SOURCE: PriceSmart, Inc.

January 08, 2007 08:00 ET

PriceSmart Announces First Quarter Results of Operations

December Sales Also Announced

SAN DIEGO, CA -- (MARKET WIRE) -- January 8, 2007 -- PriceSmart, Inc. (NASDAQ: PSMT) (www.pricesmart.com) today announced its results of operations for the first quarter of fiscal year 2007 which ended on November 30, 2006.

For the first quarter of fiscal year 2007 net warehouse sales increased 19% to $198.1 million, from $166.5 million in the first quarter of fiscal year 2006. Total revenue for the first quarter was $202.5 million, compared to $170.0 million in the prior year. The Company had 23 warehouse clubs in operation as of November 30, 2006 and 2005.

The Company recorded operating income in the quarter of $7.2 million, compared to operating income of $3.1 million in the prior year. Net income was $4.1 million, or $.14 per diluted share, in the first quarter of fiscal 2007 compared to $2.0 million, or $.08 per diluted share, in the first quarter of fiscal 2006.

The Company also announced that for the month of December 2006, net sales increased 20.0% to $97.9 million from $81.5 million in December a year earlier. For the four months ended December 31, 2006, net sales increased 19.4% to $296.0 million from $248.0 million in the same period last year. There were 23 warehouse clubs in operation at the end of December 2006 and 2005.

For the four weeks ended December 31, 2006, comparable warehouse sales for warehouse clubs open at least 12 full months increased 23.6% compared to the same four-week period last year. For the seventeen weeks ended December 31, 2006, comparable warehouse sales increased 19.7% compared to the comparable seventeen-week period a year ago. The comparable period for the previous fiscal year ended on January 01, 2006 which was a holiday resulting in one additional sales day for the current comparable period ending on December 31, 2006.

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 23 warehouse clubs in 11 countries and one U.S. territory (four each in Panama and Costa Rica; two each in Dominican Republic, El Salvador, Guatemala, Honduras, and Trinidad; 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 costs and compliance risks associated 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 13, 2006. The Company assumes no obligation and expressly disclaims 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. Certain prior period amounts may have been reclassified to conform to the current period presentation.

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


                                                       Three Months Ended
                                                          November 30,
                                                      --------------------
                                                        2006       2005
                                                      ---------  ---------
Revenues:
    Sales:
      Net warehouse club                              $ 198,100  $ 166,513
      Export                                                 95          —
    Membership income                                     3,241      2,645
    Other income                                          1,061        816
                                                      ---------  ---------
Total revenues                                          202,497    169,974
                                                      ---------  ---------
Operating expenses:
    Cost of goods sold:
      Net warehouse club                                168,498    142,520
      Export                                                 92          —
    Selling, general and administrative:
      Warehouse club operations                          20,293     18,254
      General and administrative                          5,968      5,726
    Preopening expenses                                     232        335
    Asset impairment and closure costs                      191         53
                                                      ---------  ---------
Total operating expenses                                195,274    166,888
                                                      ---------  ---------
Operating income                                          7,223      3,086
Other income (expense):
    Interest income                                         364        312
    Interest expense                                       (355)      (721)
    Other income (expense)                                   14         24
                                                      ---------  ---------
Total other income (expense)                                23       (385)
                                                      ---------  ---------
Income from continuing operations before
 provision for income taxes, loss of unconsolidated
 affiliate and   minority interest                        7,246      2,701
Provision for income taxes                               (2,973)    (1,342)
Income (loss) of unconsolidated affiliate                   (85)        36
Minority interest                                          (134)       (44)
                                                      ---------  ---------
Income from continuing operations                         4,054      1,351
Discontinued operations, net of tax                          18        654
                                                      ---------  ---------
Net income                                            $   4,072  $   2,005
                                                      =========  =========
Basic income per share – common stockholders:
     Continuing operations                            $    0.14  $    0.05
     Discontinued operations, net of tax              $       —  $    0.03
     Preferred and deemed dividends                   $       —  $       —
                                                      ---------  ---------
     Attributable to common stockholders              $    0.14  $    0.08
                                                      =========  =========
Diluted income per share – common stockholders:
     Continuing operations                            $    0.14  $    0.05
     Discontinued operations, net of tax              $       —  $    0.03
     Preferred and deemed dividends                   $       —  $       —
                                                      ---------  ---------
     Attributable to common stockholders              $    0.14  $    0.08
                                                      =========  =========
Shares used in per share computations:
     Basic                                               28,429     25,698
                                                      =========  =========
     Diluted                                             29,105     26,005
                                                      =========  =========


