PriceSmart Announces Fiscal 2021 Second Quarter Operating Results

SAN DIEGO, April 8, 2021 /PRNewswire/ — PriceSmart, Inc. (NASDAQ: PSMT), operator of 47 warehouse clubs in 12 countries and…

SAN DIEGO, April 8, 2021 /PRNewswire/ — PriceSmart, Inc. (NASDAQ: PSMT), operator of 47 warehouse clubs in 12 countries and one U.S. territory, today announced its results of operations for the fiscal second quarter of 2021 which ended on February 28, 2021.

Comments from Sherry S. Bahrambeygui, Chief Executive Officer:

«PriceSmart achieved solid results for the second quarter of fiscal year 2021, with continued focus on strengthening our Company as a trusted part of our members’ lives. The quarter started with the grand opening of our new Usaquén Club, our third club in the greater metropolitan area of Bogotá which is located in the heart of a densely populated area. We believe that the Usaquén Club should drive sales growth, provide greater convenience and strengthen our presence in a market that provides significant growth opportunity. In addition, in late February and early March, we launched our first two PriceSmart Pharmacies in Costa Rica. We believe that this incremental membership benefit will be well received and complements our Optical service. We plan to launch several more PriceSmart Pharmacies by the end of the calendar year. Additionally, we continue to invest in our omni-channel efforts to improve service and offer greater convenience to our Members.

«Despite our success, the pandemic still weighs on our business in certain markets. Similar to what we have seen in the United States, infection rates increased dramatically in our markets during and after the holiday season. This brought the return of government-mandated club closures, primarily in Panama, but we also experienced club closure days in Colombia and some other Caribbean markets. In total, we had 142 club days lost this quarter versus 51 in the first quarter of fiscal year 2021. We also faced challenges in Trinidad, as our decision to limit U.S. merchandise imports, due to a lack of sufficient U.S. dollar availability for currency exchange purposes, negatively impacted sales. However, we are pursuing avenues to increase the level of imports in support of sales in Trinidad.

«Although varying pandemic-related restrictions throughout our markets change almost daily, our global team of approximately 10,000 associates has continued to source exciting, distinctive, carefully curated merchandise and deliver goods and services at a great value in a safe and clean environment.»

Second Quarter Financial Results

Total revenues for the second quarter of fiscal year 2021 increased 3.4% to $937.6 million compared to $906.7 million in the comparable period of the prior year. For the second quarter of fiscal year 2021, net merchandise sales increased 3.1% to $898.4 million from $871.7 million in the second quarter of fiscal year 2020. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $27.3 million, or 3.2%, versus the same period in the prior year.

The Company had 47 warehouse clubs in operation as of February 28, 2021 compared to 45 warehouse clubs in operation as of February 29, 2020.

Comparable net merchandise sales for the 45 warehouse clubs that have been open for greater than 13 ½ calendar months increased 1.1% for the 13-week period ended February 28, 2021 compared to the comparable period of the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $26.2 million or 3.0% versus the same period in the prior year.

The Company recorded operating income during the fiscal second quarter of $45.0 million compared to operating income of $38.8 million in the prior year period. Net income attributable to PriceSmart was $28.2 million, or $0.92 per diluted share, in the second quarter of fiscal year 2021 as compared to $25.6 million, or $0.85 per diluted share, in the second quarter of fiscal year 2020. 

The Company reports comparable net merchandise sales on a «same week» basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month and quarter that is used for financial reporting purposes.  This approach equalizes the number of weekend days and weekdays in each period for an improved sales comparison, as the Company experiences higher merchandise club sales on the weekends. Each of the warehouse clubs used in the calculations was open for at least 13 ½ calendar months before its results for the current period were compared with its results for the prior period.

The term «currency exchange rates» refers to the currency exchange rates the Company uses to convert net merchandise and comparable net merchandise sales for all countries where the functional currency is not the U.S. dollar into U.S. dollars. The Company calculates the effect of changes in currency exchange rates as the difference between current period activities translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. The Company believes the disclosure of the effects of currency exchange rate fluctuations on the Company’s results permits investors to understand better the Company’s underlying performance.

Club days lost means the total number of days one or more clubs are closed for an entire day because of government prohibitions on offering in-store shopping. For example, if one club was prohibited from offering in-store sales for five days during a month and another club was prohibited from offering in-store sales for two days during that month, we would say that we had seven club days lost during the month.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, April 9, 2021, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (855) 209-8211 toll free or (412) 317-5214 for international callers and asking to join the PriceSmart, Inc. call. A digital replay will be available through April 16, 2021, following the conclusion of the call by dialing (877) 344-7529 for domestic callers, or (412) 317-0088 for international callers, and entering replay passcode 10152415.

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 and services at low prices to PriceSmart Members. PriceSmart operates 47 warehouse clubs in 12 countries and one U.S. territory (eight in Costa Rica and Colombia; seven in Panama; five in the Dominican Republic, four in Trinidad and Guatemala; three in Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands). The Company also plans to open new warehouse clubs in Guatemala City, Guatemala and Bucaramanga, Colombia in the fall of 2021, and in Portmore, Jamaica in the spring of 2022. Once these three new clubs are open, the Company will operate 50 warehouse clubs. 

This press release may contain forward-looking statements concerning the Company’s anticipated future revenues and earnings, adequacy of future cash flows, omni-channel initiatives, 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,» «intend,» and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, but not limited to: adverse changes in economic conditions in the Company’s markets, natural disasters, compliance risks, volatility in currency exchange rates and illiquidity of certain local currencies in our markets, competition, consumer and small business spending patterns, political instability, increased costs associated with the integration of online commerce with our traditional business, whether the Company can successfully execute strategic initiatives, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of member or business information, cost increases from product and service providers, interruption of supply chains, COVID-19 related factors and challenges, including among others, the duration of the pandemic, the unknown long-term economic impact, the impact of government policies and restrictions that have limited access for our Members, and shifts in demand away from discretionary or higher priced products to lower priced products, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law.

