SOURCE: PriceSmart, Inc.

PriceSmart, Inc.

April 09, 2015 16:00 ET

PriceSmart Announces Second Quarter Results of Operations and March Sales

SAN DIEGO, CA--(Marketwired - Apr 9, 2015) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the second quarter of fiscal year 2015 which ended on February 28, 2015.

For the second quarter of fiscal year 2015, net warehouse club sales increased 11.4% to $732.1 million from $657.2 million in the second quarter of fiscal year 2014. Total revenues for the second quarter of fiscal year 2015 were $750.3 million compared to $674.4 million in the comparable period of the prior year. The Company had 36 warehouse clubs in operation as of February 2015 and 32 clubs in operation as of February 2014.

The Company recorded operating income during the quarter of $41.7 million, as compared to operating income of $39.4 million in the prior year. Net income was $24.8 million, or $0.82 per diluted share, in the second quarter of fiscal year 2015 as compared to $28.3 million, or $0.93 per diluted share, in the second quarter of fiscal year 2014.

Commenting on the results, Jose Luis Laparte, PriceSmart's President and Chief Executive Officer said, "While many of our markets performed well in the quarter, the reduction in net income can be attributed to Colombia where various factors, most notably the devaluation of the Colombian peso, led to a year on year reduction of net income and negatively impacted the consolidated results of the Company by approximately $0.16 per share. The rest of the Company performed well in the quarter with growth in sales and membership income, and higher operating profit; contributing additional net income of approximately $0.05 per share to the consolidated results compared to the second quarter of last year."

For the first six months of fiscal year 2015, net warehouse club sales increased 9.8% to $1,368.5 million from $1,246.9 million in the first six months of fiscal year 2014. Total revenues for the first half of fiscal year 2015 increased 9.9% to $1,406.3 million from $1,280.0 million in the same period of the prior year. For the first six months of fiscal year 2015, the Company recorded operating income of $78.0 million and net income of $45.5 million, or $1.50 per diluted share. During the same six month period in fiscal year 2014, the Company recorded operating income of $71.7 million and net income of $49.7 million, or $1.64 per diluted share.

The Company also announced that for the month of March 2015, net warehouse club sales increased 17.0% to $237.7 million, from $203.2 million in March a year earlier. For the seven months ended March 31, 2015, net warehouse club sales increased 10.8% to $1,606.2 million from $1,450.1 million for the seven months ended March 31, 2014. There were 36 warehouse clubs in operation at the end of March 2015 and 32 warehouse clubs in operation at the end of March 2014.

For the four weeks ended March 29, 2015, comparable net warehouse club sales for the 32 warehouse clubs open at least 13 1/2 full months increased 7.3%, compared to the same four-week period last year. For the thirty-week period ended March 29, 2015, comparable net warehouse club sales increased 2.4%, compared to the comparable thirty-week period a year ago.

PriceSmart management plans to host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, April 10, 2015, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (800) 316-8317 for domestic callers or (719) 325-2172 for international callers, and entering participant code 7665186. A digital replay will be available through April 30, 2015, following the conclusion of the call by dialing (888) 203-1112 for domestic callers, or (719) 457-0820 for international callers, and entering relay passcode 7665186.

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 now operates 36 warehouse clubs in 12 countries and one U.S. territory (six each in Costa Rica, and Colombia; four each in Panama, and Trinidad; three each in Guatemala, the Dominican Republic, and Honduras; two in El Salvador; 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, proposed warehouse club openings, the Company's performance relative to competitors, the outcome of tax proceedings 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, 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: our financial performance is dependent on international operations, which exposes us to various risks; any failure by us to manage our widely dispersed operations could adversely affect our business; we face significant competition; future sales growth depends, in part, on our ability to successfully open new warehouse clubs; we might not identify in a timely manner or effectively respond to changes in consumer preferences for merchandise, which could adversely affect our relationship with members, demand for our products and market share; although we have begun to offer limited online shopping to our members, our sales could be adversely affected if one or more major international online retailers were to enter our markets or if other competitors were to offer a superior online experience; we face difficulties in the shipment of, and inherent risks in the importation of, merchandise to our warehouse clubs; we are exposed to weather and other natural disaster risks; general economic conditions could adversely impact our business in various respects; we are subject to risks associated with possible changes in our relationships with third parties with which we do business, as well as the performance of such third parties; we rely extensively on computer systems to process transactions, summarize results and manage our business, and failure to adequately maintain our systems or disruptions in our systems could harm our business and adversely affect our results of operations; we could be subject to additional tax liabilities; a few of our stockholders own approximately 28.1% of our voting stock as of August 31, 2014, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; our inability to develop and retain existing key personnel or to attract highly qualified employees could adversely impact our business, financial condition and results of operations; we are subject to volatility in foreign currency exchange rates; we face the risk of exposure to product liability claims, a product recall and adverse publicity; if we do not maintain the privacy and security of confidential information, we could damage our reputation, incur substantial additional costs and become subject to litigation; we are subject to payment related risks; changes in accounting standards and assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations; we face increased public company compliance risks and compliance risks related to our international operations; we face increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; and if remediation costs or hazardous substance contamination levels at certain properties for which we maintain financial responsibility exceed management's current expectations, our financial condition and results of operations could be adversely impacted. In addition to the risks described above, these statements are also subject to 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, 2014 filed on October 30, 2014 pursuant to the Securities Exchange Act of 1934. 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
February 28,
    Six Months Ended February 28,  
    2015     2014     2015     2014  
Revenues:                                
Net warehouse club sales   $ 732,120     $ 657,167     $ 1,368,535     $ 1,246,861  
Export sales     6,229       6,764       14,660       12,485  
Membership income     10,898       9,481       21,013       18,749  
Other income     1,049       962       2,109       1,880  
Total revenues     750,296       674,374       1,406,317       1,279,975  
Operating expenses:                                
Cost of goods sold:                                
Net warehouse club     625,876       561,652       1,164,904       1,065,939  
Export     5,934       6,423       13,961       11,864  
Selling, general and administrative:                                
Warehouse club operations     62,041       53,203       118,251       104,975  
General and administrative     14,117       13,277       27,467       24,461  
Pre-opening expenses     229       340       3,378       814  
Loss/(gain) on disposal of assets     391       104       363       188  
Total operating expenses     708,588       634,999       1,328,324       1,208,241  
Operating income     41,708       39,375       77,993       71,734  
Other income (expense):                                
Interest income     266       193       530       374  
Interest expense     (1,970 )     (886 )     (3,144 )     (1,924 )
Other income (expense), net     (1,659 )     712       (4,291 )     1,023  
Total other income (expense)     (3,363 )     19       (6,905 )     (527 )
Income before provision for income taxes and income (loss) of unconsolidated affiliates     38,345       39,394       71,088       71,207  
Provision for income taxes     (13,526 )     (11,116 )     (25,628 )     (21,501 )
Income (loss) of unconsolidated affiliates     16       --       22       4  
Net income     24,835     $ 28,278     $ 45,482       49,710  
Net income per share available for distribution:                                
Basic net income per share   $ 0.82     $ 0.93     $ 1.50     $ 1.64  
Diluted net income per share   $ 0.82     $ 0.93     $ 1.50     $ 1.64  
Shares used in per share computations:                                
Basic     29,827       29,724       29,809       29,707  
Diluted     29,833       29,736       29,816       29,719  
Dividends per share   $ 0.70     $ 0.70     $ 0.70     $ 0.70  
                                 
