PriceSmart Announces Fiscal 2021 Third Quarter Operating Results

Rhea-AI Summary

PriceSmart, Inc. (NASDAQ: PSMT) reported strong fiscal Q3 2021 results, with total revenues rising 11.9% to $895.3 million, and net merchandise sales up 11.6% to $857.5 million. Operating income increased to $36.0 million, while net income grew to $22.5 million, or $0.73 per diluted share. The membership renewal rate reached 87.6%, exceeding pre-COVID levels. Plans are underway to open new warehouse clubs in Guatemala and Colombia in fall 2021 and Jamaica in spring 2022.

Positive

• Total revenues increased by 11.9% to $895.3 million.
• Net merchandise sales grew 11.6% to $857.5 million.
• Operating income rose to $36.0 million from $24.0 million.
• Net income increased to $22.5 million, or $0.73 per diluted share.
• Membership renewal rate reached 87.6%, surpassing pre-COVID levels.
• Plans to open three new warehouse clubs by spring 2022.

Negative

• Foreign currency exchange fluctuations negatively impacted net merchandise sales by $11.6 million (1.6%).
• Foreign currency exchange fluctuations negatively affected comparable net merchandise sales by $11.8 million (1.5%).

SAN DIEGO, July 8, 2021 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT), operator of 47 warehouse clubs in 12 countries and one U.S. territory, today announced its results of operations for the fiscal third quarter of 2021 which ended on May 31, 2021.

Comments from Sherry S. Bahrambeygui, Chief Executive Officer:

"Operational efficiencies, digital capabilities, optionality for our supply chain, and we believe, the trust of our employees and Members to do our best to anticipate their needs and keep them safe, have contributed to our strong performance for the third quarter. Our total and comparable sales grew in the third quarter of fiscal year 2021, 11.6% and 8.8%, respectively, versus the same period last year. We continue to navigate through significant challenges in several of our markets, including rising COVID cases, club closures and restrictions, social unrest and economic pressures. However, our team is unwavering in its commitment to excel and deliver great value to our Members, regardless of the circumstances. 

"Efforts to expand Membership benefits continue, such as our Wellness initiatives in Optical, Pharmacy and Audiology services. Our investments in technology and our omni-channel initiatives have enabled us to further enhance services, benefits, and convenience for our Members, among other things. Our trailing 12-month Membership renewal rate is 87.6% - higher than its pre-COVID level - and our Membership base is rapidly approaching its peak pre-COVID level.

"We are on target with plans to open new warehouse clubs in Guatemala City, Guatemala and Bucaramanga, Colombia in the fall of 2021, and in Portmore, Jamaica in the spring of 2022.

"Our team has innovated, elevated performance and delivered results in unprecedented ways. This has inspired us all for the future of our company."

Third Quarter Financial Results

Total revenues for the third quarter of fiscal year 2021 increased 11.9% to $895.3 million compared to $799.9 million in the comparable period of the prior year. For the third quarter of fiscal year 2021, net merchandise sales increased 11.6% to $857.5 million from $768.4 million in the third quarter of fiscal year 2020. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $11.6 million, or 1.6%, versus the same period in the prior year.

The Company had 47 warehouse clubs in operation as of May 31, 2021 compared to 45 warehouse clubs in operation as of May 31, 2020.

Comparable net merchandise sales for the 45 warehouse clubs that have been open for greater than 13 ½ calendar months increased 8.8% for the 13-week period ended May 30, 2021 compared to the comparable period of the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $11.8 million or 1.5% versus the same period in the prior year.

The Company recorded operating income during the fiscal third quarter of $36.0 million compared to operating income of $24.0 million in the prior year period. Net income attributable to PriceSmart was $22.5 million, or $0.73 per diluted share, in the third quarter of fiscal year 2021 as compared to $12.7 million, or $0.41 per diluted share, in the third quarter of fiscal year 2020. 

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, July 9, 2021, 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 July 16, 2021, 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 10156316.

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 and services at low prices to PriceSmart Members. PriceSmart operates 47 warehouse clubs in 12 countries and one U.S. territory (eight in Costa Rica and Colombia; seven in 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 also plans to open new warehouse clubs in Guatemala City, Guatemala and Bucaramanga, Colombia in the fall of 2021, and in Portmore, Jamaica in the spring of 2022. Once these three new clubs are open, the Company will operate 50 warehouse clubs. 

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 an improved sales comparison, as the Company experiences 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 the Company uses 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. The Company calculates 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 Company believes the disclosure of the effects of currency exchange rate fluctuations on the Company's results permits investors to understand better the Company's underlying performance.

