SOURCE: PriceSmart, Inc.

PriceSmart, Inc.

April 09, 2014 16:00 ET

PriceSmart Announces Second Quarter Results of Operations and March Sales

SAN DIEGO, CA--(Marketwired - Apr 9, 2014) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the second quarter of fiscal year 2014 which ended on February 28, 2014.

For the second quarter of fiscal year 2014, net warehouse club sales increased 11.0% to $657.2 million from $591.9 million in the second quarter of fiscal year 2013. Total revenues for the second quarter of fiscal year 2014 were $674.4 million compared to $607.4 million in the comparable period of the prior year. The Company had 32 warehouse clubs in operation as of February 2014 and 30 clubs in operation as of February 2013.

The Company recorded operating income during the quarter of $39.4 million, as compared to operating income of $36.4 million in the prior year. Net income was $28.3 million, or $0.93 per diluted share, in the second quarter of fiscal year 2014 as compared to $24.9 million, or $0.82 per diluted share, in the second quarter of fiscal year 2013.

For the first six months of fiscal year 2014, net warehouse club sales increased 11.8% to $1,246.9 million from $1,115.5 million in the first six months of fiscal year 2013. Total revenues for the first half of fiscal year 2014 increased 12.0% to $1,280.0 million from $1,142.7 million in the same period of the prior year. For the first six months of 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. During the same six month period in fiscal year 2013, the Company recorded operating income of $66.1 million and net income of $44.9 million, or $1.48 per diluted share.

The Company also announced that for the month of March 2014, net warehouse club sales increased 5.7% to $203.2 million, from $192.3 million in March a year earlier. For the seven months ended March 31, 2014, net warehouse club sales increased 10.9% to $1,450.1 million from $1,307.8 million for the seven months ended March 31, 2013. There were 32 warehouse clubs in operation at the end of March 2014 and 30 warehouse clubs in operation at the end of March 2013.

For the four weeks ended March 30, 2014, comparable net warehouse club sales for the 30 warehouse clubs open at least 13 1/2 full months increased 1.9%, compared to the same four-week period last year. For the thirty-week period ended March 30, 2014, comparable net warehouse club sales increased 6.5%, compared to the comparable thirty-week period a year ago.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Thursday, April 10, 2014, to discuss the financial results.

Individuals interested in participating in the conference call may do so by dialing (888) 337-8198 for domestic callers or (719) 325-2402 for international callers, and entering participant code 9116013.

A digital replay will be available through April 30, 2014, 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 9116013.

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 32 warehouse clubs in 12 countries and one U.S. territory (six in Costa Rica; four each in Panama and Trinidad; three each in Guatemala, the Dominican Republic and Colombia; two each in 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, 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: 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 its business; the Company faces significant competition; future sales growth depends, in part, on the Company's ability to successfully open new warehouse clubs; the Company might not identify in a timely manner or effectively respond to changes in consumer trends and changes in consumer preferences for merchandise and shopping modalities, which could adversely affect its relationship with members, demand for its products and market share; the Company faces difficulties in the shipment of, and risks inherent in the importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business and/or from which the Company acquires merchandise; the Company relies extensively on computer systems to process transactions, summarize results and manage its business and a failure to adequately maintain the Company's systems and disruptions in its systems could harm its business and adversely affect its results of operations; the Company could be subject to additional tax liabilities; a few of the Company's stockholders own approximately 28.3% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede 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 rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; potential future impairments of long lived assets could adversely affect the Company's future results of operations and financial position; write-offs of goodwill and other intangible assets could adversely affect the Company's future results of operations and financial position; the Company faces increased public company compliance risks and compliance risks related to the Company's international operations; the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; if remediation costs or hazardous substance contamination levels at certain properties for which the Company maintains financial responsibility exceed management's current expectations, the Company's financial condition and results of operations could be adversely impacted. 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, 2013 filed on October 30, 2013 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,
 
