PriceSmart(PSMT)

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PriceSmart (PMST) Q3 Earnings Beat, Comparable Sales Up 7.8%
ZACKS· 2024-07-11 17:07
Total revenues of $1.23 billion increased significantly by 12.1% from the prior year quarter. The company's net merchandise sales of $1.19 billion climbed 11.6% from the year-ago period. On a constant currency basis, the metric rose 9.1%. Notably, foreign currency exchange fluctuations positively impacted sales by $27.3 million or 2.5%. Membership income of $19.3 million rose 15.2% from the year-ago period. Total operating expenses of $1.18 billion increased 11.9% year over year. Adjusted EBITDA for the thi ...
PriceSmart(PSMT) - 2024 Q3 - Quarterly Results
2024-07-10 20:02
Revenue Growth - Total revenues for the nine months ended May 31, 2024 increased 12.0% to $3.69 billion compared to $3.29 billion in the prior year[1] - Total revenues for the third quarter of fiscal year 2024 grew 12.1% to $1.23 billion compared to $1.10 billion in the prior year[27] Net Merchandise Sales - Net merchandise sales increased 11.8% to $3.59 billion, with constant currency growth of 8.3% and a positive foreign exchange impact of $111.4 million (3.5%)[1] - Comparable net merchandise sales for 50 warehouse clubs open over 13.5 months increased 8.2%, with constant currency growth of 5.0% and a 3.2% positive foreign exchange impact[2] - Net merchandise sales for the three months ended May 31, 2024, were $1,194.531 million, representing an 11.6% growth compared to the same period in 2023[19] - Net merchandise sales on a constant-currency basis for the three months ended May 31, 2024, were $1,167.249 million, reflecting a 9.1% growth[19] - Net merchandise sales increased 11.6% to $1.19 billion in the third quarter of fiscal year 2024 from $1.07 billion in the same period last year[27] - Comparable net merchandise sales for the 50 warehouse clubs open for over 13.5 months increased 7.8% for the 13-week period ended June 2, 2024[29] - Comparable net merchandise sales on a constant-currency basis for the thirteen weeks ended June 2, 2024, grew by 5.6%[20] Operating Income and Net Income - Operating income increased to $171.7 million, up from $152.4 million in the prior year period[3] - Net income increased 17.0% to $109.8 million, or $3.62 per diluted share, compared to $93.8 million, or $3.01 per diluted share, in the prior year[3] - Operating income for the third quarter of fiscal year 2024 was $49.9 million, up from $43.1 million in the prior year period[30] - Net income for the third quarter of fiscal year 2024 increased to $32.5 million, up 9.9% from $29.6 million in the same period last year[22][30] - Adjusted net income for the three months ended May 31, 2024, was $32.489 million, compared to $32.542 million in the same period in 2023[16] - Adjusted net income for the third quarter of fiscal year 2024 was $32.5 million, or $1.08 per diluted share, compared to $32.5 million, or $1.04 per diluted share, in the prior year[31] Adjusted EBITDA - Adjusted EBITDA for the first nine months of fiscal year 2024 was $232.9 million, up from $218.4 million in the same period last year[4] - Adjusted EBITDA for the third quarter of fiscal year 2024 was $71.0 million, up from $63.9 million in the same period last year[32] Membership Income - Membership income increased to $55.6 million for the nine months ended May 31, 2024, up from $48.8 million in the prior year[10] Cost of Goods Sold and Expenses - Cost of goods sold for net merchandise sales increased to $3.02 billion, up from $2.70 billion in the prior year period[10] - Selling, general and administrative expenses increased to $346.8 million, up from $306.7 million in the prior year period[10] Cash and Cash Equivalents - Cash and cash equivalents decreased from $239.984 million in August 2023 to $128.271 million in May 2024, a decline of 46.5%[12] Total Assets and Liabilities - Total assets increased slightly from $2,005.608 million in August 2023 to $2,020.698 million in May 2024[12] - Merchandise inventories increased from $471.407 million in August 2023 to $516.464 million in May 2024, a growth of 9.6%[12] - Accounts payable increased from $453.229 million in August 2023 to $491.203 million in May 2024, a growth of 8.4%[12] - Retained earnings increased from $817.559 million in August 2023 to $861.158 million in May 2024, a growth of 5.3%[12] Warehouse Club Expansion - The company plans to open one new warehouse club in Cartago, Costa Rica in spring 2025, increasing total clubs to 55[7] - The company operated 54 warehouse clubs as of May 31, 2024, compared to 51 in the prior year[28] Foreign Exchange Impact - Foreign currency exchange rate fluctuations positively impacted net merchandise sales by $27.3 million, or 2.5%, compared to the same period last year[27] Diluted Earnings Per Share - Diluted earnings per share for the third quarter of fiscal year 2024 were $1.08, compared to $0.94 in the same period last year[30] - Adjusted net income per diluted share for the three months ended May 31, 2024, was $1.08, compared to $1.04 in the same period in 2023[16]
PriceSmart(PSMT) - 2024 Q3 - Quarterly Report
2024-07-10 20:02
[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section covers PriceSmart, Inc.'s comprehensive financial data, including statements, management's analysis, market risks, and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents PriceSmart, Inc.'s unaudited consolidated financial statements, including balance sheets, income, equity, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates | ASSETS (in thousands) | May 31, 2024 (Unaudited) | August 31, 2023 | | :-------------------- | :----------------------- | :---------------- | | Cash and cash equivalents | $128,271 | $239,984 | | Short-term investments | $99,904 | $91,081 | | Merchandise inventories | $516,464 | $471,407 | | Total current assets | $822,828 | $877,107 | | Property and equipment, net | $938,336 | $850,328 | | Total Assets | $2,020,698 | $2,005,608 | | LIABILITIES AND EQUITY (in thousands) | May 31, 2024 (Unaudited) | August 31, 2023 | | :---------------------------------- | :----------------------- | :---------------- | | Short-term borrowings | $10,078 | $8,679 | | Accounts payable | $491,203 | $453,229 | | Dividends payable | $17,771 | — | | Long-term debt, current portion | $36,672 | $20,193 | | Total current liabilities | $694,391 | $634,477 | | Long-term debt, net of current portion | $98,426 | $119,487 | | Total Liabilities | $925,344 | $898,565 | | Total Stockholders' Equity | $1,095,354 | $1,107,043 | | Total Liabilities and Equity | $2,020,698 | $2,005,608 | - Total assets increased by **$15.1 million** to **$2.02 billion** as of May 31, 2024, compared to August 31, 2023, primarily driven by an increase in property and equipment, net, and merchandise inventories, partially offset by a decrease in cash and cash equivalents[15](index=15&type=chunk) - Total liabilities increased by **$26.8 million** to **$925.3 million**, mainly due to higher accounts payable and current portion of long-term debt, partially offset by a decrease in long-term debt, net of current portion[15](index=15&type=chunk) - Total stockholders' equity decreased by **$11.7 million** to **$1.095 billion**, primarily due to an increase in treasury stock at cost[17](index=17&type=chunk) [Consolidated Statements of Income](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income | (Amounts in thousands, except per share data) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net merchandise sales | $1,194,531 | $1,070,263 | $3,590,461 | $3,211,725 | | Total revenues | $1,229,428 | $1,096,654 | $3,687,853 | $3,293,649 | | Total operating expenses | $1,179,519 | $1,053,602 | $3,516,113 | $3,141,270 | | Operating income | $49,909 | $43,052 | $171,740 | $152,379 | | Net income | $32,489 | $29,572 | $109,807 | $93,824 | | Basic net income per share | $1.08 | $0.95 | $3.62 | $3.02 | | Diluted net income per share | $1.08 | $0.94 | $3.62 | $3.01 | - Total revenues increased by **12.1%** to **$1.229 billion** for the three months ended May 31, 2024, and by **12.0%** to **$3.688 billion** for the nine months ended May 31, 2024, compared to the prior-year periods[19](index=19&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Net income for the three months ended May 31, 2024, was **$32.5 million** (**$1.08 per diluted share**), up from **$29.6 million** (**$0.94 per diluted share**) in the prior-year period. For the nine months, net income was **$109.8 million** (**$3.62 per diluted share**), up from **$93.8 million** (**$3.01 per diluted share**)[19](index=19&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Consolidated Statements of Comprehensive Income](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section presents the company's total comprehensive income, including net income and other comprehensive income components | (Amounts in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $32,489 | $29,572 | $109,807 | $93,824 | | Other Comprehensive Income (Loss), net of tax: | | | | | | Foreign currency translation adjustments | $(5,181) | $15,285 | $5,053 | $26,599 | | Total defined benefit pension plan | $91 | $15 | $302 | $30 | | Total derivative instruments | $299 | $(1,200) | $(1,443) | $(646) | | Other comprehensive income (loss) | $(4,791) | $14,100 | $3,912 | $25,983 | | Comprehensive income | $27,698 | $43,672 | $113,719 | $119,807 | - Comprehensive income for the three months ended May 31, 2024, was **$27.7 million**, a decrease from **$43.7 million** in the prior-year period, primarily due to negative foreign currency translation adjustments[21](index=21&type=chunk) - For the nine months ended May 31, 2024, comprehensive income was **$113.7 million**, down from **$119.8 million** in the prior-year period, mainly due to lower foreign currency translation adjustments and unrealized losses on derivative instruments[21](index=21&type=chunk) [Consolidated Statements of Equity](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20EQUITY) This section details changes in the company's equity, including common stock, retained earnings, and other comprehensive loss | (Amounts in thousands) | May 31, 2024 | May 31, 2023 | | :--------------------- | :----------- | :----------- | | Common Stock (Shares) | 32,563 | 31,935 | | Common Stock (Amount) | $3 | $3 | | Additional Paid-in Capital | $509,901 | $494,382 | | Accumulated Other Comprehensive Loss | $(160,080) | $(169,603) | | Retained Earnings | $861,158 | $802,002 | | Treasury Stock (Shares) | 1,924 | 871 | | Treasury Stock (Amount) | $(115,628) | $(37,091) | | Total Equity | $1,095,354 | $1,089,693 | - Total equity increased from **$1,089.7 million** as of May 31, 2023, to **$1,095.4 million** as of May 31, 2024, primarily driven by net income and stock-based compensation, partially offset by dividends paid and treasury stock purchases[24](index=24&type=chunk)[27](index=27&type=chunk) - The Company purchased **969 thousand treasury shares** for **$71.85 million** during the nine months ended May 31, 2024, significantly increasing treasury stock compared to the prior year[27](index=27&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities | (Amounts in thousands) | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $165,754 | $184,681 | | Net cash used in investing activities | $(149,379) | $(197,814) | | Net cash used in financing activities | $(124,279) | $(13,051) | | Effect of exchange rate changes on cash | $(3,956) | $11,183 | | Net decrease in cash, cash equivalents | $(111,860) | $(15,001) | | Cash, cash equivalents and restricted cash at end of period | $140,342 | $236,372 | - Net cash provided by operating activities decreased by **$18.9 million** to **$165.8 million** for the nine months ended May 31, 2024, primarily due to shifts in working capital from merchandise inventory and accounts payable[276](index=276&type=chunk) - Net cash used in investing activities decreased by **$48.4 million** to **$149.4 million**, mainly due to a **$103.6 million** increase in proceeds from settlements of short-term investments, partially offset by higher property and equipment expenditures[277](index=277&type=chunk) - Net cash used in financing activities significantly increased by **$111.2 million** to **$124.3 million**, driven by treasury stock repurchases and a special dividend payment[278](index=278&type=chunk) [NOTE 1 – COMPANY OVERVIEW AND BASIS OF PRESENTATION](index=14&type=section&id=NOTE%201%20%E2%80%93%20COMPANY%20OVERVIEW%20AND%20BASIS%20OF%20PRESENTATION) This note provides an overview of PriceSmart's operations, business model, and the basis for its financial statement presentation - PriceSmart operates **54 international membership shopping warehouse clubs** across **12 countries** and one U.S. territory, with plans to open a **55th club** in Cartago, Costa Rica, in spring 2025[35](index=35&type=chunk) - The Company's growth strategy focuses on three major drivers: investing in remodeling existing clubs, adding new locations and distribution centers; increasing membership value; and driving incremental sales via PriceSmart.com and enhanced digital capabilities[39](index=39&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the company's consolidated financial statements | Restricted Cash (in thousands) | May 31, 2024 | August 31, 2023 | | :----------------------------- | :----------- | :-------------- | | Short-term restricted cash | $2,832 | $2,865 | | Long-term restricted cash | $9,239 | $9,353 | | Total restricted cash | $12,071 | $12,218 | | VAT Receivables (in thousands) | May 31, 2024 | August 31, 2023 | | :----------------------------- | :----------- | :-------------- | | Prepaid expenses and other current assets | $9,442 | $2,774 | | Other non-current assets | $30,275 | $36,060 | | Total amount of VAT receivables reported | $39,717 | $38,834 | | Income Tax Receivables (in thousands) | May 31, 2024 | August 31, 2023 | | :------------------------------------ | :----------- | :-------------- | | Prepaid expenses and other current assets | $15,703 | $17,749 | | Other non-current assets | $27,074 | $19,176 | | Total amount of income tax receivables reported | $42,777 | $36,925 | - In January 2024, the Company purchased a previously leased club building and land in Panama City for **$33.0 million**, resulting in the termination of related ROU assets and lease liabilities and an expected annual saving of approximately **$1.1 million**, net of tax, in operating expenses[62](index=62&type=chunk) - The Company uses derivative financial instruments for hedging interest rate and currency exchange rate risks, with effective hedges recorded using hedge accounting and changes in fair value reported in accumulated other comprehensive loss[75](index=75&type=chunk)[79](index=79&type=chunk) [NOTE 3 – REVENUE RECOGNITION](index=22&type=section&id=NOTE%203%20%E2%80%93%20REVENUE%20RECOGNITION) This note details the company's policies and methods for recognizing revenue from merchandise sales and membership fees | Contract Liabilities (in thousands) | May 31, 2024 | August 31, 2023 | | :---------------------------------- | :----------- | :-------------- | | Deferred membership income | $36,192 | $31,079 | | Other contract