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PriceSmart(PSMT) - 2025 Q3 - Quarterly Report
2025-07-10 20:02
[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents PriceSmart, Inc.'s unaudited consolidated financial statements and management's discussion for the period ended May 31, 2025 [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) PriceSmart, Inc.'s unaudited consolidated financial statements for the period ended May 31, 2025, detail financial position, performance, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of May 31, 2025, total assets were $2.14 billion, an increase from $2.02 billion at August 31, 2024, driven by increases in cash and cash equivalents and property and equipment, while total liabilities rose to $930.2 million and total stockholders' equity increased to $1.21 billion Consolidated Balance Sheet Highlights (USD in thousands) | Account | May 31, 2025 (Unaudited) | August 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $900,779 | $832,347 | | Cash and cash equivalents | $167,961 | $125,364 | | Merchandise inventories | $553,123 | $528,678 | | **Total Assets** | **$2,144,440** | **$2,022,694** | | **Total Current Liabilities** | $701,786 | $680,148 | | Accounts payable | $499,088 | $485,961 | | **Total Liabilities** | **$930,247** | **$899,729** | | **Total Stockholders' Equity** | **$1,214,193** | **$1,122,965** | [Consolidated Statements of Income](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the third quarter ended May 31, 2025, PriceSmart reported net income of $35.2 million on total revenues of $1.32 billion, with diluted EPS of $1.14, compared to $32.5 million net income on $1.23 billion revenues in the prior-year period Key Income Statement Data (USD in thousands, except per share data) | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net merchandise sales | $1,289,997 | $1,194,531 | $3,848,411 | $3,590,461 | | Total revenues | $1,317,289 | $1,229,428 | $3,939,119 | $3,687,853 | | Operating income | $56,230 | $49,909 | $179,760 | $171,740 | | Net income | $35,158 | $32,489 | $116,346 | $109,807 | | Diluted EPS | $1.14 | $1.08 | $3.80 | $3.62 | [Consolidated Statements of Cash Flows](index=12&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the nine months ended May 31, 2025, net cash provided by operating activities increased to $179.2 million, while net cash used in investing activities decreased to $95.8 million and financing activities significantly decreased to $41.9 million Cash Flow Summary (USD in thousands) | Activity | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $179,160 | $165,754 | | Net cash used in investing activities | ($95,788) | ($149,379) | | Net cash used in financing activities | ($41,888) | ($124,279) | | Effect of exchange rate changes | $5,324 | ($3,956) | | **Net increase (decrease) in cash** | **$46,808** | **($111,860)** | [Notes to Consolidated Financial Statements](index=14&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Detailed notes explain PriceSmart's accounting policies, financial data, growth strategy, revenue recognition, debt, and subsequent events - As of May 31, 2025, the Company operated **55** warehouse clubs in **12** countries and one U.S. territory, with plans to open **2** new clubs by spring 2026[32](index=32&type=chunk) - The company's growth strategy focuses on **three drivers**: new locations, increased membership value, and enhanced e-commerce capabilities[37](index=37&type=chunk) - Subsequent to quarter-end, in June 2025, the company purchased a San Diego office building for **$20.8 million**, partially funded by a **$12.5 million** loan[171](index=171&type=chunk) - In July 2025, the Trinidad subsidiary secured over **$50 million** in financing transactions to enhance U.S. dollar liquidity, including a bond issuance and loan agreements[172](index=172&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=40&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses PriceSmart's Q3 and nine-month fiscal 2025 financial performance, highlighting revenue growth, currency impacts, strategic initiatives, and liquidity Q3 FY2025 Financial Highlights vs. Q3 FY2024 (USD) | Metric | Q3 FY2025 | Q3 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1.32B | $1.23B | +7.1% | | Net Merchandise Sales | $1.29B | $1.19B | +8.0% | | Comparable Net