    2014     2013     2014     2013  
Revenues:                                
Net warehouse club sales   $ 657,167     $ 591,855     $ 1,246,861     $ 1,115,454  
Export sales     6,764       6,323       12,485       9,396  
Membership income     9,481       8,326       18,749       15,999  
Other income     962       906       1,880       1,847  
Total revenues     674,374       607,410       1,279,975       1,142,696  
Operating expenses:                                
Cost of goods sold:                                
Net warehouse club     561,652       504,725       1,065,939       949,669  
Export     6,423       5,986       11,864       8,821  
Selling, general and administrative:                                
Warehouse club operations     53,203       48,213       104,975       94,055  
General and administrative     13,277       11,888       24,461       23,046  
Pre-opening expenses     340       147       814       886  
Loss/(gain) on disposal of assets     104       47       188       104  
Total operating expenses     634,999       571,006       1,208,241       1,076,581  
Operating income     39,375       36,404       71,734       66,115  
Other income (expense):                                
Interest income     193       446       374       740  
Interest expense     (886 )     (1,306 )     (1,924 )     (2,524 )
Other income (expense), net     712       (265 )     1,023       (264 )
Total other expense     19       (1,125 )     (527 )     (2,048 )
Income before provision for income taxes and income (loss) of unconsolidated affiliates     39,394       35,279       71,207       64,067  
Provision for income taxes     (11,116 )     (10,393 )     (21,501 )     (19,172 )
Income (loss) of unconsolidated affiliates     -       (4 )     4       (8 )
Net income   $ 28,278     $ 24,882     $ 49,710     $ 44,887  
Net income per share available for distribution:                                
Basic net income per share   $ 0.93     $ 0.82     $ 1.64     $ 1.48  
Diluted net income per share   $ 0.93     $ 0.82     $ 1.64     $ 1.48  
Shares used in per share computations:                                
Basic     29,724       29,626       29,707       29,609  
Diluted     29,736       29,636       29,719       29,620  
Dividends per share   $ 0.70     $ -     $ 0.70     $ 0.60  
                                 
   
PRICESMART, INC.  
CONSOLIDATED BALANCE SHEETS  
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)  
   
    February 28,
2014

(Unaudited)
    August 31,
2013
 
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 75,337     $ 121,874  
Short-term restricted cash     2,328       5,984  
Receivables, net of allowance for doubtful accounts of $6 and $0 as of February 28, 2014 and August 31, 2013, respectively     3,614       3,130  
Merchandise inventories     236,471       217,413  
Deferred tax assets - current     6,219       6,290  
Prepaid expenses and other current assets (includes $891 and $0 as of February 28, 2014 and August 31, 2013, respectively, for the fair value of derivative instruments)     24,654       20,890  
Total current assets     348,623       375,581  
Long-term restricted cash     26,760       34,775  
Property and equipment, net     374,335       338,478  
Goodwill     36,321       36,364  
Deferred tax assets - long term     12,942       12,871  
Other non-current assets (includes $1,969 and $1,505 as of February 28, 2014 and August 31, 2013, respectively, for the fair value of derivative instruments)     26,477       19,866  
Investment in unconsolidated affiliates     8,858       8,104  
Total Assets   $ 834,316     $ 826,039  
LIABILITIES AND EQUITY                
Current Liabilities:                
Accounts payable   $ 194,959     $ 199,425  
Accrued salaries and benefits     15,048       17,862  
Deferred membership income     18,042       16,528  
Income taxes payable     8,431       8,059  
Other accrued expenses     18,115       20,136  
Dividends payable     10,593       -  
Long-term debt, current portion     18,887       12,757  
Deferred tax liability - current     138       111  
Total current liabilities     284,213       274,878  
Deferred tax liability - long-term     3,107       2,622  
Long-term portion of deferred rent     4,672       4,440  
Long-term income taxes payable, net of current portion     1,978       2,184  
Long-term debt, net of current portion     41,308       60,263  
Other long-term liabilities (includes $0 and $14 for the fair value of derivative instruments and $645 and $589 for the defined benefit plans as of February 28, 2014 and August 31, 2013, respectively)     645       603  
Total liabilities     335,923       344,990  
Equity:                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,943,763 and 30,924,392 shares issued and 30,205,586 and 30,234,506 shares outstanding (net of treasury shares) as of February 28, 2014 and August 31, 2013, respectively     3       3  
Preferred stock $.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding as of February 28, 2014 and August 31, 2013     -       -  
Additional paid-in capital     394,020       390,581  
Tax benefit from stock-based compensation     9,361       8,016  
Accumulated other comprehensive loss     (52,914 )     (41,475 )
Retained earnings     172,418       143,871  
Less: treasury stock at cost; 738,177 and 689,886 shares as of February 28, 2014 and August 31, 2013, respectively     (24,495 )     (19,947 )
Total equity     498,393       481,049  
Total Liabilities and Equity   $ 834,316     $ 826,039  
                 

Contact Information

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