performance liabilities | $11,977 | $12,347 | | Net Merchandise Sales by Category (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Foods & Sundries | $576,433 | $537,567 | $1,745,350 | $1,601,613 | | Fresh Foods | $358,764 | $319,706 | $1,055,562 | $940,470 | | Hardlines | $132,004 | $106,937 | $408,774 | $342,225 | | Softlines | $62,483 | $54,947 | $189,441 | $175,736 | | Food Service and Bakery | $53,211 | $42,980 | $159,086 | $129,784 | | Health Services | $11,636 | $8,126 | $32,248 | $21,897 | | Net Merchandise Sales | $1,194,531 | $1,070,263 | $3,590,461 | $3,211,725 | - Membership income is recognized ratably over the **12-month term**, with Platinum Memberships offering a **2% rebate** recorded as a reduction of revenue at the time of sale[101](index=101&type=chunk)[102](index=102&type=chunk) [NOTE 4 – EARNINGS PER SHARE](index=24&type=section&id=NOTE%204%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note provides a breakdown of basic and diluted earnings per share calculations, including adjustments for unvested stock | (Amounts in thousands, except per share amounts) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $32,489 | $29,572 | $109,807 | $93,824 | | Less: Allocation of income to unvested stockholders | $(67) | $(456) | $(1,033) | $(1,098) | | Net income available for distribution | $32,422 | $29,116 | $108,774 | $92,726 | | Basic weighted average shares outstanding | 29,968 | 30,800 | 30,052 | 30,752 | | Diluted average shares outstanding | 29,968 | 30,829 | 30,052 | 30,770 | | Basic net income per share | $1.08 | $0.95 | $3.62 | $3.02 | | Diluted net income per share | $1.08 | $0.94 | $3.62 | $3.01 | - Diluted net income per share increased to **$1.08** for the three months ended May 31, 2024, from **$0.94** in the prior-year period, and to **$3.62** for the nine months, from **$3.01**[113](index=113&type=chunk) [NOTE 5 – STOCKHOLDERS' EQUITY](index=26&type=section&id=NOTE%205%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) This note details changes in stockholders' equity, including dividends, comprehensive loss, and share repurchase activities | Dividends Declared (per share) | Amount | Record Date | Date Paid | Payable Date | | :----------------------------- | :----- | :---------- | :-------- | :----------- | | April 3, 2024 (Special) | $1.00 | 4/19/2024 | 4/30/2024 | N/A | | February 1, 2024 (Annual) | $1.16 | 2/15/2024 | 2/29/2024 | 8/30/2024 | | February 3, 2023 (Annual) | $0.92 | 2/16/2023 | 2/28/2023 | 8/31/2023 | | Accumulated Other Comprehensive Loss (in thousands) | May 31, 2024 | May 31, 2023 | | :-------------------------------------------------- | :----------- | :----------- | | Beginning balance, March 1 | $(155,289) | $(183,703) | | Foreign currency translation adjustments | $(5,181) | $15,285 | | Defined benefit pension plans | $91 | $15 | | Derivative instruments | $299 | $(1,200) | | Ending balance, May 31 | $(160,080) | $(169,603) | | Share Repurchase Activity (in thousands, except per share) | Nine Months Ended May 31, 2024 | | :----------------------------------------- | :----------------------------- | | Number of common shares acquired | 935,663 | | Average price per common share acquired | $74.13 | | Total cost of common shares acquired | $69,362 | - The Company declared a one-time special dividend of **$1.00 per share** on April 3, 2024, in addition to its annual cash dividend of **$1.16 per share**[114](index=114&type=chunk) - The **$75 million** share repurchase program, authorized in July 2023, was successfully completed in the first quarter of fiscal year 2024, with approximately **1,007,000 shares** repurchased[122](index=122&type=chunk) [NOTE 6 – COMMITMENTS AND CONTINGENCIES](index=29&type=section&id=NOTE%206%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's future lease obligations, construction commitments, land purchase agreements, and joint venture exposures | Future Lease Payments (in thousands) | Amount | | :----------------------------------- | :----- | | Twelve Months Ended May 31, 2026 | $1,132 | | Twelve Months Ended May 31, 2027 | $1,655 | | Twelve Months Ended May 31, 2028 | $1,616 | | Twelve Months Ended May 31, 2029 | $1,577 | | Twelve Months Ended May 31, 2030 | $1,540 | | Thereafter | $19,808 | | Total future lease payments | $27,328 | | Real Estate Joint Ventures (in thousands) | Company's Variable Interest in Entity | Commitment to Future Additional Investments | Maximum Exposure to Loss in Entity | | :---------------------------------------- | :------------------------------------ | :------------------------------------------ | :------------------------------- | | GolfPark Plaza, S.A. | $6,894 | $99 | $6,993 | | Price Plaza Alajuela PPA, S.A. | $3,667 | $785 | $4,452 | | Total | $10,561 | $884 | $11,445 | - The Company has **$12.5 million** in non-cancelable construction service obligations as of May 31, 2024[136](index=136&type=chunk) - The Company has signed a lease agreement for a new facility in Miraflores, Guatemala, with estimated future minimum lease commitments of **$27.3 million** and plans to invest approximately **$12.1 million** in cash to outfit the club[137](index=137&type=chunk)[138](index=138&type=chunk) - The Company has four land purchase agreements that, if completed, would require approximately **$13.7 million** in cash[138](index=138&type=chunk) [NOTE 7 – DEBT](index=32&type=section&id=NOTE%207%20%E2%80%93%20DEBT) This note details the company's short-term borrowings, long-term debt, and annual maturities, including new loan agreements | Short-term Borrowings (in thousands) | May 31, 2024 | August 31, 2023 | | :----------------------------------- | :----------- | :-------------- | | Total Amount of Facilities | $171,000 | $166,000 | | Facilities Used | $10,078 | $8,679 | | Facilities Available | $160,838 | $157,624 | | Weighted average interest rate (Uncommitted) | 11.4% | 13.2% | | Long-term Debt (in thousands) | August 31, 2023 | May 31, 2024 | | :---------------------------- | :-------------- | :----------- | | Total long-term debt | $139,680 | $135,098 | | Current portion of long-term debt | $20,193 | $36,672 | | Long-term debt (net of current portion) | $119,487 | $98,426 | | Annual Maturities of Long-term Debt (in thousands) | Amount | | :------------------------------------------------- | :----- | | Twelve Months Ended May 31, 2025 | $36,672 | | Twelve Months Ended May 31, 2026 | $14,881 | | Twelve Months Ended May 31, 2027 | $39,122 | | Twelve Months Ended May 31, 2028 | $14,410 | | Twelve Months Ended May 31, 2029 | $4,411 | | Thereafter | $25,602 | | Total | $135,098 | - The Company entered into a **$16.5 million** loan agreement in Q2 FY2024 to partially fund the purchase of its Via Brasil club in Panama, with a **15-year term** and an interest rate of **1.80% plus 3-month SOFR**[146](index=146&type=chunk) [NOTE 8 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES](index=34&type=section&id=NOTE%208%20%E2%80%93%20DERIVATIVE%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) This note describes the company's use of derivative financial instruments for hedging interest rate and currency exchange rate risks | Interest Expense on Hedged Items (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest expense on borrowings | $1,333 | $1,108 | $3,449 | $3,538 | | Cost of swaps | $703 | $210 | $1,775 | $747 | | Total | $2,036 | $1,318 | $5,224 | $4,285 | | Notional Balance of Interest Rate Swaps (in thousands) | May 31, 2024 | August 31, 2023 | | :----------------------------------------------------- | :----------- | :-------------- | | U.S. Bank | $29,113 | $30,069 | | Citibank N.A. | $73,102 | $65,599 | | Total | $102,215 | $95,668 | | Net Fair Value of Derivatives (in thousands) | May 31, 2024 | August 31, 2023 | | :------------------------------------------- | :----------- | :-------------- | | Net fair value of derivatives designated as hedging instruments | $(1,894) | $4,496 | - The Company uses interest rate swaps and cross-currency interest rate swaps as cash flow hedges to manage interest rate and currency exposure on U.S. dollar denominated debt within its international subsidiaries[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - Non-deliverable forward foreign-exchange contracts are used to economically hedge exposure to U.S. dollar merchandise inventory expenditures but do not qualify for derivative hedge accounting[153](index=153&type=chunk)[164](index=164&type=chunk) [NOTE 9 – SEGMENTS](index=37&type=section&id=NOTE%209%20%E2%80%93%20SEGMENTS) This note provides financial information by operating segment, including revenues, operating income, and total assets | Segment Revenues (in thousands) | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2024 | | :------------------------------ | :------------------------------ | :----------------------------- | | United States Operations | $11,587 | $30,107 | | Central American Operations | $744,626 | $2,225,507 | | Caribbean Operations | $333,219 | $1,016,608 | | Colombia Operations | $139,996 | $415,631 | | Total Revenue from external customers | $1,229,428 | $3,687,853 | | Segment Operating Income (in thousands) | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2024 | | :-------------------------------------- | :------------------------------ | :----------------------------- | | United States Operations | $1,636 | $19,481 | | Central American Operations | $54,874 | $173,086 | | Caribbean Operations | $22,915 | $72,965 | | Colombia Operations | $3,289 | $11,498 | | Total Operating income | $49,909 | $171,740 | | Segment Total Assets (in thousands) | May 31, 2024 | August 31, 2023 | | :---------------------------------- | :----------- | :-------------- | | United States Operations | $222,690 | $302,115 | | Central American Operations | $1,060,211 | $995,881 | | Caribbean Operations | $438,578 | $425,145 | | Colombia Operations | $299,219 | $282,467 | | Total assets | $2,020,698 | $2,005,608 | [NOTE 10 – SUBSEQUENT EVENTS](index=39&type=section&id=NOTE%2010%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note confirms that the company has evaluated all events subsequent to May 31, 2024, and found no requiring disclosure - The Company has evaluated all events subsequent to May 31, 2024, and determined there are no subsequent events requiring disclosure[172](index=172&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=40&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on PriceSmart's financial condition and operational results, discussing performance, key factors, growth drivers, and financial metrics [Forward-Looking Statements](index=40&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements regarding future revenues, earnings, cash flows, omni-channel initiatives, club openings, and competitive performance, subject to risks and uncertainties detailed in the report[175](index=175&type=chunk) [Overview](index=40&type=section&id=Overview) This section provides a general description of PriceSmart's business, including its operations, membership model, and strategic focus - PriceSmart operates **54 warehouse clubs** in **12 countries** and the U.S. Virgin Islands, with nearly **two million membership accounts** and almost **four million cardholders**, generating over **$4.4 billion** in fiscal year 2023 revenues[177](index=177&type=chunk) - The Company's business model relies on annual membership fees (Diamond: **$35-$40**, Platinum: **$75-$80** with a **2% cash-back rebate**) to offer lower product prices and foster loyalty, reducing advertising needs[178](index=178&type=chunk) - PriceSmart sources over half its merchandise regionally and invests in technology to improve online shopping, supply chain efficiency, and back-office operations, while also expanding services like optical, audiology, and pharmacy[179](index=179&type=chunk) [Factors Affecting the Business](index=41&type=section&id=Factors%20Affecting%20the%20Business) This section discusses various external and internal factors that can influence the company's sales, profits, and financial results - Sales and profits are influenced by general economic factors, foreign currency exchange rates, political and social conditions, and competition, with currency fluctuation being a significant variable[186](index=186&type=chunk)[188](index=188&type=chunk) - The Company faces challenges from U.S. dollar illiquidity in certain markets, notably Trinidad and Honduras, which impedes conversion of local currencies and increases foreign exchange exposure[193](index=193&type=chunk)[194](index=194&type=chunk) - Political instability and changes in tax laws, such as minimum tax rules in one operating country, can materially impact financial results, leading to increased costs or disputes[190](index=190&type=chunk)[192](index=192&type=chunk) [Mission and Business Strategy](index=43&type=section&id=Mission%20and%20Business%20Strategy) This section outlines PriceSmart's core mission and strategic approach to delivering value, operating profitably, and ensuring investor returns - PriceSmart's mission is to improve lives and businesses by delivering quality goods and services at low prices, operating profitably, and providing a good return to investors, while prioritizing member and employee well-being and social responsibility[195](index=195&type=chunk) [Growth](index=44&type=section&id=Growth) This section details the company's strategic initiatives for growth, focusing on club expansion, membership value, and digital capabilities - The Company's growth strategy is centered on three major drivers[197](index=197&type=chunk) - 1. Invest in Remodeling Current PriceSmart Clubs, Adding New PriceSmart Locations and Opening More Distribution Centers: This includes remodeling clubs in Honduras, Dominican Republic, and Trinidad, expanding clubs in El Salvador, Costa Rica, and Jamaica, relocating the Miraflores club in Guatemala, purchasing the Via Brasil club in Panama, and planning a new club in Cartago, Costa Rica, by spring 2025, alongside expanding distribution centers[197](index=197&type=chunk) - 2. Increase Membership Value: Efforts include expanding benefits, increasing membership fees by **$5** in most markets in FY2024, offering optical and audiology services, and promoting the 'Member's Selection' private label brand, which accounted for **27.4%** of total merchandise sales in the first nine months of FY2024[197](index=197&type=chunk) - 3. Drive Incremental Sales via PriceSmart.com and Enhanced Online, Digital and Technological Capabilities: This involves improving website functionality, expanding online product offerings, using data analytics to understand member preferences, and rolling out a new website platform to tailor delivery zones and improve the shopping experience[198](index=198&type=chunk) [Financial Highlights for the Third Quarter of Fiscal Year 2024](index=45&type=section&id=Financial%20highlights%20for%20the%20third%20quarter%20of%20fiscal%20year%202024) This section summarizes key financial performance metrics for the third quarter of fiscal year 2024, including revenue and net income growth - Total revenues increased **12.1%** over the comparable prior-year period[200](index=200&type=chunk) - Net merchandise sales increased **11.6%**, with constant currency