, 2021.
|
(2)
|
Reflects $7.7 million
of separation costs associated with the departure of our former
Chief Executive Officer in February 2023. On a go-forward basis,
our Interim Chief Executive Officer has declined to receive
compensation for his services during his term; therefore, we expect
selling, general and administrative expenses will be positively
impacted by approximately $2.5 million of savings each quarter
during his term, reduced by compensation increases for other
executives related to the change in leadership.
|
(3)
|
Reflects $2.3 million
of VAT receivables deemed not recoverable and written-off in the
third quarter of fiscal year 2023 following unfavorable court
rulings.
|
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. Impact of foreign currency is the effect of currency
fluctuations on our net merchandise sales.
Net merchandise sales growth rate on a net merchandise sales -
constant currency basis is calculated as follows:
|
May 31,
2023
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Net
merchandise
sales
|
|
%
Growth
|
|
Net
merchandise
sales
|
|
%
Growth
|
Net merchandise
sales
|
$
1,070,263
|
|
7.1 %
|
|
$
3,211,725
|
|
8.7 %
|
Favorable (unfavorable)
impact of foreign
currency exchange
|
14,939
|
|
1.5 %
|
|
(8,580)
|
|
(0.3) %
|
Net merchandise sales
on a constant-currency
basis
|
$
1,055,324
|
|
5.6 %
|
|
$
3,220,305
|
|
9.0 %
|
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SOURCE PriceSmart, Inc.