This press release may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flows, omni-channel initiatives, 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," "intend," 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 and illiquidity of certain local currencies in our markets, 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, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of member or business information, cost increases from product and service providers, interruption of supply chains, COVID-19 related factors and challenges, including among others, the duration of the pandemic, the unknown long-term economic impact, the impact of government policies and restrictions that have limited access for our Members, and shifts in demand away from discretionary or higher priced products to lower priced products, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, which are accessible on the SEC's website at www.sec.gov, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 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 L. McCleary, EVP, Chief Financial Officer and Principal Accounting Officer (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						Nine Months Ended
		May 31,			May 31,			May 31,			May 31,
		2021			2020			2021			2020
Revenues:
Net merchandise sales		$	857,478		$	768,368		$	2,594,251		$	2,418,822
Export sales			10,213			8,321			30,800			25,029
Membership income			14,329			13,525			41,427			41,364
Other revenue and income			13,244			9,717			43,787			33,392
Total revenues			895,264			799,931			2,710,265			2,518,607
Operating expenses:
Cost of goods sold:
Net merchandise sales			720,726			661,258			2,179,453			2,067,416
Export sales			9,820			7,995			29,568			24,044
Non-merchandise			5,755			3,503			17,847			12,416
Selling, general and administrative:
Warehouse club and other operations			89,322			78,431			264,603			241,826
General and administrative			33,225			24,408			92,016			77,910
Pre-opening expenses			1			257			651			1,254
Loss on disposal of assets			366			112			568			251
Total operating expenses			859,215			775,964			2,584,706			2,425,117
Operating income			36,049			23,967			125,559			93,490
Other income (expense):
Interest income			518			554			1,454			1,433
Interest expense			(1,596)			(2,564)			(5,857)			(5,116)
Other expense, net			(2,295)			(1,564)			(4,132)			(1,826)
Total other expense			(3,373)			(3,574)			(8,535)			(5,509)
Income before provision for income taxes and loss of unconsolidated affiliates			32,676			20,393			117,024			87,981
Provision for income taxes			(10,082)			(7,744)			(38,265)			(29,849)
Loss of unconsolidated affiliates			(13)			(16)			(34)			(79)
Net income			22,581			12,633			78,725			58,053
Less: net (income) loss attributable to noncontrolling interest			(52)			72			(223)			(20)
Net income attributable to PriceSmart, Inc.		$	22,529		$	12,705		$	78,502		$	58,033
Net income attributable to PriceSmart, Inc. per share available for distribution:
Basic		$	0.73		$	0.41		$	2.55		$	1.90
Diluted		$	0.73		$	0.41		$	2.55		$	1.90
Shares used in per share computations:
Basic			30,414			30,271			30,396			30,268
Diluted			30,446			30,275			30,423			30,273

 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
		May 31,
		2021			August 31,
		(Unaudited)			2020
ASSETS
Current Assets:
Cash and cash equivalents		$	190,687		$	299,481
Short-term restricted cash			781			185
Short-term investments			67,068			46,509
Receivables, net of allowance for doubtful accounts of $166 as of May 31, 2021 and $147 as of August 31, 2020, respectively			12,221			13,153
Merchandise inventories			336,645			309,509
Prepaid expenses and other current assets			31,812			30,165
Total current assets			639,214			699,002
Long-term restricted cash			6,972			4,105
Property and equipment, net			716,337			692,279
Operating lease right-of-use assets, net			125,998			119,533
Goodwill			45,142			45,206
Other intangibles, net			8,368			10,166
Deferred tax assets			22,872			21,672
Other non-current assets (includes $1,160 and $872 as of May 31, 2021 and August 31, 2020, respectively, for the fair value of derivative instruments)			56,483			54,260
Investment in unconsolidated affiliates			10,569			10,602
Total Assets		$	1,631,955		$	1,656,825
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings		$	—		$	65,143
Accounts payable			341,007			373,172
Accrued salaries and benefits			37,240			32,946
Deferred income			27,255			23,525
Income taxes payable			9,740			7,727
Other accrued expenses and other current liabilities			27,959			37,731
Operating lease liabilities, current portion			8,486			8,594
Dividends payable			10,755			—
Long-term debt, current portion			20,554			19,437
Total current liabilities			482,996			568,275
Deferred tax liability			1,759			1,713
Long-term income taxes payable, net of current portion			3,947			5,132
Long-term operating lease liabilities			131,510			124,181
Long-term debt, net of current portion			101,294			112,610
Other long-term liabilities (includes $3,154 and $4,685 for the fair value of derivative instruments and $6,665 and $6,155 for post-employment plans as of May 31, 2021 and August 31, 2020, respectively)			10,665			12,182
Total Liabilities			732,171			824,093

 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
Stockholders' Equity:
Common stock $0.0001 par value, 45,000,000 shares authorized; 31,456,121 and 31,417,576 shares issued and 30,777,829 and 30,670,712 shares outstanding (net of treasury shares) as of May 31, 2021 and August 31, 2020, respectively			3			3
Additional paid-in capital			459,812			454,455
Accumulated other comprehensive loss			(177,368)			(176,820)
Retained earnings			639,472			582,487
Less: treasury stock at cost, 678,292 shares as of May 31, 2021 and 746,864 shares as of August 31, 2020			(23,116)			(28,406)
Total stockholders' equity attributable to PriceSmart, Inc. stockholders			898,803			831,719
Noncontrolling interest in consolidated subsidiaries			981			1,013
Total Stockholders' Equity			899,784			832,732
Total Liabilities and Equity		$	1,631,955		$	1,656,825

 

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SOURCE PriceSmart, Inc.

FAQ

What were PriceSmart's earnings for Q3 2021?

PriceSmart reported a net income of $22.5 million, or $0.73 per diluted share for Q3 2021.

How much did PriceSmart's total revenues increase in Q3 2021?

Total revenues increased by 11.9% to $895.3 million in Q3 2021.

What is PriceSmart's membership renewal rate as of Q3 2021?

The membership renewal rate of PriceSmart reached 87.6%, exceeding pre-COVID levels.

When is PriceSmart planning to open new warehouse clubs?

PriceSmart plans to open new clubs in Guatemala and Colombia in fall 2021, and in Jamaica in spring 2022.

How did foreign currency exchange rates affect PriceSmart's sales?

Foreign currency fluctuations negatively impacted net merchandise sales by $11.6 million in Q3 2021.