sales up **9.1%**[200](index=200&type=chunk) - Comparable net merchandise sales increased **7.8%**, with constant currency sales up **5.6%**[200](index=200&type=chunk) - Membership income increased **15.2%** to **$19.3 million**[200](index=200&type=chunk) - Operating income was **$49.9 million**, an increase of **15.9%**[200](index=200&type=chunk) - Net income was **$32.5 million**, or **$1.08 per diluted share**, compared to **$29.6 million**, or **$0.94 per diluted share**, in the prior-year period[200](index=200&type=chunk) - Adjusted EBITDA was **$71.0 million**, up from **$63.9 million**[200](index=200&type=chunk) [Financial Highlights for the Nine Months Ended May 31, 2024](index=46&type=section&id=Financial%20highlights%20for%20the%20nine%20months%20ended%20May%2031%2C%202024) This section summarizes key financial performance metrics for the nine months ended May 31, 2024, including revenue and net income growth - Total revenues increased **12.0%** over the comparable prior-year period[201](index=201&type=chunk) - Net merchandise sales increased **11.8%**, with constant currency sales up **8.3%**[201](index=201&type=chunk) - Comparable net merchandise sales increased **8.2%**, with constant currency sales up **5.0%**[201](index=201&type=chunk) - Membership income increased **13.9%** to **$55.6 million**[201](index=201&type=chunk) - Operating income was **$171.7 million**, an increase of **12.7%**[201](index=201&type=chunk) - Net income was **$109.8 million**, or **$3.62 per diluted share**, compared to **$93.8 million**, or **$3.01 per diluted share**, in the prior-year period[201](index=201&type=chunk) - Adjusted EBITDA was **$232.9 million**, up from **$218.4 million**[201](index=201&type=chunk) [Non–GAAP Financial Measures](index=46&type=section&id=Non%E2%80%93GAAP%20(Generally%20Accepted%20Accounting%20Principles)%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, such as Adjusted Net Income and Adjusted EBITDA, to GAAP equivalents | Adjusted Net Income (in thousands, except per share data) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :-------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income as reported | $32,489 | $29,572 | $109,807 | $93,824 | | Adjustments (prior year) | — | $2,970 | — | $12,292 | | Adjusted net income | $32,489 | $32,542 | $109,807 | $106,116 | | Net income per diluted share | $1.08 | $0.94 | $3.62 | $3.01 | | Adjusted net income per diluted share | $1.08 | $1.04 | $3.62 | $3.41 | | Adjusted EBITDA (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income as reported | $32,489 | $29,572 | $109,807 | $93,824 | | Interest expense | $3,579 | $2,747 | $9,688 | $8,310 | | Provision for income taxes | $14,483 | $12,019 | $49,895 | $44,647 | | Depreciation and amortization | $21,129 | $17,821 | $61,114 | $53,264 | | Interest income | $(2,521) | $(3,161) | $(8,612) | $(6,260) | | Other expense, net | $1,882 | $1,885 | $11,044 | $11,795 | | Adjustments (prior year) | — | $2,970 | — | $12,842 | | Adjusted EBITDA | $71,041 | $63,853 | $232,936 | $218,422 | - Adjusted net income and adjusted net income per diluted share are presented to exclude non-recurring items like CEO separation costs and VAT/Aeropost write-offs, providing a clearer view of core operating performance[203](index=203&type=chunk) [Adjusted Net Income and Adjusted Net Income per Diluted Share](index=46&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Income%20per%20Diluted%20Share) This subsection details the calculation and reconciliation of adjusted net income and adjusted net income per diluted share [Adjusted EBITDA](index=47&type=section&id=Adjusted%20EBITDA) This subsection explains the calculation and reconciliation of Adjusted EBITDA, a non-GAAP measure of operational profitability [Net Merchandise Sales – Constant Currency and Comparable Net Merchandise Sales – Constant Currency](index=48&type=section&id=Net%20Merchandise%20Sales%20%E2%80%93%20Constant%20Currency%20and%20Comparable%20Net%20Merchandise%20Sales%20%E2%80%93%20Constant%20Currency) This subsection defines and presents net merchandise sales and comparable sales adjusted for foreign currency fluctuations [Comparison of the Three and Nine Months Ended May 31, 2024 and 2023](index=49&type=section&id=COMPARISON%20OF%20THE%20THREE%20AND%20NINE%20MONTHS%20ENDED%20MAY%2031%2C%202024%20AND%202023) This section provides a detailed comparative analysis of the company's financial performance for the specified periods [Net Merchandise Sales](index=49&type=section&id=Net%20Merchandise%20Sales) This subsection analyzes net merchandise sales performance across different segments and the impact of currency exchange | Net Merchandise Sales by Segment (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Central America | $730,022 | $656,719 | $2,183,189 | $1,955,437 | | Caribbean | $328,013 | $311,578 | $1,001,544 | $942,196 | | Colombia | $136,496 | $101,966 | $405,728 | $314,092 | | Total Net merchandise sales | $1,194,531 | $1,070,263 | $3,590,461 | $3,211,725 | | Net Merchandise Sales Growth & Currency Impact | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2024 | | :--------------------------------------------- | :------------------------------ | :----------------------------- | | Consolidated Net Merchandise Sales Growth | 11.6% | 11.8% | | Consolidated Net Merchandise Sales - Constant Currency Growth | 9.1% | 8.3% | | Consolidated % Impact of Foreign Currency Exchange | 2.5% | 3.5% | - Overall net merchandise sales grew by **11.6%** for the third quarter and **11.8%** for the nine-month period, driven by increases in both transactions (**9.4%** and **9.2%**) and average ticket (**2.0%** and **2.3%**)[213](index=213&type=chunk) - Colombia segment sales increased significantly by **33.9%** (Q3) and **29.2%** (9M), primarily due to the appreciation of the Colombian peso against the U.S. dollar[216](index=216&type=chunk) [Comparable Merchandise Sales](index=51&type=section&id=Comparable%20Merchandise%20Sales) This subsection examines comparable net merchandise sales growth, including constant currency adjustments, across operating segments | Comparable Net Merchandise Sales Growth | Thirteen Weeks Ended June 2, 2024 | Thirty-Nine Weeks Ended June 2, 2024 | | :-------------------------------------- | :-------------------------------- | :----------------------------------- | | Central America | 7.4% | 8.2% | | Caribbean | 5.0% | 5.8% | | Colombia | 19.4% | 15.7% | | Consolidated comparable net merchandise sales | 7.8% | 8.2% | | Comparable Net Merchandise Sales - Constant Currency Growth & Currency Impact | Thirteen Weeks Ended June 2, 2024 | Thirty-Nine Weeks Ended June 2, 2024 | | :---------------------------------------------------------------------------- | :-------------------------------- | :----------------------------------- | | Consolidated Comparable Net Merchandise Sales Growth | 7.8% | 8.2% | | Consolidated Comparable Net Merchandise Sales - Constant Currency Growth | 5.6% | 5.0% | | Consolidated % Impact of Foreign Currency Exchange | 2.2% | 3.2% | - Consolidated comparable net merchandise sales increased by **7.8%** for the thirteen-week period and **8.2%** for the thirty-nine-week period ended June 2, 2024[226](index=226&type=chunk) - The Colombia segment showed the highest comparable sales growth (**19.4%** for 13 weeks, **15.7%** for 39 weeks), primarily driven by foreign currency appreciation[230](index=230&type=chunk) [Membership Income](index=55&type=section&id=Membership%20Income) This subsection analyzes membership income performance, including growth drivers, member accounts, and renewal rates by segment | Membership