SOURCE: PriceSmart, Inc.

April 05, 2007 08:00 ET

PriceSmart Announces Second Quarter Results of Operations; Land Acquisition for New Sites Also Announced

SAN DIEGO, CA -- (MARKET WIRE) -- April 5, 2007 -- PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the second quarter of fiscal year 2007, which ended on February 28, 2007.

For the second quarter of fiscal year 2007, net warehouse club sales increased 19.6% to $226.7 million from $189.6 million in the second quarter of fiscal year 2006. Total revenues for the second quarter increased 20.0% to $231.9 million, compared to $193.3 million in the prior year. The Company had 23 warehouse clubs in operation as of February 28, 2007 and 2006.

The Company recorded operating income in the second quarter of $9.6 million, compared to operating income of $6.1 million in the second quarter of the prior year. Net income was $6.5 million, or $0.22 per diluted share, in the second quarter of fiscal 2007 compared to $3.2 million, or $0.12 per diluted share, in the second quarter of fiscal 2006.

For the first six months of fiscal 2007, net warehouse club sales increased 19.3% to $424.8 million from $356.1 million in the first six months of fiscal 2006. Total revenues for the first half of the fiscal year increased 19.6% to $434.4 million from $363.2 million in the same period of the prior year. For the first six months of fiscal 2007, the Company recorded operating income of $16.8 million, and net income of $10.6 million, or $0.36 per diluted share. During the same six month period in fiscal 2006, the Company recorded operating income of $9.2 million, and net income of $5.2 million, or $0.20 per diluted share.

The Company also announced that it completed the acquisition of land in Arima, Trinidad, and will begin construction of its previously announced third warehouse club in Trinidad. As a result of a delay in the land purchase, the Company now expects this warehouse club to open in November 2007. In addition, the Company announced that it has acquired land and will begin construction of a new warehouse club in the municipality of Fraijanes in the eastern outskirts of Guatemala City, Guatemala. This warehouse club, which is also expected to open in November 2007, will bring the number of PriceSmart warehouse clubs in Guatemala to three. Upon completion of both of these warehouse clubs, the total number of warehouse clubs in operation will be 25.

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 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 13, 2006. 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 BALANCE SHEETS
         (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

                                                February        August
                                                28,2007        31,2006
                                              -------------  -------------
                                               (Unaudited)
ASSETS
Current Assets:
   Cash and cash equivalents                  $      33,441  $      39,995
   Short-term restricted cash                         7,844          7,651
   Receivables, net of allowance for
    doubtful accounts of $176 and
    $191, respectively                                4,326          3,599
   Merchandise inventories                           84,108         77,432
   Prepaid expenses and other current assets         10,596          8,985
   Assets of discontinued operations                  1,543          1,594
                                              -------------  -------------
Total current assets                                141,858        139,256
                                              -------------  -------------
   Long-term restricted cash                            407            531
   Note receivable                                    2,130             --
   Property and equipment, net                      160,918        162,029
   Goodwill                                          31,702         31,870
   Deferred tax asset                                19,875         20,183
   Other assets                                       3,926          1,903
   Investment in unconsolidated affiliate             2,980          3,271
                                              -------------  -------------
Total Assets                                  $     363,796  $     359,043
                                              =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Short-term borrowings                      $       4,062  $         158
   Accounts payable                                  72,503         65,520
   Accounts payable to unconsolidated
    affiliate                                            --            381
   Accrued salaries and benefits                      5,448          5,765
   Deferred membership income                         6,720          5,780
   Income taxes payable                               4,217          4,098
   Other accrued expenses                            14,469         15,194
   Dividend payable                                   9,458             --
   Long-term debt, current portion                    1,000          5,417
   Liabilities of discontinued operations               145            130
                                              -------------  -------------
Total current liabilities                           118,022        102,443
Deferred tax liability                                1,307          1,101
Deferred rent                                         1,708          1,730
Accrued closure costs                                 3,150          3,226
Long-term debt, net of current portion                   53         13,252
                                              -------------  -------------
Total liabilities                                   124,240        121,752

Minority interest                                     2,928          2,672
Commitments and contingencies                                          

