PriceSmart(PSMT) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net merchandise sales and total revenue reached almost $1.4 billion during the first quarter, with net merchandise sales increasing by 10.6%, or 9.5% in constant currency [6] - Comparable net merchandise sales increased by 8%, or 6.9% in constant currency [6] - Operating income for the first quarter increased by 8% to $62.9 million [26] - Net income for the first quarter was $40.2 million, or $1.29 per diluted share, up from $37.4 million, or $1.21 per diluted share, in the prior year [27] - Adjusted EBITDA for the first quarter was $86.9 million, a growth of 9.8% [27] - Total gross margin remained unchanged at 15.9% of net merchandise sales [25] Business Line Data and Key Metrics Changes - In Central America, net merchandise sales increased by 9.6%, or 9.2% in constant currency, with comparable net merchandise sales up by 5.4% [7] - In the Caribbean, net merchandise sales increased by 5.7%, or 7.8% in constant currency, with comparable net merchandise sales up by 5.6% [8] - In Colombia, net merchandise sales surged by 27.8%, or 15% in constant currency, with comparable net merchandise sales increasing by 27.9%, or 14.7% in constant currency [8] Market Data and Key Metrics Changes - Membership accounts grew by 6.7% year over year to over 2 million accounts, with a strong renewal rate of 89.3% [9] - Digital channel sales reached $89.8 million, up 29.4% year over year, representing 6.6% of total net merchandise sales [18] - Private label sales represented 27% of total merchandise sales, down 70 basis points from the previous year [16] Company Strategy and Development Direction - The company is focusing on expanding its real estate footprint, with plans to open new clubs in the Dominican Republic, Jamaica, and Costa Rica [10][12] - A strategic emphasis is placed on growing Platinum memberships, which now represent 19.3% of total membership, up from 14% [9] - Investments in supply chain transformation and technology are ongoing, including the opening of new distribution centers and the implementation of advanced management platforms [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, citing strong consumer demand and operational execution [5] - The company is monitoring economic factors such as remittance flows and U.S. tariffs, which have not significantly impacted operations to date [21][22] - Management noted that while there are challenges in certain markets, overall consumer demand remains strong [23] Other Important Information - The company is advancing its migration to a new forecasting and replenishment platform, expected to enhance inventory management and sales growth [15] - The company is also enhancing its digital capabilities, with a focus on improving the online shopping experience for members [18] Q&A Session Summary Question: Were the comps positive in Honduras and Panama despite supply chain issues? - Management indicated that there was front-loading of purchasing in Honduras due to elections, and recovery is noted post-election, while Panama is seeing acceptable results [33][34] Question: What factors contribute to Colombia's strong performance? - Management attributed Colombia's strength to favorable currency conditions, a strong local merchandise mix, and effective team operations [35][36] Question: How might increased migration from Venezuela affect Colombia's economy? - Management refrained from speculation but noted strong consumer demand in Colombia and a solid brand position [39] Question: Why did cash in Trinidad increase from $60 million to $80 million? - Management explained that the increase is due to seasonal cash flow variations and ongoing challenges in currency availability [40][41] Question: What insights have been gained from the Chilean market? - Management noted that Chile is competitive and digitalized, with no direct club models present, which presents an opportunity for differentiation [48] Question: How will warehouse and parking expansions impact operations? - Management stated that expansions improve member experience and operational efficiency, although specific regional impacts were not disclosed [51][52]