SOURCE: PriceSmart, Inc.

PriceSmart, Inc.

April 07, 2016 16:00 ET

PriceSmart Announces Second Quarter Results of Operations and March Sales

SAN DIEGO, CA--(Marketwired - Apr 7, 2016) -  PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the second quarter of fiscal year 2016 which ended on February 29, 2016.

For the second quarter of fiscal year 2016, net warehouse club sales increased 3.7% to $759.0 million from $732.1 million in the second quarter of fiscal year 2015. Total revenues for the second quarter of fiscal year 2016 were $777.9 million compared to $750.3 million in the comparable period of the prior year. The Company had 38 warehouse clubs in operation as of February 2016 and 36 clubs in operation as of February 2015.

The Company recorded operating income during the quarter of $39.1 million, as compared to operating income of $41.7 million in the prior year. Net income was $25.9 million, or $0.85 per diluted share, in the second quarter of fiscal year 2016 as compared to $24.8 million, or $0.82 per diluted share, in the second quarter of fiscal year 2015.

For the first six months of fiscal year 2016, net warehouse club sales increased 5.9% to $1,449.8 million from $1,368.5 million in the first six months of fiscal year 2015. Total revenues for the first half of fiscal year 2016 increased 5.9% to $1,489.9 million from $1,406.3 million in the same period of the prior year. For the first six months of fiscal year 2016, the Company recorded operating income of $76.4 million and net income of $49.6 million, or $1.63 per diluted share. During the same six month period in 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.

The Company also announced that for the month of March 2016, net warehouse club sales decreased to $227.8 million, from $237.7 million in March a year earlier. For the seven months ended March 31, 2016, net warehouse club sales increased 4.4% to $1,677.6 million from $1,606.2 million for the seven months ended March 31, 2015. There were 38 warehouse clubs in operation at the end of March 2016 and 36 warehouse clubs in operation at the end of March 2015.

For the four weeks ended March 27, 2016, comparable net warehouse club sales for the 36 warehouse clubs open at least 13 1/2 full months decreased 5.4%, compared to the same four-week period last year. For the thirty-week period ended March 27, 2016, comparable net warehouse club sales decreased 0.5%, compared to the comparable thirty-week period a year ago.

Comparable warehouse sales were negatively impacted by the devaluation of the Colombian peso from the year ago period. Six warehouse clubs in Colombia are in the calculation for comparable warehouse sales. Excluding those warehouse clubs, the four-week and thirty-week comparable warehouse sales for the other 30 warehouse clubs open at least 13 1/2 full months decreased 3.1% and increased 2.9%, respectively.

PriceSmart management plans to host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, April 8, 2016, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (877) 795-3610 for domestic callers or (719) 325-4776 for international callers, and entering participant code 1201714. A digital replay will be available through April 30, 2016, 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 1201714.

