SAN DIEGO, April 9, 2019 /PRNewswire/ -- PriceSmart,
Inc. (NASDAQ: PSMT), operator of 41 warehouse clubs in 12 countries
and one U.S. territory, today announced its results of operations
for the second quarter of fiscal year 2019 which ended on
February 28, 2019.
Total revenues for the second quarter of fiscal year 2019
increased 1.8% to $854.4 million
compared to $839.6 million in the
second quarter of the prior year. For the second quarter of fiscal
year 2019, net merchandise sales increased 0.5% to $820.3 million from $816.6
million in the second quarter of fiscal year 2018. Foreign
currency exchange rate fluctuations impacted net merchandise sales
negatively by $29.9 million or 3.6%
versus the same period in the prior year.
The Company had 41 clubs in operation as of February 28, 2019, compared to 40 warehouse clubs
in operation as of February 28,
2018.
Comparable net merchandise sales, for warehouse clubs that have
been open for greater than 13 ½ calendar months, decreased 0.9% for
the 13-week period ended March 3,
2019 compared to the same period in the prior year. Foreign
currency exchange rate fluctuations impacted comparable net
merchandise sales negatively by $29.9
million or 3.7% versus the same period in the prior
year.
The Company recorded operating income for the second quarter of
fiscal year 2019 of $36.5 million, as
compared to operating income of $37.3
million in the prior year period. Net income attributable to
PriceSmart was $23.8 million, or
$0.79 per diluted share, in the
second quarter of fiscal year 2019. The second quarter fiscal 2019
earnings were negatively impacted by $4.2
million or $0.14 per share
from costs related to investments to expand our omni-channel
capabilities, together with net operating results of our
marketplace and casillero business. A payment from a credit
card processing vendor positively impacted earnings during this
quarter by $1.6 million or
$0.05 per share. Net income in the
second quarter of fiscal year 2018 was $14.1
million, or $0.47 per diluted
share. The second quarter fiscal 2018 earnings were negatively
impacted by $0.42 per share primarily
due to a one-time repatriation tax on unremitted foreign earnings
("Transition Tax").
The Company reports comparable net merchandise sales on a "same
week" basis with 13 weeks in each quarter beginning on a Monday and
ending on a Sunday. The periods are established at the
beginning of the fiscal year to provide as close a match as
possible to the calendar month and quarter that is used for
financial reporting purposes. This approach equalizes the
number of weekend days and weekdays in each period for improved
sales comparison, as we experience higher merchandise club sales on
the weekends. Each of the warehouse clubs used in the
calculations was open for at least 13 ½ calendar months before its
results for the current period were compared with its results for
the prior period.
The term "currency exchange rates" refers to the currency
exchange rates we use to convert net merchandise and comparable net
merchandise sales for all countries where the functional currency
is not the U.S. dollar into U.S. dollars. We calculate the effect
of changes in currency exchange rates as the difference between
current period activities translated using the current period's
currency exchange rates, and current period activities translated
using the comparable prior year period's currency exchange rates.
The disclosure of the effects of currency exchange rate
fluctuations on the Company's results permits investors to
understand better our underlying performance.
PriceSmart management plans to host a conference call at
12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Wednesday, April 10, 2019, to discuss the
financial results. Individuals interested in participating in the
conference call may do so by dialing (855) 209-8211 for domestic
callers or (412) 317-5214 for international callers, and asking to
join the PriceSmart, Inc. call. A digital replay will be available
through April 17, 2019, following the
conclusion of the call by dialing (877) 344-7529 for domestic
callers, or (412) 317-0088 for international callers, and entering
replay access code 10129327.
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 at low prices to PriceSmart members. PriceSmart
operates 41 warehouse clubs in 12 countries and one U.S. territory
(seven each in Colombia and
Costa Rica; five in Panama; four each in Trinidad and Dominican Republic; three each in Guatemala and Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands). The Company has
acquired property and is currently constructing warehouse clubs in
Santiago, Panama and Santo
Domingo, Dominican Republic that are expected to open in the
spring, and summer of 2019, respectively. The Company also plans to
open warehouse clubs in San
Cristobal, Guatemala and an
additional club in Panama City, Panama, in the fall of 2019. Once these four
new clubs are open, the Company will operate 45 warehouse
clubs. PriceSmart is developing an expansion of its
omni-channel capabilities, including through its e-commerce
platform, by investing in and integrating the technology, talent
and cross-border logistics infrastructure obtained as part of the
acquisition of a company in March
2018, which also has a marketplace and casillero business.
