EX-99.1 2 psmt-20171026xex99_1.htm EX-99.1 Earnings Release Q4FY17

 





PriceSmart Announces Fourth Quarter and

Fiscal Year Results of Operations



San Diego, CA (October 26, 2017) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the fourth quarter and the twelve months of fiscal year 2017 which ended on August 31, 2017.



For the fourth quarter of fiscal year 2017, net warehouse club sales increased 3.6% to $711.0 million from $686.4 million in the fourth quarter of fiscal year 2016. Total revenues for the fourth quarter of fiscal year 2017 were $733.5 million compared to $711.1 million in the comparable period of the prior year. The Company had 39 warehouse clubs in operation as of August 2017 compared to 38 warehouse clubs in operation as of August 2016.



The Company recorded operating income during the quarter of $30.8 million, as compared to operating income of $32.8 million in the prior year. Net income was $19.8 million, or $0.64 per diluted share, in the fourth quarter of fiscal year 2017 as compared to $22.3 million, or $0.74 per diluted share, in the fourth quarter of fiscal year 2016.



For the twelve months ended August 31, 2017, net warehouse club sales increased 3.2% to $2.9 billion, from $2.8 billion for the twelve months ended August 31, 2016.  Total revenues for the twelve months ended August 31, 2017 increased 3.1% to $3.0 billion from $2.9 billion in the same period of the prior year. For the twelve months ended August 31, 2017, the Company recorded operating income of $136.2 million and net income of $90.7 million, or $2.98 per diluted share. During the twelve months ended August 31, 2016, the Company recorded operating income of $136.7 million and net income of $88.7 million, or $2.92 per diluted share.



The Company filed its Annual Report on Form 10-K for the year ended August 31, 2017 on October 26, 2017.



PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00a.m. Pacific time) on Friday, October 27, 2017, 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 through November 3, 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 passcode 10112016.



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 40 warehouse clubs in 12 countries and one U.S. territory (seven each in Colombia and 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 offer limited online shopping to our members in certain markets, 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;  failure to grow our e-commerce business through the integration of physical and digital retail or otherwise, and the cost of our increasing e-commerce investments, may materially adversely affect our market position, net sales and financial performance; 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; negative 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 face the risk of exposure to product liability claims, a product recall and adverse publicity; 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 could be subject to additional tax liabilities or subject to reserves on the recoverability of tax receivables; 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 compliance risks related to our international operations; we rely extensively on computer systems to process

 

 

 

transactions, summarize results and manage our business. Failure to adequately maintain our systems and disruptions in our systems could harm our business and adversely affect our results of operations; we may experience difficulties implementing our new global enterprise resource planning system; any failure by us to maintain the security of the information that we hold relating to our company, members, employees and vendors, 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; 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; 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; a few of our stockholders own approximately 25.3% of our voting stock as of August 31, 2017, which may make it difficult to complete some corporate transactions without their support and may impede a change in control.    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, 2017 filed on October 26, 2017 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

 

Twelve Months Ended



 

August 31,

 

August 31,



 

2017

 

2016

 

2017

 

2016

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Net warehouse club sales

 

$

 711,011 

 

$

 686,375 

 

$

 2,910,062 

 

$

 2,820,740 

Export sales

 

 

 8,863 

 

 

 11,941 

 

 

 34,244 

 

 

 33,813 

Membership income

 

 

 12,162 

 

 

 11,555 

 

 

 47,743 

 

 

 45,781 

Other income

 

 

 1,466 

 

 

 1,181 

 

 

 4,579 

 

 

 4,842 

Total revenues

 

 

 733,502 

 

 

 711,052 

 

 

 2,996,628 

 

 

 2,905,176 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold:

 

 

 

 

 

 

 

 

 

 

 

 

Net warehouse club

 

 

 607,399 

 

 

 585,183 

 

 

 2,487,146 

 

 

 2,417,366 

Export

 

 

 8,521 

 

 

 11,461 

 

 

 32,606 

 

 

 32,260 

Selling, general and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse club operations

 

 

 67,665 

 

 

 63,782 

 

 

 268,629 

 

 

 252,130 

General and administrative

 

 

 18,092 

 

 

 16,258 

 

 

 70,013 

 

 

 64,344 

Pre-opening expenses

 

 

 855 

 

 

 802 

 

 

 44 

 

 

 1,191 

Loss/(gain) on disposal of assets

 

 

 148 

 

 

 763 

 

 

 1,961 

 

 

 1,162 

Total operating expenses

 

 

 702,680 

 

 

 678,249 

 

 

 2,860,399 

 

 

 2,768,453 

Operating income

 

 

 30,822 

 

 

 32,803 

 

 

 136,229 

 

 

 136,723 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 365 

 

 

 527 

 

 

 1,809 

 

 

 1,307 

Interest expense

 

 

 (1,651)

 

 

 (1,411)

 

 

 (6,777)