Merchandise Sales | - | - | +7.0% | | Operating Income | $56.2M | $49.9M | +12.7% | | Net Income | $35.2M | $32.5M | +8.3% | | Diluted EPS | $1.14 | $1.08 | +5.6% | - The company's growth strategy focuses on **three pillars**: new locations, increased membership value, and enhanced digital sales capabilities[205](index=205&type=chunk) - Digital channel sales increased **19.8%** year-over-year in Q3, reaching a record **$79.0 million**, or **6.1%** of total net merchandise sales[207](index=207&type=chunk) - The company is actively evaluating **Chile** as a potential new market for multiple warehouse clubs[189](index=189&type=chunk)[205](index=205&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) For Q3 FY2025, net merchandise sales grew 8.0% to $1.29 billion, driven by increased transactions and average ticket, with all segments showing growth despite adverse currency fluctuations, leading to a 12.7% increase in operating income Net Merchandise Sales Growth by Segment (Q3 FY2025 vs Q3 FY2024) | Segment | Sales Growth | Constant Currency Sales Growth | Impact of Foreign Currency | | :--- | :--- | :--- | :--- | | Central America | 7.5% | 7.6% | (0.1)% | | Caribbean | 8.2% | 9.7% | (1.5)% | | Colombia | 10.1% | 19.3% | (9.2)% | | **Consolidated** | **8.0%** | **9.5%** | **(1.5)%** | - Membership income increased **13.4%** to **$21.9 million** in Q3, driven by **5.1%** growth in member accounts, with a stable **88.0%** trailing twelve-month renewal rate[237](index=237&type=chunk)[238](index=238&type=chunk)[241](index=241&type=chunk) - SG&A expenses increased by **20 basis points** as a percentage of total revenue, primarily due to technology investments[252](index=252&type=chunk)[256](index=256&type=chunk) - The effective tax rate for Q3 decreased to **28.4%** from **30.8%** in the prior year, driven by tax optimization initiatives[268](index=268&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains strong liquidity, primarily from operations, with $183.1 million in cash and equivalents, while facing U.S. dollar illiquidity challenges in Trinidad and Honduras, and declared an annual dividend of $1.26 per share Cash and Investments (USD in thousands) | Account | May 31, 2025 | August 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $183,119 | $136,311 | | Short-term investments | $94,408 | $100,165 | - The company faces U.S. dollar illiquidity in Trinidad, with **$73.9 million** in Trinidad dollar-denominated assets, and in Honduras, with **$2.0 million** in lempira-denominated assets as of May 31, 2025[275](index=275&type=chunk) - Capital expenditures for the first nine months of FY2025 totaled **$101.6 million**, allocated as **$51.4 million** for maintenance and **$50.2 million** for growth[280](index=280&type=chunk) - The Board declared an annual cash dividend of **$1.26 per share** for fiscal 2025, payable in two installments[279](index=279&type=chunk) [Critical Accounting Estimates](index=71&type=section&id=Critical%20Accounting%20Estimates) Management identifies income taxes, tax receivables, and long-lived asset impairment as critical accounting estimates, requiring significant judgment in assessing uncertain tax positions and recoverability - Significant judgment is required for income taxes, particularly in assessing uncertain tax positions and the recoverability of deferred tax assets across multiple jurisdictions[290](index=290&type=chunk)[291](index=291&type=chunk) - The company holds significant VAT and income tax receivables, classified based on expected recovery time, with no allowance currently placed as recovery is deemed more likely than not[293](index=293&type=chunk)[297](index=297&type=chunk)[299](index=299&type=chunk) - Long-lived assets are evaluated quarterly for impairment indicators, with no significant impairment charges recorded during Q3 FY2025[298](index=298&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company reports no material changes in market risks since fiscal year-end 2024, but reiterates ongoing U.S. dollar illiquidity challenges in Trinidad and Honduras - No material changes in market risk factors, including interest rate and currency exchange rate risk, have occurred since the FY2024 Annual Report on Form 10-K[301](index=301&type=chunk) - The company continues to face U.S. dollar illiquidity in Trinidad and Honduras, hindering