Income by Segment (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Central America | $11,114 | $10,126 | $32,128 | $29,504 | | Caribbean | $4,998 | $4,431 | $14,419 | $13,184 | | Colombia | $3,167 | $2,178 | $9,019 | $6,118 | | Total Membership income | $19,279 | $16,735 | $55,566 | $48,806 | | Number of Member Accounts | May 31, 2024 | May 31, 2023 | | :------------------------ | :----------- | :----------- | | Central America | 1,048,736 | 987,025 | | Caribbean | 479,564 | 462,634 | | Colombia | 343,224 | 336,171 | | Total | 1,871,524 | 1,785,830 | - Total membership income increased by **15.2%** for the three months and **13.9%** for the nine months ended May 31, 2024, driven by a **4.8%** increase in member accounts and a **$5 membership fee increase** in most markets[237](index=237&type=chunk)[238](index=238&type=chunk) - The trailing twelve-month renewal rate improved to **88.1%** as of May 31, 2024, from **87.1%** in the prior year[240](index=240&type=chunk) [Other Revenue](index=56&type=section&id=Other%20Revenue) This subsection details the components and growth of other revenue streams, such as miscellaneous and rental income | Other Revenue (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Miscellaneous income | $3,418 | $2,754 | $9,949 | $7,771 | | Rental income | $614 | $555 | $1,771 | $1,660 | | Total Other revenue | $4,032 | $3,309 | $11,720 | $9,431 | - Other revenue increased by **21.8%** for the three months and **24.3%** for the nine months ended May 31, 2024, primarily due to higher incentive fee revenue from increased average outstanding balances on co-branded credit cards[242](index=242&type=chunk) [Results of Operations Consolidated](index=57&type=section&id=Results%20of%20Operations%20Consolidated) This subsection provides a consolidated overview of the company's operating results, including gross margin and operating income | Consolidated Results (in thousands, except percentages) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :------------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total gross margin | $185,810 | $163,650 | $566,327 | $508,582 | | Total gross margin percentage | 15.6% | 15.3% | 15.8% | 15.8% | | Total revenue margin | $209,772 | $184,060 | $635,056 | $567,973 | | Total revenue margin percentage | 17.1% | 16.8% | 17.2% | 17.2% | | Operating income - Total | $49,909 | $43,052 | $171,740 | $152,379 | | Operating Income by Segment (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Central America | $54,874 | $46,023 | $173,086 | $152,786 | | Caribbean | $22,915 | $21,184 | $72,965 | $71,161 | | Colombia | $3,289 | $2,961 | $11,498 | $12,491 | | United States | $1,636 | $4,066 | $19,481 | $24,622 | - Total gross margin as a percentage of net merchandise sales increased by **30 basis points** to **15.6%** for the three months ended May 31, 2024, mainly due to general margin improvement across most sales categories[246](index=246&type=chunk) - Operating income increased to **$49.9 million** (**4.1% of total revenue**) for the three months and **$171.7 million** (**4.7% of total revenue**) for the nine months ended May 31, 2024[255](index=255&type=chunk)[256](index=256&type=chunk) [Selling, General and Administrative](index=59&type=section&id=Selling%2C%20General%20and%20Administrative) This subsection analyzes trends in selling, general, and administrative expenses, including their components and impact on profitability | SG&A Expenses (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Warehouse club and other operations | $119,053 | $106,172 | $346,792 | $306,694 | | General and administrative | $40,434 | $34,343 | $114,682 | $100,274 | | Separation costs associated with Chief Executive Officer departure | — | — | — | $7,747 | | Total Selling, general and administrative | $159,863 | $141,008 | $463,316 | $415,594 | - Total selling, general and administrative expenses increased by **$18.9 million** for the third quarter and **$47.7 million** for the nine months ended May 31, 2024[249](index=249&type=chunk)[250](index=250&type=chunk) - General and administrative expenses increased to **3.3% of total revenues** for the third quarter and **3.1%** for the nine months, primarily due to investments in technology and increased compensation expense from stock grants to Executive Leadership[252](index=252&type=chunk)[253](index=253&type=chunk) - Expected savings of **$2.5 million per quarter** in SG&A expenses are anticipated due to the Interim Chief Executive Officer declining compensation for his services[254](index=254&type=chunk) [Interest Income](index=60&type=section&id=Interest%20Income) This subsection examines the company's interest income, detailing its sources and changes over the reporting periods | Interest Income (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest income | $2,521 | $3,161 | $8,612 | $6,260 | - Interest income decreased for the three-month period but increased by **$2.35 million** for the nine-month period ended May 31, 2024, primarily due to increased investments at higher yields[259](index=259&type=chunk) [Interest Expense](index=61&type=section&id=Interest%20Expense) This subsection analyzes the company's interest expense, including costs related to loans and hedging activities | Interest Expense (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest expense on loans | $2,939 | $3,152 | $8,702 | $8,870 | | Interest expense related to hedging activity | $703 | $209 | $1,775 | $746 | | Less: Capitalized interest | $(63) | $(614) | $(789) | $(1,306) | | Total Interest expense | $3,579 | $2,747 | $9,688 | $8,310 | - Interest expense increased for both the three and nine-month periods ended May 31, 2024, primarily due to higher interest expense related to hedging activity and less capitalized interest[262](index=262&type=chunk) [Other Expense, Net](index=61&type=section&id=Other%20Expense%2C%20Net) This subsection details other net expenses, including transaction costs from currency conversions and revaluation gains | Other Expense, Net (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Other expense, net | $1,882 | $1,885 | $11,044 | $11,795 | - Other expense, net, for the three and nine months ended May 31, 2024, included **$3.8 million** and **$9.8 million**, respectively, in transaction costs related to converting local currencies in countries with liquidity issues[266](index=266&type=chunk) - These costs were partially offset by a revaluation gain in Costa Rica of **$2.5 million** (three months) and **$0.2 million** (nine months) due to the appreciation of the Costa Rican colón[266](index=266&type=chunk) [Provision for Income Taxes](index=63&type=section&id=Provision%20for%20Income%20Taxes) This subsection analyzes the company's provision for income taxes and effective tax rates, explaining key influencing factors | Provision for Income Taxes (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Provision for income taxes | $14,483 | $12,019 | $49,895 | $44,647 | | Effective tax rate | 30.8% | 28.9% | 31.3% | 32.2% | - The effective tax rate increased to **30.8%** for the three months ended May 31, 2024, from **28.9%** in the prior year, primarily due to a comparably unfavorable net tax impact from recurring items related to CEO compensation cost savings in the prior year[267](index=267&type=chunk) - For the nine months, the effective tax rate decreased to **31.3%** from **32.2%**, mainly due to fewer valuation allowances on deferred tax assets from foreign tax credits[268](index=268&type=chunk) [Other Comprehensive Income](index=64&type=section&id=Other%20Comprehensive%20Income) This subsection details the components