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PriceSmart Announces Second Quarter Results of Operations and March Sales

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SAN DIEGO, April 6, 2017 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the second quarter of fiscal year 2017 which ended on February 28, 2017.

For the second quarter of fiscal year 2017, net warehouse club sales increased 1.8% to $772.3 million from $759.0 million in the second quarter of fiscal year 2016. Total revenues for the second quarter of fiscal year 2017 were $793.3 million compared to $777.9 million in the comparable period of the prior year. The Company had 39 warehouse clubs in operation as of February 2017 and 38 clubs in operation as of February 2016.

The Company recorded operating income during the quarter of $39.4 million, as compared to operating income of $39.1 million in the prior year. Net income was $27.2 million, or $0.90 per diluted share, in the second quarter of fiscal year 2017 as compared to $25.9 million, or $0.85 per diluted share, in the second quarter of fiscal year 2016.

For the first six months of fiscal year 2017, net warehouse club sales increased 2.7% to $1,488.4 million from $1,449.8 million in the first six months of fiscal year 2016. Total revenues for the first half of fiscal year 2017 increased 2.9% to $1,532.9 million from $1,489.9 million in the same period of the prior year. For the first six months of fiscal year 2017, the Company recorded operating income of $77.8 million and net income of $52.1 million, or $1.72 per diluted share. During the same six month period in fiscal year 2016, the Company recorded operating income of $76.4 million and net income of $49.6 million, or $1.63 per diluted share.

The Company also announced that for the month of March 2017, net warehouse club sales increased 5.3% to $239.9 million, from $227.8 million in March a year earlier. For the seven months ended March 31, 2017, net warehouse club sales increased 3.0% to $1,728.2 million from $1,677.6 million for the seven months ended March 31, 2016. There were 39 warehouse clubs in operation at the end of March 2017 and 38 warehouse clubs in operation at the end of March 2016.

For the four weeks ended April 2, 2017, comparable net warehouse club sales for the 38 warehouse clubs open at least 13 1/2 full months increased 2.9%, compared to the same four-week period last year. For the thirty-week period ended April 2, 2017, comparable net warehouse club sales increased 1.3%, compared to the comparable thirty-week period a year ago.

PriceSmart management plans to host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, April 7, 2017, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (877) 870-4263 for domestic callers or (412) 317-0790 for international callers, and asking to join the PriceSmart, Inc. call. A digital replay will be available through April 14, 2017, following the conclusion of the call by dialing (877) 344-7529 for domestic callers, or (412) 317-0088 for international callers, and entering replay access code 10102319.

About PriceSmart

PriceSmart, headquartered  in  San  Diego,  owns  and  operates  U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members.  PriceSmart now operates 39 warehouse clubs in 12 countries and one U.S. territory (seven in Colombia; six in Costa Rica; five in Panama; four in Trinidad; three each in Guatemala, the Dominican Republic and Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands).