PriceSmart expects these investments and this integration to
enhance the membership shopping experience, drive efficiencies and
fuel sales growth. The marketplace and casillero business operates,
directly or via agency relationships, through the Aeropost brand in
38 countries in Latin America and
the Caribbean, many of which
overlap with markets where PriceSmart operates its warehouse
clubs.
This press release may contain forward-looking statements
concerning the Company's future performance. These forward-looking
statements include, but are not limited to, statements containing
the words "expect," "believe," "will," "may," "should," "project,"
"estimate," "anticipated," "scheduled," 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, the following risks:
- Natural disasters that might cause damages not covered by
insurance;
- Negative macroeconomic conditions;
- Volatility in foreign currency exchange rates and limitations
on our ability to convert foreign currency to U.S. dollars;
- Changes in, and inconsistent enforcement of, laws and
regulations in countries where we operate, including those related
to tariffs and taxes;
- Compliance risks;
- Crime and security concerns, which can adversely affect the
economies of the countries in which we operate and which require us
to incur additional costs to provide additional security at our
warehouse clubs;
- Recoverability of moneys owed to PriceSmart from governments in
countries where we do business;
- The possibility of operational interruptions, including those
related to union work stoppages;
- Political instability, such as recent unrest in Honduras, the ongoing anti-government protests
in Nicaragua that have disrupted
our operations there, and a general strike in Costa Rica led by public-sector unions that
disrupted normal commerce in September
2018;
- In March 2019, the President of
the United States directed the
U.S. State Department to cut off $450
million of planned aid to Guatemala, Honduras and El
Salvador. Eliminating this aid could adversely impact the
economies of these countries and lead to further political
instability, with the resulting impact on our business;
- Changes in consumer shopping preferences;
- Significant competition, including from international online
retailers or the market entrance of other club operators;
- Limitations on the availability of appropriate sites for new
warehouse clubs, which could adversely affect growth;
- Failure to establish an e-commerce presence to allow our
members to choose a physical or online shopping channel that is
convenient for them and efficient for us may materially adversely
affect our market position, net sales and financial performance,
and costs associated with our increasing investments in
technological resources intended to fuel sales growth and drive
efficiencies may adversely affect our short-term results of
operations;
- Acquisitions, such as our acquisition of Aeropost, Inc. in
March 2018, may expose us to
additional risks, such as retention of key personnel, previously
undisclosed liabilities or compliance issues, integration
challenges, impairment of goodwill or intangible assets, and
diversion of management resources;
- Cost increases from product and service providers;
- Interruption of supply chains, which might adversely impact on
our ability to import merchandise;
- Failure to maintain our brand's reputation;
- Exposure to product liability claims and product recalls;
- Failure to maintain our computer systems and/or disruption in
those systems;
- Cybersecurity risks, such as a failure to maintain the security
of the information we hold relating to our company, our members,
employees and suppliers;
- Risks associated with executive leadership and organizational
transition, failure to attract and/or retain other qualified
employees, increases in wage and benefit costs, changes in laws and
other labor issues;
- Changes in accounting standards affecting management's
financial assumptions, projections, estimates and judgments;
and
- A few of our stockholders own approximately 24.5% of our voting
stock as of February 28, 2019, which
may make it difficult to complete some corporate transactions
without their support and may impede a change in control.
The risks described above as well as the other risks detailed in
the Company's U.S. Securities and Exchange Commission ("SEC")
reports, including the Company's Annual Report on Form 10-K filed
for the fiscal year ended August 31,
2018 filed on October 25,
2018, pursuant to the Securities Exchange Act of 1934, see
"Part I - Item 1A - Risk Factors," could materially and adversely
affect our business, financial condition and results of operations.
These risks are not the only risks that the Company faces. The
Company could also be affected by additional factors that apply to
all companies operating globally and in the U.S., as well as other
risks that are not presently known to the Company or that the
Company currently considers to be immaterial.