the conversion of local currency sales to settle liabilities[302](index=302&type=chunk) [Controls and Procedures](index=74&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of May 31, 2025, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were deemed effective at a reasonable assurance level by the Principal Executive Officer and Principal Financial Officer as of the reporting period end[305](index=305&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[306](index=306&type=chunk) [PART II - OTHER INFORMATION](index=76&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [Legal Proceedings](index=76&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various claims arising from the ordinary course of business, which management does not expect to have a material adverse effect on its financial condition or results of operations - The company is involved in ordinary course claims, but does not anticipate a material adverse effect on its financial condition or results[309](index=309&type=chunk) [Risk Factors](index=76&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section highlights the company's vulnerability to political and economic conditions, including potential negative impacts from U.S. tariffs and a decline in remittances to key Latin American markets - The company is vulnerable to U.S. tariffs, which could increase prices or affect product sourcing, potentially harming sales and profitability[311](index=311&type=chunk) - A decline in remittances to key markets, potentially due to U.S. policy changes or new taxes, could negatively impact local economies and consumer spending[312](index=312&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q3 FY2025, the company repurchased 1,298 shares of common stock at an average price of $96.15 per share to cover employee tax withholding obligations, noting no formal share repurchase program is currently in place Common Stock Repurchase Activity (Q3 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 2025 | 466 | $88.82 | | April 2025 | 832 | $100.26 | | May 2025 | 0 | $0.00 | | **Total** | **1,298** | **$96.15** | - Repurchases were for employee tax withholding on vested restricted stock, not a formal buyback program[314](index=314&type=chunk) [Defaults Upon Senior Securities](index=77&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities during the period - None[316](index=316&type=chunk) [Mine Safety Disclosures](index=77&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[317](index=317&type=chunk) [Other Information](index=77&type=section&id=ITEM%205.%20OTHER%20INFORMATION) On May 14, 2025, Michael McCleary, then EVP and CFO, adopted a Rule 10b5-1 trading plan for the sale of up to 6,322 shares of common stock, plus tax-related shares, from September 2025 to January 2026 - Michael McCleary, former EVP and CFO, adopted a Rule 10b5-1 Trading Plan on May 14, 2025, for stock sales starting September 9, 2025[318](index=318&type=chunk) [Exhibits](index=78&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including employment and separation agreements for CFOs and Sarbanes-Oxley certifications - Key exhibits include employment and separation agreements for CFOs, and Sarbanes-Oxley certifications[320](index=320&type=chunk)
PRICESMART ANNOUNCES FISCAL 2025 THIRD QUARTER OPERATING RESULTS AND CHILE AS A POTENTIAL NEW MARKET
Prnewswire· 2025-07-10 20:01
Core Insights - PriceSmart, Inc. reported a total revenue increase of 7.1% to $1.32 billion for the third quarter of fiscal year 2025 compared to $1.23 billion in the same period last year [2] - Net merchandise sales grew by 8.0% to $1.29 billion, with a constant currency increase of 9.5% [2][5] - The company recorded net income of $35.2 million, or $1.14 per diluted share, reflecting an 8.2% increase from $32.5 million, or $1.08 per diluted share, in the prior year [5][19] Financial Performance - Total revenues for the nine months ended May 31, 2025, increased by 6.8% to $3.94 billion compared to $3.69 billion in the same period last year [6] - Year-to-date net merchandise sales rose by 7.2% to $3.85 billion from $3.59 billion in the comparable prior-year period [6][8] - Adjusted EBITDA for the third quarter was $79.0 million, up from $71.0 million in the same period last year [5] Comparable Sales - Comparable net merchandise sales for the 54 warehouse