This press release  may  contain  forward-looking  statements concerning  the  Company's  anticipated  future  revenues  and earnings,  adequacy  of  future  cash  flow,  proposed  warehouse  club  openings,  the  Company's  performance  relative  to competitors,  the  outcome  of  tax  proceedings  and  related  matters.  These  forward-looking  statements  include,  but are not  limited  to,  statements  containing  the  words  "expect,"  "believe,"  "will,"  "may,"  "should,"  "project,"  "estimate," "anticipated,"  "scheduled,"  and  like  expressions,  and  the  negative  thereof.  These  statements  are  subject  to risks and uncertainties that could cause actual results  to  differ materially, including the  following risks: our financial  performance is dependent  on international  operations,  which  exposes  us  to various  risks;  any  failure  by  us  to manage our  widely dispersed operations could  adversely affect  our  business;  we  face  significant competition; future  sales  growth  depends, in part,  on our ability  to successfully  open new warehouse  clubs and grow  sales  in our existing locations;  we might not identify  in a timely  manner  or effectively  respond  to changes  in consumer  preferences  for  merchandise,  which  could adversely  affect  our relationship  with  members,  demand  for our products  and  market  share;  although  we  have  begun to offer  limited  online  shopping  to  our  members,  our  sales  could  be  adversely  affected  if  one  or  more  major international online retailers were  to enter our markets  or  if other competitors were  to  offer a superior online experience; our  profitability  is  vulnerable  to  cost  increases;  we  face  difficulties  in  the  shipment  of  and  risks  inherent  in  the importation  of, merchandise  to our  warehouse  clubs;  we  are exposed  to weather  and  other  natural  disaster  risks  that might  not  be adequately  compensated  by insurance;  general  economic  conditions  could  adversely  impact  our business in various  respects;  our failure  to maintain  our brand  and reputation  could  adversely  affect  our  results  of operations; we are  subject  to  risks  associated  with  possible  changes  in  our  relationships  with  third  parties  with  which  we  do business,  as  well  as  the  performance  of  such  third  parties;  we  rely  extensively  on  computer  systems  to  process transactions,  summarize  results  and  manage  our  business,  and  failure  to  adequately  maintain  our  systems  and disruptions  in  our  systems  could  harm  our  business  and  adversely  affect our results  of operations;  we could  be subject to additional tax liabilities  or subject  to reserves  on the recoverability  of  tax  receivables; a  few  of  our  stockholders own approximately  25.3%  of  our  voting  stock  as  of August  31,  2016,  which  may  make  it  difficult  to  complete  some corporate  transactions  without  their  support  and  may  impede a change  in  control;  failure  to  attract  and  retain qualified  employees,  increases  in  wage  and  benefit  costs,  changes  in  laws  and  other  labor  issues  could  materially adversely  affect  our  financial  performance;  we  face  the  possibility  of  operational  interruptions  related  to  union  work stoppages;  we  are  subject  to  volatility  in  foreign  currency  exchange  rates  and limits  on our ability  to convert  foreign currencies  into  U.S.  dollars;  we  face  the  risk  of  exposure  to  product  liability  claims, a product recall and adverse publicity;  any  failure  to  maintain  the  security  of  the  information  relating  to  our  company,  members,  employees  and vendors  that  we  hold,  whether  as a result  of  cybersecurity  attacks  on  our  information  systems,  failure  of  internal controls,  employee  negligence  or  malfeasance or  otherwise,  could  damage  our reputation  with  members,  employees, vendors and others, could disrupt our operations, could cause  us  to incur substantial additional costs and  to become subject to litigation and could materially adversely affect  our  operating results;  we  are  subject  to  payment related risks;  changes in accounting standards  and  assumptions,  projections,  estimates  and  judgments  by  management  related  to  complex accounting matters  could  significantly  affect  our  financial  condition  and  results  of  operations;  we  face  compliance risks  related  to our international operations; if remediation  costs  or hazardous  substance  contamination  levels  at certain properties  for  which  we  maintain  financial  responsibility  exceed  management's  current  expectations,  our  financial condition  and  results  of operations  could  be adversely  impacted.  The risks described above as well as the other risks detailed in the Company's U.S.  Securities and  Exchange Commission ("SEC") reports, including the  Company's Annual Report on Form 10-K  filed  for  the  fiscal  year  ended  August  31,  2016  filed  on  October  27,  2016  pursuant  to  the Securities  Exchange  Act  of 1934.  We  assume  no obligation  and  expressly  disclaim  any  duty  to update  any  forward-looking  statement  to reflect  events  or circumstances  after  the date  of this  presentation  or  to reflect  the occurrence  of unanticipated  events.

For further information, please contact John M. Heffner, Principal Financial Officer and Principal Accounting Officer (858) 404-8826.

 

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
















Three Months Ended


Six Months Ended



February 28,


February 29,


February 28,


February 29,



2017


2016


2017


2016

Revenues:













Net warehouse club sales


$

772,273


$

758,987


$

1,488,352


$

1,449,818

Export sales



8,172



6,549



18,906



14,781

Membership income



11,833



11,285



23,543



22,751

Other income



1,018



1,110



2,067



2,512

Total revenues



793,296



777,931



1,532,868



1,489,862

Operating expenses:













Cost of goods sold:













Net warehouse club



659,802



651,500



1,268,292



1,241,683

Export



7,761



6,225



17,942



14,057

Selling, general and administrative:













Warehouse club operations



67,784



64,763



133,210



125,603

General and administrative



18,212



16,184



35,014



31,647

Pre-opening expenses





71



(113)



376

Loss/(gain) on disposal of assets



335



52



742



65

Total operating expenses



753,894



738,795



1,455,087



1,413,431

Operating income



39,402



39,136



77,781



76,431

Other income (expense):













Interest income



549



280



1,051



458

Interest expense



(1,644)



(1,536)



(3,298)



(2,909)

Other income (expense), net



915



(552)



(13)



(796)

Total other income (expense)



(180)



(1,808)



(2,260)



(3,247)

Income before provision for income taxes and

income (loss) of unconsolidated affiliates



39,222



37,328



75,521



73,184

Provision for income taxes



(11,989)



(11,815)



(23,426)



(23,945)

Income (loss) of unconsolidated affiliates



(14)



429



(7)



375

Net income



27,219


$

25,942


$

52,088



49,614

Net income per share available for distribution:













Basic net income per share


$

0.90


$

0.85


$

1.72


$

1.63

Diluted net income per share


$

0.90


$

0.85


$

1.72


$

1.63

Shares used in per share computations:













Basic



30,004



29,914



29,993



29,902

Diluted



30,008



29,919



29,997



29,907

Dividends per share


$

0.70


$

0.70


$

0.70


$

0.70

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)










February 28,






2017


August 31,



(Unaudited)


2016

ASSETS







Current Assets:







Cash and cash equivalents


$

181,990


$

199,522

Short-term restricted cash



816



518

Receivables, net of allowance for doubtful accounts of $7 as of February 28, 2017 and August 31, 2016, respectively



6,384



7,464

Merchandise inventories



296,984



282,907

Prepaid expenses and other current assets



20,922



22,143

Total current assets



507,096



512,554

Long-term restricted cash



2,709



2,676

Property and equipment, net



535,479



473,045

Goodwill



35,692



35,637

Deferred tax assets



12,251



12,258

Other non-current assets (includes $3,332 and $3,224 as of February 28, 2017 and August 31, 2016, respectively, for the fair value of derivative instruments)



52,966



49,798

Investment in unconsolidated affiliates



10,759



10,767

Total Assets


$

1,156,952


$

1,096,735

LIABILITIES AND EQUITY







Current Liabilities:







Short-term borrowings


$

6,561


$

16,534

Accounts payable



265,756



267,173

Accrued salaries and benefits



17,181



19,606

Deferred membership income



22,921



20,920

Income taxes payable



5,933



4,226

Other accrued expenses (includes $87 and $110 as of February 28, 2017 and August 31, 2016, respectively, for the fair value of foreign currency forward contracts)



22,620



24,880

Dividends payable



10,643



Long-term debt, current portion



14,623



14,565

Total current liabilities



366,238



367,904

Deferred tax liability



1,693



1,760

Long-term portion of deferred rent



8,961



8,961

Long-term income taxes payable, net of current portion



891



970

Long-term debt, net of current portion



101,942



73,542

Other long-term liabilities (includes $665 and $1,514 for the fair value of derivative instruments and $4,868 and $4,013 for post employment plans as of February 28, 2017 and August 31, 2016, respectively)



5,533



5,527

Total Liabilities



485,258



458,664















Equity:







Common stock $0.0001 par value, 45,000,000 shares authorized; 31,264,387 and 31,237,658 shares issued and 30,404,645 and 30,401,307 shares outstanding (net of treasury shares) as of February 28, 2017 and August 31, 2016, respectively



3



3

Additional paid-in capital



417,776



412,369

Tax benefit from stock-based compensation



11,534



11,321

Accumulated other comprehensive loss



(104,811)



(103,951)

Retained earnings



381,864



351,060

Less: treasury stock at cost, 859,742 shares and 836,351 shares as of February 28, 2017 and August 31, 2016, respectively



(34,672)



(32,731)

Total Equity



671,694



638,071

Total Liabilities and Equity


$

1,156,952


$

1,096,735

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pricesmart-announces-second-quarter-results-of-operations-and-march-sales-300436158.html

SOURCE PriceSmart, Inc.

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