 

 

 (5,891)

Other income (expense), net

 

 

 394 

 

 

 119 

 

 

 1,482 

 

 

 (899)

Total other income (expense)

 

 

 (892)

 

 

 (765)

 

 

 (3,486)

 

 

 (5,483)

Income before provision for income taxes and
income (loss) of unconsolidated affiliates

 

 

 29,930 

 

 

 32,038 

 

 

 132,743 

 

 

 131,240 

Provision for income taxes

 

 

 (10,133)

 

 

 (9,736)

 

 

 (42,018)

 

 

 (42,849)

Income (loss) of unconsolidated affiliates

 

 

 1 

 

 

 (30)

 

 

 (1)

 

 

 332 

Net income

 

$

 19,798 

 

$

 22,272 

 

$

 90,724 

 

$

 88,723 

Net income per share available for distribution:

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

 0.64 

 

$

 0.74 

 

$

 2.98 

 

$

 2.92 

Diluted net income per share

 

$

 0.64 

 

$

 0.74 

 

$

 2.98 

 

$

 2.92 

Shares used in per share computations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 30,043 

 

 

 29,956 

 

 

 30,020 

 

 

 29,928 

Diluted

 

 

 30,044 

 

 

 29,961 

 

 

 30,023 

 

 

 29,933 

Dividends per share

 

$

 0.35 

 

$

 0.35 

 

$

 0.70 

 

$

 0.70 











 

 

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)











 

 

 

 

 

 



 

 

 

 

 

 



 

August 31,



 

2017

 

2016

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

 162,434 

 

$

 199,522 

Short-term restricted cash

 

 

 460 

 

 

 518 

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

 

 

 6,460 

 

 

 7,464 

Merchandise inventories

 

 

 310,946 

 

 

 282,907 

Prepaid expenses and other current assets

 

 

 30,070 

 

 

 22,143 

Total current assets

 

 

 510,370 

 

 

 512,554 

Long-term restricted cash

 

 

 2,818 

 

 

 2,676 

Property and equipment, net

 

 

 557,829 

 

 

 473,045 

Goodwill

 

 

 35,642 

 

 

 35,637 

Deferred tax assets

 

 

 15,412 

 

 

 12,258 

Other non-current assets (includes $2,547 and $3,224 as of August 31, 2017 and August 31, 2016, respectively, for the fair value of derivative instruments)

 

 

 44,678 

 

 

 49,798 

Investment in unconsolidated affiliates

 

 

 10,765 

 

 

 10,767 

Total Assets

 

$

 1,177,514 

 

$

 1,096,735 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Short-term borrowings

 

$

 —

 

$

 16,534 

Accounts payable

 

 

 272,248 

 

 

 267,173 

Accrued salaries and benefits

 

 

 19,151 

 

 

 19,606 

Deferred membership income

 

 

 22,100 

 

 

 20,920 

Income taxes payable

 

 

 5,044 

 

 

 4,226 

Other accrued expenses (includes $0 and $110 as of August 31, 2017 and August 31, 2016, respectively, for the fair value of foreign currency forward contracts)

 

 

 26,483 

 

 

 24,880 

Long-term debt, current portion

 

 

 18,358 

 

 

 14,565 

Total current liabilities

 

 

 363,384 

 

 

 367,904 

Deferred tax liability

 

 

 1,812 

 

 

 1,760 

Long-term portion of deferred rent

 

 

 8,914 

 

 

 8,961 

Long-term income taxes payable, net of current portion

 

 

 909 

 

 

 970 

Long-term debt, net of current portion

 

 

 87,939 

 

 

 73,542 

Other long-term liabilities (includes $682 and $1,514 for the fair value of derivative instruments and $5,051 and $4,013 for post employment plans as of August 31, 2017 and August 31, 2016, respectively)

 

 

 5,789 

 

 

 5,527 

Total Liabilities

 

 

 468,747 

 

 

 458,664 











 

 

 

 

 

 



 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common stock $0.0001 par value, 45,000,000 shares authorized; 31,275,727 and 31,237,658 shares issued and 30,400,742 and 30,401,307 shares outstanding (net of treasury shares) as of August 31, 2017 and August 31, 2016, respectively

 

 

 3 

 

 

 3 

Additional paid-in capital

 

 

 422,762 

 

 

 412,369 

Tax benefit from stock-based compensation

 

 

 11,486 

 

 

 11,321 

Accumulated other comprehensive loss

 

 

 (110,059)

 

 

 (103,951)

Retained earnings

 

 

 420,499 

 

 

 351,060 

Less: treasury stock at cost, 874,985 and 836,531 shares as of August 31, 2017 and August 31, 2016, respectively

 

 

 (35,924)

 

 

 (32,731)

Total Equity

 

 

 708,767 

 

 

 638,071 

Total Liabilities and Equity

 

$

 1,177,514 

 

$

 1,096,735