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PriceSmart Announces Fiscal 2020 First Quarter Operating Results

SAN DIEGO, Jan. 9, 2020 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT), operator of 45 warehouse clubs in 12 countries and one U.S. territory, today announced its results of operations for the first quarter of fiscal year 2020 which ended on November 30, 2019.

PriceSmart, Inc.

Total revenues for the first quarter of fiscal year 2020 increased 4.1% to $811.9 million compared to $779.6 million in the first quarter of the prior year. For the first quarter of fiscal year 2020, net merchandise sales increased 4.2% to $778.7 million from $747.4 million in the first quarter of fiscal year 2019. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $12.2 million or 1.6% of net merchandise sales.

The Company had 45 clubs in operation as of November 30, 2019, compared to 41 warehouse clubs in operation as of November 30, 2018.

For the thirteen-week period ended December 1, 2019, comparable net merchandise sales increased 1.0% compared to the same thirteen-week period a year ago. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $11.3 million, or 1.5% of comparable net merchandise sales.

The Company recorded operating income for the first quarter of fiscal year 2020 of $30.7 million, as compared to operating income of $24.7 million in the prior year. Net income attributable to PriceSmart was $19.7 million, or $0.64 per diluted share, in the first quarter of fiscal year 2020. Net income in the first quarter of fiscal year 2019 was $14.6 million, or $0.48 per diluted share. The first quarter fiscal 2019 earnings were negatively impacted by $3.8 million or $0.13 per share from the separation related costs associated with the resignation of our former Chief Executive Officer by mutual agreement with the Company's board in November 2018.

The Company reports comparable net merchandise sales on a "same week" basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday.  The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month and quarter that is used for financial reporting purposes.  This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as we experience higher merchandise club sales on the weekends.  Each of the warehouse clubs used in the calculations was open for at least 13 ½ calendar months before its results for the current period were compared with its results for the prior period. 

The term "currency exchange rates" refers to the currency exchange rates we use to convert net merchandise and comparable net merchandise sales for all countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of changes in currency exchange rates as the difference between current period activities translated using the current period's currency exchange rates, and the comparable prior year period's currency exchange rates. The disclosure of the effects of currency exchange rate fluctuations on the Company's results permits investors to understand better our underlying performance.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, January 10, 2020, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (855) 209-8211 toll free, or (412) 317-5214 for international callers and asking to join the PriceSmart, Inc. call. A digital replay will be available following the conclusion of the call through January 17, 2020 by dialing (877) 344-7529 for domestic callers, or (412) 317-0088 for international callers, and entering replay passcode 10137166.

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 operates 45 warehouse clubs in 12 countries and one U.S. territory (seven each in Colombia, Costa Rica, and Panama; five in the Dominican Republic, four in Trinidad and Guatemala; three in Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands). The Company is currently constructing and plans to open warehouse clubs in Liberia, Costa Rica, in the summer of 2020; and Bogota, Colombia, in the fall of 2020. The Company also plans to build new warehouse clubs in Portmore, Jamaica and Bucaramanga, Colombia and open them in the fall of 2020. Once these four new clubs are open, the Company will operate 49 warehouse clubs.  PriceSmart is investing in technology to increase efficiencies and to enable omni-channel capabilities, including e-commerce, to enhance the member experience. PriceSmart also operates a legacy (marketplace and casillero) business through the Aeropost brand in 38 countries in Latin America and the Caribbean, many of which overlap with markets where PriceSmart operates its warehouse clubs.

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, but not limited to: adverse changes in economic conditions in the Company's markets, natural disasters, compliance risks, volatility in currency exchange rates, competition, consumer and small business spending patterns, political instability, increased costs associated with the integration of online commerce with our traditional business, whether the Company can successfully execute strategic initiatives, breaches of security or privacy of member or business information, cost increases from product and service providers, interruption of supply chains, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed under the captions "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended August 31, 2019 filed with the United States Securities and Exchange Commission ("SEC") on October 29, 2019, as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law.

For further information, please contact Michael McCleary, SVP and Interim Chief Financial Officer at (858) 404-8826 or send an email to ir@pricesmart.com.