                             PRICESMART, INC.
                  UNAUDITED CONSOLIDATED BALANCE SHEETS
                (amounts in thousands, except share data)


                                                          November 30,
                                                      --------------------
                                                        2006       2005
                                                      ---------  ---------
ASSETS
Current Assets:
  Cash and cash equivalents                           $  15,261  $  24,344
  Short-term restricted cash                              7,748      7,399
    Receivables, net of allowance for doubtful
     accounts of $195 and $ 2,252 in 2007 and 2006,
     respectively                                         4,888      2,464
    Receivables from unconsolidated affiliate                 —        106
    Merchandise inventories                              93,730     81,157
    Prepaid expenses and other current assets             9,741      8,627
    Assets of discontinued operations                     1,513      1,770
                                                      ---------  ---------
Total current assets                                    132,881    125,867

    Long-term restricted cash                               585        792
    Property and equipment, net                         165,489    155,624
    Goodwill                                             31,801     31,279
    Deferred tax asset                                   20,073     21,166
    Other assets                                          1,512      4,458
    Investment in unconsolidated affiliate                3,133      6,456
                                                      ---------  ---------
Total Assets                                          $ 355,474  $ 345,642
                                                      =========  =========
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
    Short-term borrowings                             $     677  $   1,380
    Accounts payable                                     75,861     69,825
    Accrued salaries and benefits                         5,658      4,714
    Deferred membership income                            6,249      5,215
    Income taxes payable                                  3,600      2,445
    Other accrued expenses                               13,816     11,399
    Long-term debt, current portion                       1,000      5,417
    Liabilities of discontinued operations                  143        634
                                                      ---------  ---------
Total current liabilities                               107,004    101,029
Deferred tax liability                                      961        903
Deferred rent                                             1,571      1,317
Accrued closure costs                                     3,189      3,403
                                                      ---------  ---------
Long-term debt, related party                                 —     12,500
                                                      ---------  ---------
Long-term debt, net of current portion                      555     20,359
                                                      ---------  ---------
Total liabilities                                       113,280    139,511

Minority interest                                         2,808      2,633
Commitments and contingencies                                 —          —

Stockholders’ Equity:
   Common stock, $.0001 par value, 45,000,000
    shares authorized; 29,421,560 and 26,403,421
    shares issued and 28,983,397 and 25,968,996
    shares outstanding (net of treasury shares),
    respectively                                              3          3
   Additional paid-in capital                           364,774    343,018
   Tax benefit from exercise of stock options             3,593      3,379
   Notes receivable from stockholders                         —        (29)
   Accumulated other comprehensive loss                 (13,914)   (13,911)
   Accumulated deficit                                 (105,604)  (119,529)
   Less: treasury stock at cost; 438,163 and
    434,425 shares, respectively                         (9,466)    (9,433)
                                                      ---------  ---------
Total stockholders’ equity                              239,389    203,498
                                                      ---------  ---------
Total Liabilities and Stockholders’ Equity            $ 355,474  $ 345,642
                                                      =========  =========

Contact Information

  • For further information, please contact:
    Robert E. Price
    Chief Executive Officer
    (858) 551-2336
    or
    John M. Heffner
    Executive Vice President and Chief Financial Officer
    (858) 404-8826