PriceSmart Announces Third Quarter Results of Operations and June Sales

Marketwired

SAN DIEGO, CA--(Marketwired - Jul 10, 2013) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the third quarter of fiscal year 2013 which ended on May 31, 2013.

For the third quarter of fiscal year 2013, net warehouse club sales increased 12.3% to $555.8 million from $494.7 million in the third quarter of fiscal year 2012. Total revenues for the third quarter of fiscal year 2013 were $571.7 million compared to $505.3 million in the comparable period of the prior year. The Company had 31 warehouse clubs in operation as of May 2013 compared to 29 warehouse clubs in operation as of May 2012.

The Company recorded operating income during the quarter of $28.7 million, as compared to operating income of $25.4 million in the prior year. Net income was $18.5 million, or $0.61 per diluted share, in the third quarter of fiscal year 2013 as compared to $15.7 million, or $0.52 per diluted share, in the third quarter of fiscal year 2012.

For the first nine months of fiscal year 2013, net warehouse club sales increased 11.4% to $1,671.3 million from $1,500.6 million in the first nine months of fiscal year 2012. Total revenues for the first nine months of the fiscal year 2013 increased 12.0% to $1,714.4 million from $1,531.2 million in the same period of the prior year. For the first nine months of fiscal year 2013, the Company recorded operating income of $95.0 million and net income of $63.4 million, or $2.09 per diluted share. During the nine month period in fiscal year 2012, the Company recorded operating income of $80.0 million and net income of $49.9 million, or $1.66 per diluted share.

The Company also announced that for the month of June 2013, net warehouse club sales increased 14.2% to $186.9 million, from $163.7 million in June a year earlier. For the ten months ended June 30, 2013, net warehouse club sales increased 11.7% to $1,858.1 million, from $1,664.2 million for the ten months ended June 30, 2012. There were 31 warehouse clubs in operation at the end of June 2013 and 29 warehouse clubs in operation at the end of June 2012.

For the four weeks ended June 30, 2013, comparable warehouse sales for the 29 warehouse clubs open at least 13 1/2 full months increased 9.7%, compared to the same four-week period last year. For the forty-three week period ended June 30, 2013, comparable warehouse sales increased 9.0%, 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 Thursday, July 11, 2013, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (888) 455-2260 toll free, or (719) 457-2628 for international callers and entering participant code 9596291. A digital replay will be available through July 31, 2013, 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 9596291.

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 31 warehouse clubs in 12 countries and one U.S. territory (five in Costa Rica; four each in Panama and Trinidad; three each in Guatemala, the Dominican Republic and Colombia; two each in El Salvador, and Honduras; 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 could be dependent upon the Company acquiring suitable sites for additional warehouse clubs; the Company faces difficulties in the shipment of, and risks inherent in the acquisition and 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; a few of the Company's stockholders own nearly 29.7% 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; a determination that the Company's long-lived or intangible assets have been impaired could adversely affect the Company's future results of operations and financial position; although the Company takes steps to continuously review, enhance, and implement improvements to its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; 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 for the fiscal year ended August 31, 2012, filed pursuant to the Securities Exchange Act of 1934 on October 30, 2012. 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,
2013