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)










Three Months Ended



November 30,


November 30,



2019


2018

Revenues:







Net merchandise sales


$

778,728


$

747,443

Export sales



8,274



8,189

Membership income



13,746



12,740

Other revenue and income



11,193



11,265

Total revenues



811,941



779,637

Operating expenses:







Cost of goods sold:







Net merchandise sales



662,724



641,155

Export sales



7,971



7,778

Non-merchandise



4,251



4,247

Selling, general and administrative:







Warehouse club and other operations



79,373



74,222

General and administrative



25,884



27,335

Pre-opening expenses



953



15

Loss on disposal of assets



71



215

Total operating expenses



781,227



754,967

Operating income



30,714



24,670

Other income (expense):







Interest income



293



391

Interest expense



(862)



(1,033)

Other expense, net



(985)



(1,819)

Total other income (expense)



(1,554)



(2,461)

Income before provision for income taxes and

loss of unconsolidated affiliates



29,160



22,209

Provision for income taxes



(9,403)



(7,540)

Loss of unconsolidated affiliates



(48)



(24)

Net income



19,709



14,645

Less: net (income) loss attributable to noncontrolling interest



19



(33)

Net income attributable to PriceSmart, Inc.


$

19,728


$

14,612

Net income attributable to PriceSmart, Inc. per share available for distribution:







Basic


$

0.64


$

0.48

Diluted


$

0.64


$

0.48

Shares used in per share computations:







Basic



30,277



30,172

Diluted



30,284



30,189

Dividends per share


$


$

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)










November 30,






2019


August 31,



(Unaudited)


2019

ASSETS







Current Assets:







Cash and cash equivalents


$

111,359


$

102,653

Short-term restricted cash



65



54

Short-term investments



25,098



17,045

Receivables, net of allowance for doubtful accounts of $125 as of November 30, 2019 and $144 as of August 31, 2019, respectively



10,293



9,872

Merchandise inventories



388,072



331,273

Prepaid expenses and other current assets (includes $2,747 and $2,736 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of derivative instruments)



36,990



30,999

Total current assets



571,877



491,896

Long-term restricted cash



3,689



3,529

Property and equipment, net



693,275



671,151

Operating lease right-of-use assets, net



118,203



Goodwill



45,425



46,101

Other intangibles, net



11,977



12,576

Deferred tax assets



17,790



15,474

Other non-current assets (includes $436 and $0 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of derivative instruments)



51,226



44,987

Investment in unconsolidated affiliates



10,649



10,697

Total Assets


$

1,524,111


$

1,296,411

LIABILITIES AND EQUITY







Current Liabilities:







Short-term borrowings


$

23,018


$

7,540

Accounts payable



328,585



286,219

Accrued salaries and benefits



24,131



25,401

Deferred income



25,147



25,340

Income taxes payable



6,640



4,637

Other accrued expenses and other current liabilities (includes $127 and $0 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of foreign currency forward contracts)



40,519



32,442

Operating lease liabilities, current portion



8,310



Long-term debt, current portion



13,726



25,875

Total current liabilities



470,076



407,454

Deferred tax liability



1,829



2,015

Long-term portion of deferred rent





11,198

Long-term income taxes payable, net of current portion



5,346



5,069

Long-term operating lease liabilities



121,698



Long-term debt, net of current portion



98,084



63,711

Other long-term liabilities (includes $3,259 and $2,910 for the fair value of derivative instruments and $5,675 and $5,421 for post-employment plans as of November 30, 2019 and August 31, 2019, respectively)



9,306



8,685

Total Liabilities



706,339



498,132















Stockholders' Equity:







Common stock $0.0001 par value, 45,000,000 shares authorized; 31,474,818 and 31,461,359 shares issued and 30,612,511 and 30,538,788 shares outstanding (net of treasury shares) as of November 30, 2019 and August 31, 2019, respectively



3



3

Additional paid-in capital



440,756



443,084

Tax benefit from stock-based compensation



11,486



11,486

Accumulated other comprehensive loss



(147,524)



(144,339)

Retained earnings



545,532



525,804

Less: treasury stock at cost, 862,307 shares as of November 30, 2019 and 924,332 shares as of August 31, 2019



(33,424)



(38,687)

Total stockholders' equity attributable to PriceSmart, Inc. stockholders



816,829



797,351

Noncontrolling interest in consolidated subsidiaries



943



928

Total stockholders' equity 



817,772



798,279

Total Liabilities and Equity


$

1,524,111


$

1,296,411

 

Cision

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SOURCE PriceSmart, Inc.