Stockholders' Equity:
   Common stock, $.0001 par value,
    45,000,000 shares authorized;
    29,552,580 and 29,404,457 shares
    issued and 29,076,867 and 28,966,294
    shares outstanding (net of treasury
    shares), respectively                                 3              3
   Additional paid-in capital                       365,317        364,132
   Tax benefit from stock-based compensation          3,902          3,509
   Accumulated other comprehensive loss             (14,010)       (13,883)
   Accumulated deficit                             (108,517)      (109,676)
   Less: treasury stock at cost; 475,713
    shares and 438,163 shares held,
    respectively                                    (10,067)        (9,466)
                                              -------------  -------------
Total stockholders' equity                          236,628        234,619
                                              -------------  -------------
Total Liabilities and Stockholders' Equity    $     363,796  $     359,043
                                              =============  =============


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

                                 Three Months Ended      Six Months Ended
                                   February 28,            February 28,
                                ====================  ====================
                                  2007       2006       2007        2006
                                =========  =========  =========  =========
Revenues:
    Sales:
      Net warehouse club        $ 226,722  $ 189,562  $ 424,822  $ 356,075
      Export                          171         11        266         11
    Membership income               3,421      2,817      6,662      5,462
    Other income                    1,543        868      2,604      1,684
                                ---------   --------  ---------  ---------
Total revenues                    231,857    193,258    434,354    363,232
                                ---------   --------  ---------  ---------
Operating expenses:
    Cost of goods sold:
      Net warehouse club          192,959    162,170    361,457    304,690
      Export                          168         16        260         16
    Selling, general and
     administrative:
      Warehouse club operations    21,749     19,134     42,042     37,488
      General and
       administrative               6,877      5,753     12,845     11,379
    Preopening expenses                23          1        255        336
    Asset impairment and
     closure costs                    472         60        663        113
                                ---------   --------  ---------  ---------
Total operating expenses          222,248    187,134    417,522    354,022
                                ---------   --------  ---------  ---------
Operating income                    9,609      6,124     16,832      9,210
Other income (expense):
    Interest income                   479        412        843        724
    Interest expense                  (90)      (829)      (445)    (1,550)
    Other income (expense), net       (36)         1        (22)        25
                                ---------   --------  ---------  ---------
Total other income (expense)          353       (416)       376       (801)
                                ---------   --------  ---------  ---------
Income from continuing
 operations before provision
 for income taxes, loss of
 unconsolidated affiliate and
 minority interest                  9,962      5,708     17,208      8,409
Provision for income taxes         (3,219)    (2,152)    (6,192)    (3,494)
Loss of unconsolidated
 affiliate                            (99)       (80)      (183)       (44)
Minority interest                    (128)      (129)      (262)      (173)
                                ---------   --------  ---------  ---------
Income from continuing
 operations                         6,516      3,347     10,571      4,698
Discontinued operations, net of
 tax                                   28       (107)        46        547
                                ---------   --------  ---------  ---------
Net income                      $   6,544  $   3,240  $  10,617  $   5,245
                                =========  =========  =========  =========
Basic income per share:

    Continuing operations       $    0.23  $    0.12  $    0.37  $    0.18

    Discontinued operations,
     net of tax                 $      --  $      --  $      --  $    0.02
                                ---------   --------  ---------  ---------

    Net income                  $    0.23  $    0.12  $    0.37  $    0.20
                                =========  =========  =========  =========
Diluted income per share:

    Continuing operations       $    0.22  $    0.12  $    0.36  $    0.18

    Discontinued operations,
     net of tax                 $      --  $      --  $      --  $    0.02
                                ---------   --------  ---------  ---------

    Net income                  $    0.22  $    0.12  $    0.36  $    0.20
                                =========  =========  =========  =========
Shares used in per share
 computations:
    Basic                          28,477     26,821     28,441     26,256
                                =========  =========  =========  =========
    Diluted                        29,224     27,139     29,153     26,569
                                =========  =========  =========  =========

Dividends per share             $    0.32  $    0.00  $    0.32  $    0.00
                                =========  =========  =========  =========

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