(Unaudited)
    August 31,
2012
 
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 92,408     $ 91,248  
Short-term restricted cash     4,386       1,241  
Receivables, net of allowance for doubtful accounts of $5 and $1 as of May 31, 2013 and August 31, 2012, respectively     3,352       3,361  
Merchandise inventories     220,923       201,043  
Deferred tax assets - current     6,265       5,619  
Prepaid expenses and other current assets     22,853       19,067  
Total current assets     350,187       321,579  
Long-term restricted cash     34,576       36,505  
Property and equipment, net     329,914       299,567  
Goodwill     36,622       36,886  
Deferred tax assets - long term     13,657       14,835  
Other non-current assets (includes $987 as of May 31, 2013 for the fair value of derivative instruments)     19,431       18,781  
Investment in unconsolidated affiliates     8,107       7,559  
Total Assets   $ 792,494     $ 735,712  
LIABILITIES AND EQUITY                
Current Liabilities:                
Accounts payable   $ 175,037     $ 173,198  
Accrued salaries and benefits     16,267       14,729  
Deferred membership income     16,568       13,747  
Income taxes payable     7,208       8,193  
Other accrued expenses     18,877       17,515  
Dividends payable     9,065       --  
Long-term debt, current portion     7,784       7,237  
Deferred tax liability - current     188       122  
Total current liabilities     250,994       234,741  
Deferred tax liability - long-term     2,465       2,191  
Long-term portion of deferred rent     4,423       4,336  
Long-term income taxes payable, net of current portion     2,166       2,512  
Long-term debt, net of current portion     68,068       71,422  
Other long-term liabilities (includes $212 and $1,200 for the fair value of derivative instruments and $466 and $396 for the defined benefit plans as of May 31, 2013 and August 31, 2012, respectively)     678       1,596  
Total liabilities     328,794       316,798  
Equity:                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,920,998 and 30,855,651 shares issued and 30,233,138 and 30,210,255 shares outstanding (net of treasury shares) as of May 31, 2013 and August 31, 2012, respectively     3       3  
Additional paid-in capital     389,133       384,154  
Tax benefit from stock-based compensation     7,951       6,680  
Accumulated other comprehensive loss     (36,656 )     (33,182 )
Retained earnings     123,035       77,739  
Less: treasury stock at cost; 687,860 and 645,426 as of May 31, 2013 and August 31, 2012, respectively     (19,766 )     (16,480 )
Total equity     463,700       418,914  
Total Liabilities and Equity   $ 792,494     $ 735,712  
                 
                 
   
PRICESMART, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(UNAUDITED--AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)  
   
    Three Months Ended
May 31,
    Nine Months Ended
May 31,
 
    2013     2012     2013     2012  
Revenues:                                
Net warehouse club sales   $ 555,815     $ 494,747     $ 1,671,269     $ 1,500,558  
Export sales     6,224       2,768       15,620       8,476  
Membership income     8,774       6,944       24,773       19,668  
Other income     909       869       2,756       2,483  
Total revenues     571,722       505,328       1,714,418       1,531,185  
Operating expenses:                                
Cost of goods sold:                                
Net warehouse club     475,727       420,724       1,425,396       1,279,097  
Export     5,907       2,622       14,728       8,075  
Selling, general and administrative:                                
Warehouse club operations     49,421       45,540       143,476       133,193  
General and administrative     11,404       10,940       34,450       30,559  
Pre-opening expenses     525       94       1,409       255  
Total operating expenses     542,984       479,920       1,619,459       1,451,179  
Operating income     28,738       25,408       94,959       80,006  
Other income (expense):                                
Interest income     338       279       1,078       668  
Interest expense     (427 )     (1,344 )     (2,951 )     (3,915 )
Other income (expense), net     (1,034 )     (538 )     (1,404 )     (975 )
Total other expense     (1,123 )     (1,603 )     (3,277 )     (4,222 )
Income from continuing operations before provision for income taxes and income (loss) of unconsolidated affiliates     27,615       23,805       91,682       75,784  
Provision for income taxes     (9,082 )     (8,078 )     (28,254 )     (25,854 )
Income (loss) of unconsolidated affiliates     6       (19 )     (2 )     (9 )
Income from continuing operations     18,539       15,708       63,426       49,921  
Income (loss) from discontinued operations, net of tax     --       (2 )     --       (6 )
Net income   $ 18,539     $ 15,706     $ 63,426     $ 49,915  
Net income per share available for distribution:                                
Basic net income per share from continuing operations   $ 0.61     $ 0.52     $ 2.09     $ 1.66  
Basic net income (loss) per share from discontinued operations, net of tax   $ --     $ --     $ --     $ --  
Basic net income per share   $ 0.61     $ 0.52     $ 2.09     $ 1.66  
Diluted net income per share from continuing operations   $ 0.61     $ 0.52     $ 2.09     $ 1.66  
Diluted net income (loss) per share from discontinued operations, net of tax   $ --     $ --     $ --     $ --  
Diluted net income per share   $ 0.61     $ 0.52     $ 2.09     $ 1.66  
Shares used in per share computations:                                
Basic     29,683       29,584       29,634       29,543  
Diluted     29,692       29,595       29,644       29,555  
Dividends per share   $ --     $ --     $ 0.60     $ 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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