For further information, please contact Maarten O. Jager, Chief Financial Officer and
Principal Accounting Officer (858) 404-8826.
PRICESMART,
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(UNAUDITED—AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February 28,
|
|
February 28,
|
|
February 28,
|
|
February 28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Net merchandise
sales
|
$
|
820,290
|
|
$
|
816,573
|
|
$
|
1,567,733
|
|
$
|
1,561,974
|
Export
sales
|
|
6,844
|
|
|
9,138
|
|
|
15,033
|
|
|
17,285
|
Membership
income
|
|
12,845
|
|
|
12,703
|
|
|
25,585
|
|
|
25,078
|
Other revenue and
income
|
|
14,446
|
|
|
1,149
|
|
|
25,711
|
|
|
2,298
|
Total
revenues
|
|
854,425
|
|
|
839,563
|
|
|
1,634,062
|
|
|
1,606,635
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold:
|
|
|
|
|
|
|
|
|
|
|
|
Net merchandise
sales
|
|
705,546
|
|
|
699,355
|
|
|
1,346,701
|
|
|
1,336,591
|
Export
sales
|
|
6,486
|
|
|
8,685
|
|
|
14,264
|
|
|
16,434
|
Non-merchandise
|
|
4,826
|
|
|
—
|
|
|
9,073
|
|
|
—
|
Selling, general and
administrative:
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse club and
other operations
|
|
75,708
|
|
|
71,951
|
|
|
149,930
|
|
|
141,453
|
General and
administrative
|
|
24,968
|
|
|
20,258
|
|
|
52,303
|
|
|
39,088
|
Pre-opening
expenses
|
|
97
|
|
|
81
|
|
|
112
|
|
|
511
|
Asset
impairment
|
|
—
|
|
|
1,929
|
|
|
—
|
|
|
1,929
|
Loss/(gain) on
disposal of assets
|
|
258
|
|
|
40
|
|
|
473
|
|
|
199
|
Total operating
expenses
|
|
817,889
|
|
|
802,299
|
|
|
1,572,856
|
|
|
1,536,205
|
Operating
income
|
|
36,536
|
|
|
37,264
|
|
|
61,206
|
|
|
70,430
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
423
|
|
|
368
|
|
|
814
|
|
|
768
|
Interest
expense
|
|
(1,001)
|
|
|
(992)
|
|
|
(2,034)
|
|
|
(2,247)
|
Other income
(expense), net
|
|
(372)
|
|
|
210
|
|
|
(2,191)
|
|
|
488
|
Total other income
(expense)
|
|
(950)
|
|
|
(414)
|
|
|
(3,411)
|
|
|
(991)
|
Income before
provision for income taxes and
income (loss) of
unconsolidated affiliates
|
|
35,586
|
|
|
36,850
|
|
|
57,795
|
|
|
69,439
|
Provision for income
taxes
|
|
(11,703)
|
|
|
(22,707)
|
|
|
(19,243)
|
|
|
(32,822)
|
Income (loss) of
unconsolidated affiliates
|
|
(20)
|
|
|
5
|
|
|
(44)
|
|
|
21
|
Net income
|
|
23,863
|
|
$
|
14,148
|
|
$
|
38,508
|
|
$
|
36,638
|
Less: net (income)
loss attributable to noncontrolling interest
|
|
(53)
|
|
|
—
|
|
|
(86)
|
|
|
—
|
Net income
attributable to PriceSmart, Inc.
|
$
|
23,810
|
|
$
|
14,148
|
|
$
|
38,422
|
|
$
|
36,638
|
Net income
attributable to PriceSmart, Inc. per share available for
distribution:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.79
|
|
$
|
0.47
|
|
$
|
1.27
|
|
$
|
1.21
|
Diluted
|
$
|
0.79
|
|
$
|
0.47
|
|
$
|
1.27
|
|
$
|
1.21
|
Shares used in per
share computations:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
30,206
|
|
|
30,100
|
|
|
30,189
|
|
|
30,089
|
Diluted
|
|
30,211
|
|
|
30,100
|
|
|
30,200
|
|
|
30,090
|
Dividends per
share
|
$
|
0.70
|
|
$
|
0.70
|
|
$
|
0.70
|
|
$
|
0.70
|
PRICESMART,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(AMOUNTS IN
THOUSANDS, EXCEPT SHARE DATA)
|
|
|
February 28,
|
|
|
|
|
2019
|
|
August 31,
|
|
(Unaudited)
|
|
2018
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
90,261
|
|
$
|
93,460
|
Short-term restricted
cash
|
|
4,464
|
|
|
405
|
Short-term
investments
|
|
23,501
|
|
|
32,304
|
Receivables, net of
allowance for doubtful accounts of $120 as of February 28, 2019 and
$97 as of August 31, 2018, respectively.