clubs open for more than 13.5 months increased by 7.0% for the 13-week period ended June 1, 2025 [4] - Comparable net merchandise sales on a constant currency basis for the same period increased by 8.5% [4][24] - For the 39-week period ended June 1, 2025, comparable net merchandise sales increased by 6.5% [7] Operational Expansion - As of May 31, 2025, PriceSmart operated 55 warehouse clubs, an increase from 54 clubs a year earlier [3] - The company is exploring opportunities to open new warehouse clubs in Chile, hiring local consultants to assist in site evaluations [10] Currency Impact - Foreign currency exchange rate fluctuations negatively impacted net merchandise sales by $18.6 million, or 1.5%, compared to the same period last year [2][6] - The unfavorable impact of foreign currency exchange on comparable net merchandise sales was also noted, affecting results by 1.5% for the 13-week period and 1.1% for the 39-week period [4][7]
PriceSmart Announces Change to Previously Scheduled Conference Call
Prnewswire· 2025-06-27 12:00
Core Points - PriceSmart, Inc. will hold its conference call for the third quarter financial results on July 14, 2025, due to a scheduling conflict [1] - The financial results will be released on July 10, 2025, after market close [2] Company Overview - PriceSmart operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, with 55 clubs across 12 countries and one U.S. territory [3] - The company plans to open two new warehouse clubs, one in Quetzaltenango, Guatemala in August 2025 and another in La Romana, Dominican Republic in spring 2026, bringing the total to 57 clubs [3]
PriceSmart: A Great Play At A Good Price
Seeking Alpha· 2025-06-03 17:54
Group 1 - The retail space presents occasional investment opportunities despite general skepticism [1] - PriceSmart is highlighted as a notable example of a potential investment in the retail sector [1] Group 2 - Crude Value Insights offers an investment service focused on oil and natural gas, emphasizing cash flow and growth prospects [1] - Subscribers benefit from a stock model account, cash flow analyses of exploration and production firms, and live sector discussions [2]
PriceSmart Announces Earnings Release and Conference Call Details for the Third Quarter of Fiscal 2025 and Plans for Sixth Warehouse Club in the Dominican Republic
Prnewswire· 2025-06-02 12:00
Financial Results Announcement - PriceSmart, Inc. plans to release financial results for the third quarter of fiscal year 2025 on July 10, 2025, after market close [1] - A conference call to discuss the financial results will be held on July 11, 2025, at 12:00 p.m. Eastern time [1] Expansion Plans - The company has purchased land for its sixth warehouse club in the Dominican Republic, located in La Romana, approximately 73 miles from the nearest club in Santo Domingo [2] - The new club is expected to open in the spring of 2026, bringing the total number of warehouse clubs operated by PriceSmart to 57 [2][3] - Additionally, PriceSmart plans to open another warehouse club in Quetzaltenango, Guatemala, in the summer of 2025 [3] Company Overview - PriceSmart operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, currently managing 55 clubs across 12 countries and one U.S. territory [3] - The countries include ten clubs in Colombia, nine in Costa Rica, seven in Panama, and others in Guatemala, Dominican Republic, Trinidad, El Salvador, Honduras, Nicaragua, Jamaica, Aruba, Barbados, and the U.S. Virgin Islands [3]
PriceSmart Announces CFO Transition Plan
Prnewswire· 2025-05-09 20:05
Core Points - PriceSmart, Inc. has announced the appointment of Gualberto Hernandez as the new Chief Financial Officer (CFO) effective June 1, 2025, following the resignation of Michael McCleary by mutual agreement [1] - Michael McCleary will continue to serve as an Executive Vice President until September 30, 2025, and will provide consulting support for three months post-resignation [1] Group 1: Leadership Transition - Gualberto Hernandez has extensive experience, having served as Vice President Finance & Strategy for Latin America at The Estée Lauder Companies since January 2016, and held various leadership roles within the company [2] - Robert Price, Interim CEO, expressed gratitude for Michael McCleary's contributions over his 20-year tenure, highlighting the company's growth during his leadership, including a doubling of club count and an eight-fold increase in revenues [3] Group 2: Company Overview - PriceSmart operates 55 warehouse clubs across 12 countries and one U.S. territory, with plans to open a new club in Quetzaltenango, Guatemala in summer 2025, bringing the total to 56 [4]
