SOURCE: PriceSmart, Inc.

January 09, 2008 08:00 ET

PriceSmart Announces First Quarter Results of Operations; New Trinidad Club and December Sales Also Announced

SAN DIEGO, CA--(Marketwire - January 9, 2008) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the first quarter of fiscal year 2008 which ended on November 30, 2007.

For the first quarter of fiscal year 2008, net warehouse sales increased 23.8% to $245.2 million from $198.1 million in the first quarter of fiscal year 2007. Total revenue for the first quarter was $250.4 million compared to $202.5 million in the prior year. The Company had 24 warehouse clubs in operation as of November 30, 2007 compared to 23 warehouse clubs in operation as of November 30, 2006.

The Company recorded operating income in the quarter of $10.2 million, compared to operating income of $7.2 million in the prior year. Net income was $6.7 million, or $0.23 per diluted share, in the first quarter of fiscal 2008 compared to $4.1 million, or $0.14 per diluted share, in the first quarter of fiscal 2007.

On December 13, 2007, the Company successfully opened its third warehouse club in Trinidad. This brings to 25 the number of warehouse clubs in operation for the Company.

The Company also announced that for the month of December 2007, net sales increased 25.3% to $122.6 million from $97.8 million in December a year earlier. For the four months ended December 31, 2007, net sales increased 24.3% to $367.8 million from $296.0 million in the same period last year. There were 25 warehouse clubs in operation at the end of December 2007 compared to 23 warehouse clubs in operation in December 2006.

For the four weeks ended December 30, 2007, comparable warehouse sales for warehouse clubs open at least 12 full months increased 19.8% compared to the same four-week period last year. For the seventeen-week period ended December 30, 2007, comparable warehouse sales increased 21.6% compared to the comparable seventeen-week period a year ago.

About PriceSmart

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 25 warehouse clubs in 11 countries and one U.S. territory (four each in Panama and Costa Rica; three each in Guatemala and Trinidad, two each in Dominican Republic, El Salvador and Honduras; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands).

This press release may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "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 the following risks: the Company had substantial net losses in fiscal 2003, 2004 and 2005, and may not be able to sustain the profitability it achieved in fiscal 2006 in future periods; the Company's financial performance is dependent on international operations which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect the Company's business; although the Company has taken and continues to take steps to improve significantly its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; the Company faces significant competition; the Company faces difficulties in the shipment of and inherent risks in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other risks associated with international operations; declines in the economies of the countries in which the Company operates its warehouse clubs would harm its business; a few of the Company's stockholders have control over the Company's voting stock, which will make it difficult to complete some corporate transactions without their support and may prevent a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; a determination that the Company's long-lived or intangible assets have been impaired could adversely affect the Company's future results of operations and financial position; and the Company faces increased costs and compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; as well as the other risks detailed in the Company's SEC reports, including the Company's Form 10-K filed pursuant to the Securities Exchange Act of 1934 on November 29, 2007. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.



                           PRICESMART, INC.
                  CONSOLIDATED STATEMENTS OF INCOME
       (UNAUDITED -- AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                    Three Months Ended
                                                       November 30,
                                                ==========================
                                                    2007          2006
                                                ============  ============
Revenues:
    Sales:
      Net warehouse club                        $    245,189  $    198,100
      Export                                             367            95
    Membership income                                  3,742         3,241
    Other income                                       1,113         1,061
                                                ------------  ------------
         Total revenues                              250,411       202,497
                                                ------------  ------------
Operating expenses:
    Cost of goods sold:
      Net warehouse club                             208,511       168,498
      Export                                             349            92
    Selling, general and administrative:
      Warehouse club operations                       23,227        20,293
      General and administrative                       7,316         5,968
    Preopening expenses                                  772           232
    Asset impairment and closure costs                    19           191
                                                ------------  ------------
         Total operating expenses                    240,194       195,274
                                                ------------  ------------
Operating income                                      10,217         7,223
Other income (expense):
    Interest income                                      410           364
    Interest expense                                     (59)         (355)
    Other income (expense), net                          (47)           14
                                                ------------  ------------
         Total other income                              304            23
                                                ------------  ------------
Income from continuing operations before
 provision for income taxes, loss of
 unconsolidated affiliate and minority interest       10,521         7,246
Provision for income taxes                            (3,715)       (2,973)
Loss of unconsolidated affiliate                          --           (85)
Minority interest                                       (130)         (134)
                                                ------------  ------------
Income from continuing operations                      6,676         4,054
Discontinued operations, net of tax                       18            18
                                                ------------  ------------
Net income                                      $      6,694  $      4,072
                                                ============  ============