For further information, please contact Michael L. McCleary, EVP, Chief Financial Officer and Principal Accounting Officer (858) 404-8826 or send an email to ir@pricesmart.com.

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)





























Three Months Ended


Six Months Ended



February 28,


February 29,


February 28,


February 29,



2021


2020


2021


2020

Revenues:













Net merchandise sales


$

898,404


$

871,726


$

1,736,773


$

1,650,454

Export sales



9,706



8,434



20,587



16,708

Membership income



13,799



14,093



27,098



27,839

Other revenue and income



15,660



12,482



30,543



23,675

Total revenues



937,569



906,735



1,815,001



1,718,676

Operating expenses:













Cost of goods sold:













Net merchandise sales



755,108



743,434



1,458,727



1,406,158

Export sales



9,315



8,078



19,748



16,049

Non-merchandise



6,268



4,662



12,092



8,913

Selling, general and administrative:













Warehouse club and other operations



90,449



84,022



175,281



163,395

General and administrative



31,270



27,618



58,791



53,502

Pre-opening expenses



48



44



650



997

Loss on disposal of assets



132



68



202



139

Total operating expenses



892,590



867,926



1,725,491



1,649,153

Operating income



44,979



38,809



89,510



69,523

Other income (expense):













Interest income



445



586



936



879

Interest expense



(2,228)



(1,690)



(4,261)



(2,552)

Other income (expense), net



(292)



723



(1,837)



(262)

Total other expense



(2,075)



(381)



(5,162)



(1,935)

Income before provision for income taxes and

loss of unconsolidated affiliates



42,904



38,428



84,348



67,588

Provision for income taxes



(14,565)



(12,702)



(28,183)



(22,105)

Loss of unconsolidated affiliates



(12)



(15)



(21)



(63)

Net income



28,327



25,711



56,144



45,420

Less: net income attributable to noncontrolling interest



(91)



(111)



(171)



(92)

Net income attributable to PriceSmart, Inc.


$

28,236


$

25,600


$

55,973


$

45,328

Net income attributable to PriceSmart, Inc. per share

available for distribution:













Basic


$

0.92


$

0.85


$

1.82


$

1.49

Diluted


$

0.92


$

0.85


$

1.82


$

1.49

Shares used in per share computations:













Basic



30,376



30,255



30,387



30,266

Diluted



30,404



30,258



30,412



30,271

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

















February 28,






2021


August 31,



(Unaudited)


2020

ASSETS







Current Assets:







Cash and cash equivalents


$

180,179


$

299,481

Short-term restricted cash



736



185

Short-term investments



81,430



46,509

Receivables, net of allowance for doubtful accounts of $178 as of February 28,

2021 and $147 as of August 31, 2020, respectively



11,874



13,153

Merchandise inventories



339,237



309,509

Prepaid expenses and other current assets



32,283



30,165

Total current assets



645,739



699,002

Long-term restricted cash



6,864



4,105

Property and equipment, net



712,758



692,279

Operating lease right-of-use assets, net



123,968



119,533

Goodwill



45,157



45,206

Other intangibles, net



8,974



10,166

Deferred tax assets



22,332



21,672

Other non-current assets (includes $228 and $872 as of February 28, 2021 and

August 31, 2020, respectively, for the fair value of derivative instruments)



54,462



54,260

Investment in unconsolidated affiliates



10,582



10,602

Total Assets


$

1,630,836


$

1,656,825

LIABILITIES AND EQUITY







Current Liabilities:







Short-term borrowings


$

23,067


$

65,143

Accounts payable



335,821



373,172

Accrued salaries and benefits



29,278



32,946

Deferred income



28,283



23,525

Income taxes payable



10,181



7,727

Other accrued expenses and other current liabilities



35,835



37,731

Operating lease liabilities, current portion



7,975



8,594

Dividends payable



10,755



Long-term debt, current portion



20,406



19,437

Total current liabilities



501,601



568,275

Deferred tax liability



1,557



1,713

Long-term income taxes payable, net of current portion



5,439



5,132

Long-term operating lease liabilities



129,789



124,181

Long-term debt, net of current portion



106,160



112,610

Other long-term liabilities (includes $3,712 and $4,685 for the fair value of

derivative instruments and $6,522 and $6,155 for post-employment plans as of

February 28, 2021 and August 31, 2020, respectively)



11,039



12,182

Total Liabilities



755,585



824,093

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)















Stockholders’ Equity:







Common stock $0.0001 par value, 45,000,000 shares authorized; 31,451,915 and

31,417,576 shares issued and 30,777,030 and 30,670,712 shares outstanding (net of

treasury shares) as of February 28, 2021 and August 31, 2020, respectively



3



3

Additional paid-in capital



454,881



454,455

Accumulated other comprehensive loss



(174,778)



(176,820)

Retained earnings



616,943



582,487

Less: treasury stock at cost, 674,885 shares as of February 28, 2021 and 746,864

shares as of August 31, 2020



(22,781)



(28,406)

Total stockholders’ equity attributable to PriceSmart, Inc. stockholders



874,268



831,719

Noncontrolling interest in consolidated subsidiaries



983



1,013

Total stockholders’ equity 



875,251



832,732

Total Liabilities and Equity


$

1,630,836


$

1,656,825

 

 

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SOURCE PriceSmart, Inc.