PriceSmart(PSMT) - 2025 Q2 - Earnings Call Presentation
2025-04-10 20:16
Financial Performance - PriceSmart's net merchandise sales reached $133 billion for the three months ended February 28, 2025, representing a 58% growth [99] - Net merchandise sales saw a constant currency growth of 70% [99] - Membership income increased by 128% to $209 million [99] - Total revenue grew by 56% to $136 billion [99] - For the first six months of fiscal year 2025, net merchandise sales reached $256 billion, a 68% increase [101] - Membership income for the first six months grew by 133% to $411 million [101] Membership and Expansion - PriceSmart operates 55 warehouse clubs across 12 countries and one US territory [36] - The company has over 193 million members [12] - Membership renewal rate stands at 870% [33] - Private label penetration of total net merchandise sales is 274% for the six-month period ended February 28, 2025 [68] Omni-Channel and Digital Penetration - Omni-channel sales penetration of total net merchandise sales is 57% [99, 101]
PriceSmart(PSMT) - 2025 Q2 - Earnings Call Transcript
2025-04-10 16:00
Financial Data and Key Metrics Changes - In the second quarter, net merchandise sales reached over $1.3 billion, and total revenue was almost $1.4 billion [14] - Net merchandise sales increased by 0.8% or 7% in constant currency during the second quarter [15] - Net income for the second quarter was $43.8 million or $1.45 per diluted share, compared to $39.3 million or $1.31 per diluted share in the same quarter last year [25] - Adjusted EBITDA for the second quarter was $87 million compared to $84.1 million in the same period last year [25] - Total gross margins as a percentage of net merchandise sales decreased by 10 basis points to 26.6% [21] Business Line Data and Key Metrics Changes - In Central America, net merchandise sales increased by 0.4% or 0.6% in constant currency [15] - In the Caribbean, net merchandise sales increased by 0.4% or 0.6% in constant currency [16] - In Colombia, net merchandise sales increased by 0.6% or 16% in constant currency [17] - Membership accounts grew by 0.1% to over 1.9 million accounts, with a 12-month removal rate of 87% [18] Market Data and Key Metrics Changes - All markets in Central America had positive comparable net merchandise sales growth, except for El Salvador [15] - The Caribbean region contributed approximately 230 basis points to the growth in total consolidated comparable net merchandise sales for the second quarter [16] - Colombia contributed approximately 100 basis points to the growth in total consolidated comparable net merchandise sales for the quarter [17] Company Strategy and Development Direction - The company is focusing on enhancing its distribution infrastructure and plans to open new warehouse clubs in Guatemala and other locations [30][31] - The company is actively seeking ways to improve its distribution network, including operating its own fleet of trucks [33] - The company is investing in technology to enhance supply chain efficiency and improve the member experience [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing tariff challenges and emphasized the importance of sourcing products locally and regionally [10][11] - The company is developing contingency plans to adapt to the uncertain tariff environment [12] - Management expressed optimism about the growth opportunities in digital channels and plans to continue investing in this area [44] Other Important Information - The company opened its ninth warehouse club in Costa Rica during the quarter [9] - The effective tax rate for the second quarter was 22% compared to 25% a year ago, primarily due to tax optimization initiatives [24] - The company has seven recycling centers open and plans to expand this program [46] Q&A Session Summary Question: Impact of tariffs on merchandise sourcing - Management is not aware of any reciprocal tariffs imposed by Central American countries and believes the impact will be minimal [55][60] Question: Future store openings - Management disclosed that there are up to six locations in various stages of due diligence and permitting, but no specific timing was provided [66]