Basic income per share:
      Continuing operations                     $       0.23  $       0.14
      Discontinued operations, net of tax       $         --  $         --
                                                ------------  ------------
      Net income                                $       0.23  $       0.14
                                                ============  ============
Diluted income per share:
      Continuing operations                     $       0.23  $       0.14
      Discontinued operations, net of tax       $         --  $         --
                                                ------------  ------------
      Net income                                $       0.23  $       0.14
                                                ============  ============

Shares used in per share computations:
      Basic                                           28,781        28,429
                                                ============  ============
      Diluted                                         29,494        29,105
                                                ============  ============




                            PRICESMART, INC.
                       CONSOLIDATED BALANCE SHEETS
           (UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)


                                             November 30,     August 31,
                                                 2007            2007
                                            --------------  --------------
ASSETS
Current Assets:
    Cash and cash equivalents               $       19,269  $       32,065
    Short-term restricted cash                       8,155           8,046
    Receivables, net of allowance for
     doubtful accounts of $8 and $3 in
     2007 and 2006, respectively                     2,429           2,705
    Merchandise inventories                        120,872          95,979
    Prepaid expenses and other current
     assets                                         16,907          15,777
    Assets of discontinued operations                1,491           1,380
                                            --------------  --------------
Total current assets                               169,123         155,952
    Long-term restricted cash                          457             477
    Notes receivable                                 2,085           2,086
    Property and equipment, net                    197,479         179,985
    Goodwill                                        31,594          31,652
    Deferred tax assets                             19,396          19,535
    Other assets                                     3,615           3,732
    Investment in unconsolidated affiliate              --           2,000
                                            --------------  --------------
Total Assets                                $      423,749  $      395,419
                                            ==============  ==============

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
    Short-term borrowings                   $        3,884  $        3,301
    Accounts payable                                98,784          80,633
    Accrued salaries and benefits                    6,507           6,962
    Deferred membership income                       7,286           6,634
    Income taxes payable                             2,580           4,593
    Accrued reserve for settlement of
     pending litigation                              5,500           5,500
    Other accrued expenses                          11,246          18,564
    Dividend payable                                    --           4,678
    Long-term debt, current portion                  2,307           1,411
    Liabilities of discontinued operations             145             151
                                            --------------  --------------
Total current liabilities                          138,239         132,427
Deferred tax liability                               1,438           1,474
Deferred rent                                        1,779           1,977
Accrued closure costs                                3,033           3,072
Long-term income tax payable                         7,686              --
Long-term debt, net of current portion              15,838           8,008
                                            --------------  --------------
Total liabilities                                  168,013         146,958
Minority interest                                    3,270           3,145
Stockholders’ Equity:
    Common stock, $0.0001 par value,
     45,000,000 shares authorized;
     29,832,435 and 29,815,435 shares
     issued and 29,356,211 and 29,339,211
     shares outstanding (net of treasury
     shares), respectively                               3               3
    Additional paid-in capital                     370,565         369,848
    Tax benefit from stock-based
     compensation                                    3,974           3,970
    Accumulated other comprehensive loss           (12,608)        (12,343)
    Accumulated deficit                            (99,393)       (106,087)
    Less: treasury stock at cost; 476,224
     shares as of November 30, 2007 and
     August 31, 2007, respectively                 (10,075)        (10,075)
                                            --------------  --------------
Total stockholders’ equity                         252,466         245,316
                                            --------------  --------------
Total Liabilities and Stockholders’ Equity  $      423,749  $      395,419
                                            ==============  ==============

Contact Information

  • For further information, please contact:
    Robert E. Price
    Chief Executive Officer
    (858) 551-2336

    John M. Heffner
    Executive Vice President and Chief Financial Officer
    (858) 404-8826