   
PRICESMART, INC.  
CONSOLIDATED BALANCE SHEETS  
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)  
   
    February 28, 2015       August 31, 2014  
    (Unaudited)          
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 119,243     $ 137,098  
Short-term restricted cash     1,500       2,353  
Receivables, net of allowance for doubtful accounts of $5 and $0 as of February 28, 2015 and August 31, 2014, respectively     7,078       7,910  
Merchandise inventories     281,256       226,383  
Deferred tax assets - current     6,839       6,177  
Prepaid expenses and other current assets (includes $0 and $495 as of February 28, 2015 and August 31, 2014, respectively, for the fair value of derivative instruments and $1,064 and $0 as of February 28, 2015 and August 31, 2014, respectively, for the fair value of foreign currency forward contracts)     27,068       17,260  
Total current assets     442,984       397,181  
Long-term restricted cash     25,428       27,013  
Property and equipment, net     424,360       426,325  
Goodwill     36,069       36,108  
Deferred tax assets - long term     9,013       11,825  
Other non-current assets (includes $6,996 and $1,095 as of February 28, 2015 and August 31, 2014, respectively, for the fair value of derivative instruments)     38,267       30,755  
Investment in unconsolidated affiliates     10,245       8,863  
Total Assets   $ 986,366     $ 938,070  
LIABILITIES AND EQUITY                
Current Liabilities:                
Short-term borrowings   $ 4,470     $ --  
Accounts payable     233,266       223,559  
Accrued salaries and benefits     15,288       17,799  
Deferred membership income     21,992       17,932  
Income taxes payable     8,359       7,718  
Other accrued expenses (includes $0 and $14 as of February 28, 2015 and August 31, 2014, respectively, for the fair value of foreign currency forward contracts)     22,193       21,030  
Dividends payable     10,564       --  
Long-term debt, current portion     14,792       11,848  
Deferred tax liability - current     137       157  
Total current liabilities     331,061       300,043  
Deferred tax liability - long-term     2,432       2,290  
Long-term portion of deferred rent     6,107       5,591  
Long-term income taxes payable, net of current portion     1,562       1,918  
Long-term debt, net of current portion     90,328       79,591  
Other long-term liabilities (includes $586 and $0 for the fair value of derivative instruments and $379 and $372 for the defined benefit plan as of February 28, 2015 and August 31, 2014, respectively)     965       372  
Total liabilities     432,455       389,805  
Equity:                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,973,256 and 30,950,701 shares issued and 30,182,541 and 30,209,917 shares outstanding (net of treasury shares) as of February 28, 2015 and August 31, 2014, respectively     3       3  
Preferred stock $0.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding as of February 28, 2015 and August 31, 2014     --       --  
Additional paid-in capital     400,539       397,150  
Tax benefit from stock-based compensation     10,962       9,505  
Accumulated other comprehensive loss     (68,399 )     (49,286 )
Retained earnings     239,967       215,613  
Less: treasury stock at cost; 790,715 and 740,784 shares as of February 28, 2015 and August 31, 2014, respectively     (29,161 )     (24,720 )
Total equity     553,911       548,265  
Total Liabilities and Equity   $ 986,366     $ 938,070  
                 
                 

Contact Information

  • For further information, please contact
    John M. Heffner
    Principal Financial Officer and Principal Accounting Officer
    (858) 404-8826