of other comprehensive income or loss, primarily focusing on foreign currency translation adjustments | Other Comprehensive Income (Loss) (in thousands) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :----------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Other Comprehensive Income (Loss) | $(4,791) | $14,100 | $3,912 | $25,983 | - Other comprehensive loss for the third quarter of fiscal year 2024 resulted primarily from negative foreign currency translation adjustments[270](index=270&type=chunk) - For the nine months, other comprehensive income of **$3.9 million** was primarily due to a **$5.1 million** comprehensive gain from foreign currency translation adjustments, partially offset by **$1.4 million** in unrealized losses on derivative obligations[270](index=270&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=64&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's ability to generate and manage cash, detailing financial position, cash flow, and capital structure [Financial Position and Cash Flow](index=64&type=section&id=Financial%20Position%20and%20Cash%20Flow) This subsection analyzes the company's cash and short-term investments, including restricted cash, and summarizes cash flow activities | Cash and Cash Equivalents, including Restricted Cash (in thousands) | May 31, 2024 | August 31, 2023 | | :---------------------------------------------------------------- | :----------- | :-------------- | | Amounts held by foreign subsidiaries | $110,890 | $139,050 | | Amounts held domestically | $29,452 | $113,152 | | Total cash and cash equivalents, including restricted cash | $140,342 | $252,202 | | Short-term Investments (in thousands) | May 31, 2024 | August 31, 2023 | | :------------------------------------ | :----------- | :-------------- | | Amounts held by foreign subsidiaries | $99,904 | $74,294 | | Amounts held domestically | — | $16,787 | | Total short-term investments | $99,904 | $91,081 | | Cash Flows Summary (in thousands) | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $165,754 | $184,681 | | Net cash used in investing activities | $(149,379) | $(197,814) | | Net cash used in financing activities | $(124,279) | $(13,051) | | Net decrease in cash and cash equivalents | $(111,860) | $(15,001) | - The Company continues to experience U.S. dollar illiquidity in Trinidad and Honduras, impeding the conversion of local currencies and funding operations[275](index=275&type=chunk) [Capital Expenditures](index=67&type=section&id=Capital%20Expenditures) This subsection details the company's capital expenditures, distinguishing between maintenance and growth-related investments - Capital expenditures for the nine months ended May 31, 2024, totaled **$141.9 million**, comprising **$61.6 million** for maintenance and **$80.3 million** for growth initiatives[281](index=281&type=chunk) - Significant growth expenditures included the **$33.0 million** purchase of a leased club building and land in Panama City and the acquisition of land in Cartago, Costa Rica, for a new warehouse club[281](index=281&type=chunk) [Short-Term Borrowings and Long-Term Debt](index=67&type=section&id=Short-Term%20Borrowings%20and%20Long-Term%20Debt) This subsection outlines the company's financing strategy, including short-term borrowings and long-term debt management - The Company's financing strategy focuses on ensuring liquidity and access to capital markets while minimizing borrowing costs, with proceeds used for general corporate purposes including working capital, capital expenditures, and debt repayment[282](index=282&type=chunk) [Future Lease and Other Commitments](index=67&type=section&id=Future%20Lease%20and%20Other%20Commitments) This subsection addresses the company's future lease obligations and other contractual commitments, and its ability to meet them - The Company emphasizes managing future lease commitments for facilities and equipment, confident that current liquidity and cash flow projections can cover these obligations[283](index=283&type=chunk) [Derivatives](index=67&type=section&id=Derivatives) This subsection describes the company's use of derivative financial instruments to manage interest rate and currency exchange risks - The Company utilizes derivative financial instruments for hedging and non-trading purposes to manage exposure to changes in interest and currency exchange rates[284](index=284&type=chunk) [Off-Balance Sheet Arrangements](index=67&type=section&id=Of%20-Balance%20Sheet%20Arrangements) This subsection confirms the absence of material off-balance sheet arrangements that could significantly impact the company's financials - The Company has no off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on its financial condition or consolidated financial statements[285](index=285&type=chunk) [Repurchase of Common Stock and Reissuance of Treasury Shares Related to Employee Stock Awards](index=68&type=section&id=Repurchase%20of%20Common%20Stock%20and%20Reissuance%20of%20Treasury%20Shares%20Related%20to%20Employee%20Stock%20Awards) This subsection details the company's common stock repurchase activities for tax withholding and reissuance of treasury shares for employee awards - The Company repurchases a portion of vested restricted stock to cover employees' minimum statutory tax withholding requirements and reissues treasury shares as part of its stock-based compensation programs[286](index=286&type=chunk)[287](index=287&type=chunk) [Share Repurchase Program](index=68&type=section&id=Share%20Repurchase%20Program) This subsection provides an overview of the company's share repurchase program, including shares acquired and total cost | Share Repurchase Activity (in thousands, except per share) | Nine Months Ended May 31, 2024 | | :----------------------------------------- | :----------------------------- | | Number of common shares acquired | 935,663 | | Average price per common share acquired | $74.13 | | Total cost of common shares acquired | $69,362 | - The **$75 million** share repurchase program, authorized in July 2023, was successfully completed in the first quarter of fiscal year 2024, with approximately **1,007,000 shares** repurchased[288](index=288&type=chunk) [Critical Accounting Estimates](index=68&type=section&id=Critical%20Accounting%20Estimates) This subsection discusses management's significant judgments and estimates in preparing financial statements, particularly for complex areas - The preparation of financial statements requires management to make estimates and judgments, particularly concerning business acquisitions, contingencies, income taxes, VAT, and long-lived assets, which are inherently uncertain[290](index=290&type=chunk) [Income Taxes](index=68&type=section&id=Income%20Taxes) This subsection details the company's estimation of annual effective tax rates and recognition of uncertain tax positions - The Company estimates an annual effective tax rate for interim reporting and records benefits of uncertain tax positions only when it is more likely than not they will sustain challenge by taxing authorities[291](index=291&type=chunk)[292](index=292&type=chunk) [Tax Receivables](index=69&type=section&id=Tax%20Receivables) This subsection explains the accumulation and management of VAT and income tax receivables, including refund claim processes - The Company accumulates VAT and income tax receivables due to advance payment mechanisms in operating countries, often requiring significant refund claims that can take months to years to complete[294](index=294&type=chunk)[295](index=295&type=chunk) - Despite unclear an
Is PriceSmart (PSMT) Stock Undervalued Right Now?
