PriceSmart Announces Third Quarter Results of Operations and June Sales

Marketwired

SAN DIEGO, CA--(Marketwired - Jul 10, 2014) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the third quarter of fiscal year 2014 which ended on May 31, 2014.

For the third quarter of fiscal year 2014, net warehouse club sales increased 7.6% to $597.9 million from $555.8 million in the third quarter of fiscal year 2013. Total revenues for the third quarter of fiscal year 2014 were $615.0 million compared to $571.7 million in the comparable period of the prior year. The Company had 33 warehouse clubs in operation as of May 2014 compared to 31 warehouse clubs in operation as of May 2013.

The Company recorded operating income during the quarter of $31.2 million, as compared to operating income of $28.5 million in the prior year. Net income was $21.3 million, or $0.70 per diluted share, in the third quarter of fiscal year 2014 as compared to $18.5 million, or $0.61 per diluted share, in the third quarter of fiscal year 2013.

For the first nine months of fiscal year 2014, net warehouse club sales increased 10.4% to $1,844.7 million from $1,671.3 million in the first nine months of fiscal year 2013. Total revenues for the first nine months of the fiscal year 2014 increased 10.5% to $1,895.0 million from $1,714.4 million in the same period of the prior year. For the first nine months of fiscal year 2014, the Company recorded operating income of $102.9 million and net income of $71.0 million, or $2.34 per diluted share. During the nine month period in fiscal year 2013, the Company recorded operating income of $94.6 million and net income of $63.4 million, or $2.09 per diluted share.

The Company also announced that for the month of June 2014, net warehouse club sales increased 4.0% to $194.3 million, from $186.9 million in June a year earlier. For the ten months ended June 30, 2014, net warehouse club sales increased 9.7% to $2,039.0 million, from $1,858.1 million for the ten months ended June 30, 2013. There were 33 warehouse clubs in operation at the end of June 2014 and 31 warehouse clubs in operation at the end of June 2013.

For the four weeks ended June 29, 2014, comparable warehouse sales for the 30 warehouse clubs open at least 13 1/2 full months increased 1.0%, compared to the same four-week period last year. For the forty-three week period ended June 29, 2014, comparable warehouse sales increased 5.4%, compared to the comparable forty-three week period a year ago.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, July 11, 2014, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (877) 719-9789 toll free, or (719) 325-4784 for international callers and entering participant code 9238757. A digital replay will be available through July 31, 2014, following the conclusion of the call by dialing (888) 203-1112 for domestic callers, or (719) 457-0820 for international callers, and entering replay passcode 9238757.

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 33 warehouse clubs in 12 countries and one U.S. territory (six in Costa Rica; four each in Panama and Trinidad; three each in Guatemala, the Dominican Republic, Honduras and Colombia; two in El Salvador; and one each in Aruba, Barbados, Jamaica, Nicaragua 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 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: the Company's financial performance is dependent on international operations, which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect its business; the Company faces significant competition; future sales growth depends, in part, on the Company's ability to successfully open new warehouse clubs; the Company might not identify in a timely manner or effectively respond to changes in consumer trends and changes in consumer preferences for merchandise and shopping modalities, which could adversely affect its relationship with members, demand for its products and market share; the Company faces difficulties in the shipment of, and risks inherent in the importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business and/or from which the Company acquires merchandise; the Company relies extensively on computer systems to process transactions, summarize results and manage its business and a failure to adequately maintain the Company's systems and disruptions in its systems could harm its business and adversely affect its results of operations; the Company could be subject to additional tax liabilities; a few of the Company's stockholders own approximately 28.1% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; potential future impairments of long lived assets could adversely affect the Company's future results of operations and financial position; write-offs of goodwill and other intangible assets could adversely affect the Company's future results of operations and financial position; the Company faces increased public company compliance risks and compliance risks related to the Company's international operations; the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; if remediation costs or hazardous substance contamination levels at certain properties for which the Company maintains financial responsibility exceed management's current expectations, the Company's 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, 2013 filed on October 30, 2013 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.