PriceSmart(PSMT) - 2025 Q2 - Quarterly Results
2025-04-09 20:06
Revenue Growth - Total revenues for Q2 FY2025 increased by 5.6% to $1.36 billion compared to $1.29 billion in the same period last year[3] - Year-to-date total revenues for the six months ended February 28, 2025, increased by 6.6% to $2.62 billion compared to $2.46 billion in the prior year[7] Merchandise Sales - Net merchandise sales grew by 5.8% to $1.33 billion from $1.26 billion in Q2 FY2024, with a constant currency increase of 7.0%[3] - Comparable net merchandise sales for clubs open for more than 13.5 months increased by 6.7% for the 13-week period ended March 2, 2025[5] - Net merchandise sales for the three months ended February 28, 2025, reached $1,334,555 million, with a growth rate of 5.8% compared to the previous year[23] - Comparable net merchandise sales growth for the thirteen weeks ended March 2, 2025, was 6.7%, while the comparable net merchandise sales on a constant-currency basis grew by 7.9%[24] Net Income - Net income rose by 11.4% to $43.8 million, or $1.45 per diluted share, compared to $39.3 million, or $1.31 per diluted share, in Q2 FY2024[6] - Net income for the three months ended February 28, 2025, was reported at $43,760 million, an increase from $39,271 million for the same period in 2024, reflecting a growth of 3.8%[21] Operating Income and EBITDA - Adjusted EBITDA for Q2 FY2025 was $87.0 million, up from $84.1 million in the same period last year[6] - Operating income for the first six months of FY2025 was $123.5 million, compared to $121.8 million in the prior-year period[9] - Adjusted EBITDA for the six months ended February 28, 2025, was $161,895 million, compared to $166,137 million for the same period in 2024, indicating a decrease of 2.0%[21] Foreign Currency Impact - Foreign currency exchange rate fluctuations negatively impacted net merchandise sales by $14.7 million, or 1.2%, in Q2 FY2025[3] - The unfavorable impact of foreign currency exchange on net merchandise sales for the six months ended February 28, 2025, was $19,406 million, equating to a 0.8% decrease[23] Company Expansion - The company opened its ninth warehouse club in Costa Rica, bringing the total to 55 clubs[11] - The company plans to open one additional warehouse club in Quetzaltenango, Guatemala, in the summer of 2025[14] Assets and Liabilities - Total assets increased to $2,092,665 million as of February 28, 2025, up from $2,022,694 million on August 31, 2024, representing a growth of 3.5%[19] - Total current liabilities increased to $701,805 million as of February 28, 2025, compared to $680,148 million on August 31, 2024, marking a rise of 3.5%[19] Retained Earnings and Equity - Retained earnings rose to $932,673 million as of February 28, 2025, up from $890,272 million on August 31, 2024, reflecting an increase of 4.7%[19] - The company reported a total stockholders' equity of $1,172,586 million as of February 28, 2025, compared to $1,122,965 million on August 31, 2024, indicating a growth of 4.4%[19] Salaries and Benefits - The company experienced a decrease in accrued salaries and benefits, which fell to $38,258 million from $48,263 million, a decline of 20.7%[19]
PriceSmart(PSMT) - 2025 Q2 - Quarterly Report
2025-04-09 20:02
Company Operations - PriceSmart operates 55 warehouse clubs across 12 countries and the U.S. Virgin Islands, generating revenues exceeding $4.9 billion in fiscal year 2024[179]. - The company has nearly 2 million membership accounts and almost 4 million cardholders, with annual fees of approximately $40 for Diamond Membership and $80 for Platinum Membership, which includes a 2% cash-back rebate[180]. - PriceSmart sources about 50% of its merchandise from regional suppliers, focusing on innovation by adding services like optical, audiology, and pharmacy, along with online shopping options[181]. - The company plans to open a new warehouse club in Guatemala in summer 2025, which will increase the total to 56 clubs[186]. - In April 2025, PriceSmart opened a new warehouse club in Costa Rica, located in Cartago, enhancing its market presence[185]. Financial Performance - Total revenues increased by 5.6% year-over-year, with