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 38 warehouse clubs in 12 countries and one U.S. territory (six each in Costa Rica and Colombia; five in Panama, four in Trinidad; three each in Guatemala, the Dominican Republic and Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica 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 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 and grow sales in our existing locations; 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; our profitability is vulnerable to cost increases; 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; failure to adequately maintain our systems and 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 27.7% of our voting stock as of February 29, 2016, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; failure to attract and retain qualified employees, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance; 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; any failure to maintain the security of the information relating to our company, members, employees and vendors that we hold, whether as a result of cybersecurity attacks on our information systems, failure of internal controls, employee negligence or malfeasance or otherwise, could damage our reputation with members, employees, vendors and others, could cause us to incur substantial additional costs and to become subject to litigation and could materially adversely affect our operating results; 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; 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. 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, 2015 filed on October 29, 2015 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     Six Months Ended  
    February 29,     February 28,     February 29,     February 28,  
    2016     2015     2016     2015  
Revenues:                                
Net warehouse club sales   $ 758,987     $ 732,120     $ 1,449,818     $ 1,368,535  
Export sales     6,549       6,229       14,781       14,660  
Membership income     11,285       10,898       22,751       21,013  
Other income     1,110       1,049       2,512       2,109  
Total revenues     777,931       750,296       1,489,862       1,406,317  
Operating expenses:                                
Cost of goods sold:                                
Net warehouse club     651,500       625,876       1,241,683       1,164,904  
Export     6,225       5,934       14,057       13,961  
Selling, general and administrative:                                
Warehouse club operations     64,763       62,041       125,603       118,251  
General and administrative     16,184       14,117       31,647       27,467  
Pre-opening expenses     71       229       376       3,378  
Loss/(gain) on disposal of assets     52       391       65       363  
Total operating expenses     738,795       708,588       1,413,431       1,328,324  
Operating income     39,136       41,708       76,431       77,993  
Other income (expense):                                
Interest income     280       266       458       530  
Interest expense     (1,536 )     (1,970 )     (2,909 )     (3,144 )
Other income (expense), net     (552 )     (1,659 )     (796 )     (4,291 )
Total other income (expense)     (1,808 )     (3,363 )     (3,247 )     (6,905 )
Income before provision for income taxes and income (loss) of unconsolidated affiliates     37,328       38,345       73,184       71,088  
Provision for income taxes     (11,815 )     (13,526 )     (23,945 )     (25,628 )
Income (loss) of unconsolidated affiliates     429       16       375       22  
Net income     25,942     $ 24,835     $ 49,614       45,482  
Net income per share available for distribution:                                
Basic net income per share   $ 0.85     $ 0.82     $ 1.63     $ 1.50  
Diluted net income per share   $ 0.85     $ 0.82     $ 1.63     $ 1.50  
Shares used in per share computations:                                
Basic     29,914       29,827       29,902       29,809  
Diluted     29,919       29,833       29,907       29,816  
Dividends per share   $ 0.70     $ 0.70     $ 0.70     $ 0.70  
                                 
                                 
                                 
PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
 
    February 29,    
    2016   August 31,
    (Unaudited)   2015
ASSETS        
Current Assets:            
Cash and cash equivalents   $ 173,008   $ 157,072
Short-term restricted cash     135     61
Receivables, net of allowance for doubtful accounts of $0 as of February 29, 2016 and August 31, 2015, respectively     7,178     9,662
Merchandise inventories     260,101     267,175
Prepaid expenses and other current assets     24,366     22,535
Total current assets     464,788     456,505
Long-term restricted cash     2,360     1,464
Property and equipment, net     440,523     433,040
Goodwill     35,701     35,871
Deferred tax assets - long term     13,648     14,845
Other non-current assets (includes $4,735 and $4,129 as of February 29, 2016 and August 31, 2015, respectively, for the fair value of derivative instruments)     41,012     39,182
Investment in unconsolidated affiliates     10,811     10,317
Total Assets   $ 1,008,843   $ 991,224
LIABILITIES AND EQUITY            
Current Liabilities:            
Short-term borrowings   $ --   $ 6,606
Accounts payable     237,810     241,978
Accrued salaries and benefits     15,124     17,977
Deferred membership income     21,804     20,184
Income taxes payable     6,398     9,595
Other accrued expenses (includes $216 and $66 as of February 29, 2016 and August 31, 2015, respectively, for the fair value of foreign currency forward contracts)     22,649     23,558
Dividends payable     10,629     --
Long-term debt, current portion     16,018     17,169
Total current liabilities     330,432     337,067
Deferred tax liability - long-term     1,544     1,755
Long-term portion of deferred rent     8,253     6,595
Long-term income taxes payable, net of current portion     1,050     1,402
Long-term debt, net of current portion     75,047     73,365
Other long-term liabilities (includes $1,977 and $1,699 for the fair value of derivative instruments and $3,571 and $2,757 for post employment plans as of February 29, 2016and August 31, 2015, respectively)     5,548     4,456
Total Liabilities     421,874     424,640
Equity:                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 31,189,728 and 30,977,764 shares issued and 30,369,911 and 30,184,584 shares outstanding (net of treasury shares) as of February 29, 2016 and August 31, 2015, respectively     3       3  
Additional paid-in capital     407,826       403,168  
Tax benefit from stock-based compensation     11,269       10,711  
Accumulated other comprehensive loss     (112,743 )     (101,512 )
Retained earnings     311,967       283,611  
Less: treasury stock at cost; 819,817 shares as of February 29, 2016 and 793,180 shares as of August 31, 2015     (31,353 )     (29,397 )
Total Equity     586,969       566,584  
Total Liabilities and Equity   $ 1,008,843     $ 991,224  

Contact Information

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