|
|
10,500
|
|
|
8,859
|
Merchandise
inventories
|
|
334,899
|
|
|
321,025
|
Prepaid expenses and
other current assets
|
|
35,898
|
|
|
31,800
|
Total current
assets
|
|
499,523
|
|
|
487,853
|
Long-term restricted
cash
|
|
3,352
|
|
|
3,049
|
Property and
equipment, net
|
|
626,279
|
|
|
594,403
|
Goodwill
|
|
46,263
|
|
|
46,329
|
Other intangibles,
net
|
|
13,788
|
|
|
14,980
|
Deferred tax
assets
|
|
11,786
|
|
|
10,166
|
Other non-current
assets (includes $3,611 and $4,364 as of February 28, 2019 and
August 31, 2018, respectively, for the fair value of derivative
instruments)
|
|
46,525
|
|
|
48,854
|
Investment in
unconsolidated affiliates
|
|
10,714
|
|
|
10,758
|
Total
Assets
|
$
|
1,258,230
|
|
$
|
1,216,392
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
274,311
|
|
|
255,739
|
Accrued salaries and
benefits
|
|
20,219
|
|
|
22,836
|
Deferred
income
|
|
24,725
|
|
|
23,018
|
Income taxes
payable
|
|
3,793
|
|
|
4,636
|
Other accrued
expenses
|
|
32,652
|
|
|
28,281
|
Dividends
payable
|
|
10,672
|
|
|
—
|
Long-term debt,
current portion
|
|
26,193
|
|
|
14,855
|
Total current
liabilities
|
|
392,565
|
|
|
349,365
|
Deferred tax
liability
|
|
2,078
|
|
|
1,894
|
Long-term portion of
deferred rent
|
|
9,061
|
|
|
8,885
|
Long-term income
taxes payable, net of current portion
|
|
5,081
|
|
|
4,622
|
Long-term debt, net
of current portion
|
|
69,793
|
|
|
87,720
|
Other long-term
liabilities (includes $610 and $502 for the fair value of
derivative instruments and $5,151 and $4,715 for post-employment
plans as of February 28, 2019 and August 31, 2018,
respectively)
|
|
6,062
|
|
|
5,268
|
Total
Liabilities
|
|
484,640
|
|
|
457,754
|
PRICESMART,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(AMOUNTS IN
THOUSANDS, EXCEPT SHARE DATA)
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common stock $0.0001
par value, 45,000,000 shares authorized; 31,447,055 and 31,372,752
shares issued and 30,495,712 and 30,460,353 shares outstanding (net
of treasury shares) as of February 28, 2019 and August 31, 2018,
respectively
|
|
3
|
|
|
3
|
Additional paid-in
capital
|
|
442,273
|
|
|
432,882
|
Tax benefit from
stock-based compensation
|
|
11,486
|
|
|
11,486
|
Accumulated other
comprehensive loss
|
|
(130,110)
|
|
|
(121,216)
|
Retained
earnings
|
|
491,032
|
|
|
473,954
|
Less: treasury stock
at cost, 951,343 shares as of February 28, 2019 and 912,399 shares
as of August 31, 2018
|
|
(41,524)
|
|
|
(39,107)
|
Total stockholders'
equity attributable to PriceSmart, Inc. stockholders
|
|
773,160
|
|
|
758,002
|
Noncontrolling
interest in consolidated subsidiaries
|
|
430
|
|
|
636
|
Total stockholders'
equity
|
|
773,590
|
|
|
758,638
|
Total Liabilities and
Equity
|
$
|
1,258,230
|
|
$
|
1,216,392
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/pricesmart-announces-fiscal-2019-second-quarter-operating-results-300828340.html
SOURCE PriceSmart, Inc.