   
PRICESMART, INC.  
CONSOLIDATED BALANCE SHEETS  
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)  
   
    May 31,
 2014
    August 31,
 2013
 
    (Unaudited)    
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 123,759     $ 121,874  
Short-term restricted cash     2,356       5,984  
Receivables, net of allowance for doubtful accounts of $2 and $0 as of May 31, 2014 and August 31, 2013, respectively     4,507       3,130  
Merchandise inventories     230,693       217,413  
Deferred tax assets - current     6,075       6,290  
Prepaid expenses and other current assets (includes $378 and $0 as of May 31, 2014 and August 31, 2013, respectively, for the fair value of derivative instruments)     23,756       20,890  
Total current assets     391,146       375,581  
Long-term restricted cash     26,923       34,775  
Property and equipment, net     396,749       338,478  
Goodwill     36,176       36,364  
Deferred tax assets - long term     12,862       12,871  
Other non-current assets (includes $729 and $1,505 as of May 31, 2014 and August 31, 2013, respectively, for the fair value of derivative instruments)     25,734       19,866  
Investment in unconsolidated affiliates     8,861       8,104  
Total Assets   $ 898,451     $ 826,039  
LIABILITIES AND EQUITY                
Current Liabilities:                
Accounts payable   $ 197,671     $ 199,425  
Accrued salaries and benefits     18,041       17,862  
Deferred membership income     17,770       16,528  
Income taxes payable     6,867       8,059  
Other accrued expenses     18,696       20,136  
Dividends payable     10,593       --  
Long-term debt, current portion     15,742       12,757  
Deferred tax liability - current     189       111  
Total current liabilities     285,569       274,878  
Deferred tax liability - long-term     2,716       2,622  
Long-term portion of deferred rent     5,116       4,440  
Long-term income taxes payable, net of current portion     2,001       2,184  
Long-term debt, net of current portion     78,353       60,263  
Other long-term liabilities (includes $104 and $14 for the fair value of derivative instruments and $664 and $589 for the defined benefit plan as of May 31, 2014 and August 31, 2013, respectively)     768       603  
Total liabilities     374,523       344,990  
Equity:                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,948,290 and 30,924,392 shares issued and 30,209,596 and 30,234,506 shares outstanding (net of treasury shares) as of May 31, 2014 and August 31, 2013, respectively     3       3  
Preferred stock $0.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding as of May 31, 2014 and August 31, 2013     --       --  
Additional paid-in capital     395,569       390,581  
Tax benefit from stock-based compensation     9,489       8,016  
Accumulated other comprehensive loss     (50,323 )     (41,475 )
Retained earnings     193,738       143,871  
Less: treasury stock at cost; 738,694 and 689,886 shares as of May 31, 2014 and August 31, 2013, respectively     (24,548 )     (19,947 )
Total equity     523,928       481,049  
Total Liabilities and Equity   $ 898,451     $ 826,039  
                 
   
PRICESMART, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(UNAUDITED-AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)  
   
    Three Months Ended
May 31,
    Nine Months Ended
May 31,
 
    2014     2013     2014     2013  
Revenues:                                
Net warehouse club sales   $ 597,885     $ 555,815     $ 1,844,746     $ 1,671,269  
Export sales     6,577       6,224       19,062       15,620  
Membership income     9,552       8,774       28,301       24,773  
Other income     1,023       909       2,903       2,756  
Total revenues     615,037       571,722       1,895,012       1,714,418  
Operating expenses:                                
Cost of goods sold:                                
Net warehouse club     509,684       475,727       1,575,623       1,425,396  
Export     6,246       5,907       18,110       14,728  
Selling, general and administrative:                                
Warehouse club operations     53,617       49,421       158,592       143,476  
General and administrative     12,604       11,404       37,065       34,450  
Pre-opening expenses     1,125       525       1,939       1,409  
Loss/(gain) on disposal of assets     558       249       746       353  
Total operating expenses     583,834       543,233       1,792,075       1,619,812  
Operating income     31,203       28,489       102,937       94,606  
Other income (expense):                                
Interest income     202       338       576       1,078  
Interest expense     (1,043 )     (427 )     (2,967 )     (2,951 )
Other income (expense), net     489       (785 )     1,512       (1,051 )
Total other expense     (352 )     (874 )     (879 )     (2,924 )
Income before provision for income taxes and income (loss) of unconsolidated affiliates     30,851       27,615       102,058       91,682  
Provision for income taxes     (9,534 )     (9,082 )     (31,035 )     (28,254 )
Income (loss) of unconsolidated affiliates     3       6       7       (2 )
Net income   $ 21,320     $ 18,539     $ 71,030     $ 63,426  
Net income per share available for distribution:                                
Basic net income per share   $ 0.70     $ 0.61     $ 2.35     $ 2.09  
Diluted net income per share   $ 0.70     $ 0.61     $ 2.34     $ 2.09  
Shares used in per share computations:                                
Basic     29,784       29,683       29,733       29,634  
Diluted     29,792       29,692       29,743       29,644  
Dividends per share   $ --     $ --     $ 0.70     $ 0.60  
                                 
Contact:
For further information, please contact
John M. Heffner
Principal Financial Officer and Principal Accounting Officer
(858) 404-8826
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