net merchandise sales rising by 5.8%[204]. - Membership income for Q2 FY 2025 increased by 12.8% to $20.9 million compared to the prior year[204]. - Net income for Q2 FY 2025 was $43.8 million, or $1.45 per diluted share, compared to $39.3 million, or $1.31 per diluted share, in Q2 FY 2024[204]. - Adjusted EBITDA for Q2 FY 2025 was $87.0 million, up from $84.1 million in the same period last year[204]. - Net merchandise sales for the three months ended February 28, 2025, reached $1,334,555, reflecting a 5.8% increase from $1,260,916 for the same period in 2024[209]. Membership and Sales Growth - Private-label sales under the Member's Selection® brand accounted for 27.4% of total merchandise sales during the first six months of FY 2025, up from 27.1% in the same period of FY 2024[201]. - Platinum Membership accounts increased to 14.5% of the total membership base as of February 28, 2025, up from 9.6% a year earlier[201]. - Comparable net merchandise sales for the 13 weeks ended March 2, 2025, increased by 6.7%, with a constant currency increase of 7.9%[204]. - Central America segment net merchandise sales increased by 5.4% and 6.8% for the three and six months ended February 28, 2025, contributing 330 basis points and 410 basis points to total sales growth, respectively[210]. - Caribbean segment net merchandise sales grew by 6.4% and 5.9% for the same periods, contributing 180 basis points and 170 basis points to total sales growth[211]. Currency and Economic Impact - Approximately 80% of net merchandise sales in the first half of fiscal years 2025 and 2024 were in currencies other than the U.S. dollar, with 49.6% and 49.4% of those sales being products purchased in U.S. dollars[190]. - Currency fluctuations significantly impact sales and profits, with a 15% devaluation of the Colombian peso in fiscal year 2023 affecting the company's gross margin[191]. - Currency fluctuations negatively impacted net merchandise sales by approximately $14.7 million (1.2%) for the three months and $19.4 million (0.8%) for the six months ended February 28, 2025[216]. - The company experienced U.S. dollar illiquidity in certain markets, impacting its ability to convert local currencies into U.S. dollars, with $75.6 million in Trinidad dollar denominated cash and cash equivalents as of February 28, 2025[270]. Expenses and Taxation - Selling, general and administrative expenses rose by 7.0% in Q2 FY 2025, primarily due to investments in technology[204]. - The effective tax rate decreased to 27.2% in Q2 FY 2025 from 30.5% in Q2 FY 2024, attributed to tax optimization initiatives[204]. - The effective tax rate for the six months ended February 28, 2025, was 26.9%, down from 31.4% in the prior year, attributed to tax optimization initiatives[263]. - The company recorded a $7.2 million charge in fiscal year 2023 to settle a minimum tax payment dispute in one of its operating countries[196]. Cash Flow and Investments - Net cash provided by operating activities for the six months ended February 28, 2025, was $126,385,000, a slight decrease of $1,281,000 from $127,666,000 in the prior year[271]. - Net cash used in investing activities decreased by $25,756,000 to $79,508,000 for the six months ended February 28, 2025, primarily due to a $40.7 million decrease in property and equipment expenditures[272]. - Capital expenditures for the six months ended February 28, 2025, were $62,800,000, with $35,600,000 for maintenance and $27,200,000 for growth expenditures[276]. Shareholder Returns - The company declared an annual cash dividend of $1.26 per share on February 6, 2025, with $0.63 per share paid on February 28, 2025[275]. - The company repurchased approximately 1,007,000 shares of common stock under a program that was completed in the first quarter of fiscal year 2024[283]. Risk Factors and Compliance - The company’s operating results fluctuate due to seasonal retail patterns and external economic factors, making quarterly results not indicative of full-year performance[296]. - The company’s tax returns are subject to routine reviews by taxing authorities, which may challenge the interpretations used to calculate tax liabilities[287]. - The company evaluates long-lived assets quarterly for impairment indicators, which could lead to adjustments based on future business activity estimates[294].