PriceSmart(US:PSMT)2025-04-09 20:02Company 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].