ZACKS· 2024-06-13 15:19
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels. Finally, we should also recognize that PSMT has a P/CF ratio of 12.25. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. PSMT's P/CF compa ...
Should Value Investors Buy PriceSmart (PSMT) Stock?
zacks.com· 2024-05-22 14:46
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuat ...
3 Retail Stocks to Buy as Inflation Shows Signs of Cooling
zacks.com· 2024-05-16 13:05
Retail sales remained stagnant in April, demonstrating customer fatigue arising out of stubborn inflation. It seems that Americans are going slow on their spending as inflation continues to sting, and elevated interest rates have made debts less lucrative. Per the Commerce Department, retail sales for April remained virtually unchanged at $705.2 billion. The March number was revised down to a 0.6% rise from the previously reported 0.7%. Rising prices have had an impact to the effect that retail sales fell s ...
PriceSmart(PSMT) - 2024 Q2 - Earnings Call Presentation
2024-04-11 05:42
Total Growth CapEx⁽¹⁾ Total Maintenance CapEx⁽²⁾ (1) Reflects $7.7 million of separation costs associated with the departure of our former Chief Executive Officer in February 2023. (2) Reflects the tax effect of the above-mentioned adjustments. (3) Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues and foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily ...
PriceSmart(PSMT) - 2024 Q2 - Earnings Call Transcript
2024-04-10 18:31
Financial Data and Key Metrics Changes - The company declared an annual cash dividend of $1.16 per share, a 26% increase from last year's $0.92 per share dividend, reflecting confidence in cash-generating activities [1] - For the first half of fiscal year 2024, net merchandise sales increased by 11.9% or 8% in constant currency, with comparable net merchandise sales increasing by 8.4% or 4.7% in constant currency [26] - Net income for the second quarter of fiscal year 2024 was $39.3 million or $1.31 per diluted share, compared to $31.3 million or $1.02 per diluted share in the same period last year [52] Business Line Data and Key Metrics Changes - In Central America, net merchandise sales increased by 12.4% or 8.8% in constant currency, with an 8.1% increase in comparable net merchandise sales [26] - In the Caribbean, net merchandise sales increased by 7.2% or 8.9% in constant currency, with comparable net merchandise sales increasing by 6.3% or 8% in constant currency [31] - In Colombia, net merchandise sales increased by 34.5% or 11% in constant currency, with comparable net merchandise sales increasing by 20.7% [32] Market Data and Key Metrics Changes - Membership accounts grew by 5% year-over-year to almost 1.9 million accounts, with a strong 12-month renewal rate of 88.3% [48] - Total gross margin for the second quarter decreased by 30 basis points to 15.7% compared to 16% in the same quarter last year [49] - The average price per item increased approximately 3.9% year-over-year, while average items per basket decreased approximately 1.4% [35] Company Strategy and Development Direction - The company plans to open a new warehouse club in Costa Rica in early 2025, which will be its 9th club in the country [2] - The company is focusing on enhancing its digital channel, with total orders placed online increasing by 26.6% [4] - The implementation of a new tool called RELEX aims to modernize supply chain management and improve inventory planning [81] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in Colombia's political and financial environment, contributing positively to business operations [7] - The company is optimistic about growth opportunities in El Salvador, Guatemala, and Jamaica, with a focus on sourcing production closer to its markets [10][87] - Management acknowledged challenges in meeting demand during high sales volumes, particularly in December, but emphasized effective inventory management [25][62] Other Important Information - The company expects annualized after-tax savings of approximately $1.1 million from the acquisition of the Via Brasil club in Panama [38] - Total SG&A expenses decreased to 12.2% of total revenues for the second quarter, down from 12.6% in the prior year [36] - The company is remodeling several high-volume clubs and expanding its presence in various markets [79] Q&A Session Summary Question: What challenges did the company face in meeting demand during December? - Management acknowledged that high sales volumes exceeded expectations, creating operational stress but did not result in significant additional expenses [62] Question: What is the outlook for new openings in markets like El Salvador and Guatemala? - Management expressed confidence in growth opportunities in these regions, supported by improved sourcing strategies [10][87] Question: Can you elaborate on the increase in general and administrative expenses? - The increase was attributed to higher compensation costs and non-recurring professional fees, with ongoing investments in IT and management [11][70]
PriceSmart(PSMT) - 2024 Q2 - Quarterly Results
2024-04-09 20:06
PRICESMART ANNOUNCES FISCAL 2024 SECOND QUARTER OPERATING RESULTS; $1.00 PER SHARE SPECIAL DIVIDEND; PLANS FOR NINTH WAREHOUSE IN COSTA RICA NET MERCHANDISE SALES GREW 13.0% COMPARABLE NET MERCHANDISE SALES INCREASED 8.8% $1.31 EARNINGS PER DILUTED SHARE & ADJUSTED EARNINGS PER DILUTED SHARE San Diego, CA (April 9, 2024) - PriceSmart, Inc. ("PriceSmart" or the "Company") (NASDAQ: PSMT), operator of 54 warehouse clubs in 12 countries and one U.S. territory, today announced results for the fiscal second quart ...
PriceSmart(PSMT) - 2024 Q2 - Quarterly Report
2024-04-09 20:01
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to COMMISSION FILE NUMBER 000-22793 PriceSmart, Inc. (Exact name of registrant as specified in its charter) Delaware 33-0628530 (State or ot ...