PRICESMART ANNOUNCES FISCAL 2024 SECOND QUARTER OPERATING RESULTS; $1.00 PER SHARE SPECIAL DIVIDEND; PLANS FOR NINTH WAREHOUSE IN COSTA RICA
- Total revenues increased by 13.1% to $1.29 billion in the second quarter of fiscal year 2024.
- Net merchandise sales grew by 13.0% to $1.26 billion in the same period.
- Comparable net merchandise sales rose by 8.8% for the 13-week period ended March 3, 2024.
- Operating income increased to $63.6 million in the second quarter of fiscal year 2024.
- Net income surged by 25.3% to $39.3 million, with earnings per diluted share reaching $1.31.
- Adjusted net income was $39.3 million, or $1.31 per diluted share, in the second quarter of fiscal year 2024.
- Adjusted EBITDA for the second quarter of fiscal year 2024 was $84.1 million, a 5.9% increase from the prior year period.
- Total revenues for the six months ended February 29, 2024, increased by 11.9% to $2.46 billion.
- Net merchandise sales for the first six months of fiscal year 2024 grew by 11.9% to $2.40 billion.
- Operating income for the first six months of fiscal year 2024 was $121.8 million.
- Net income rose by 20.3% to $77.3 million, with earnings per diluted share at $2.54.
- Adjusted net income for the first six months of fiscal year 2024 was $77.3 million, or $2.54 per diluted share.
- Adjusted EBITDA for the first six months of fiscal year 2024 was $161.9 million, a 4.7% increase from the same period last year.
- PriceSmart declared a one-time $1.00 per share special dividend payable on April 30, 2024.
- The Company plans to open its ninth warehouse club in Costa Rica, expanding its operations to 55 warehouse clubs in total.
- Non-GAAP financial measures like adjusted net income and adjusted EBITDA were used to provide a clearer picture of the Company's core operating performance.
- None.
Insights
The reported increase in net merchandise sales by 13.0% and comparable net merchandise sales by 8.8% for PriceSmart indicates a positive trend in consumer demand and store performance. This growth is particularly notable in the context of the retail sector, where companies face challenges from e-commerce competition and changing consumer behaviors. The expansion of warehouse clubs from 50 to 54 also suggests a strategic growth initiative that could capture additional market share and enhance economies of scale.
Moreover, the positive impact of foreign currency exchange rate fluctuations, contributing 4.0% to net merchandise sales, highlights the significance of international operations for PriceSmart. Investors may see this as a strength in diversifying revenue streams and reducing reliance on any single market. However, reliance on currency fluctuations can also introduce volatility in earnings, which should be considered in financial planning.
PriceSmart's announcement of a special dividend of $1.00 per share is a strong signal to shareholders regarding the company's cash position and confidence in its financial stability. Special dividends are often perceived as a positive gesture by companies that have accumulated excess cash and wish to return value to their shareholders. This could potentially attract income-focused investors.
The increase in operating income and net income by 18.2% and 25.3%, respectively, compared to the prior year, along with a consistent rise in adjusted EBITDA, reflects effective cost management and operational efficiency. The adjusted figures, which aim to represent the core operating performance by excluding certain items, provide a clearer picture of the company's profitability and may be closely scrutinized by analysts for sustainable growth indicators.
The strategic land purchase and planned opening of a new warehouse club in Costa Rica is a testament to PriceSmart's commitment to expanding its footprint in Central America. This move could potentially tap into an under-served market, offering a competitive edge. The location, 10 miles east from the nearest clubs in the greater San Jose metropolitan area, suggests an understanding of the local market dynamics and an effort to optimize the distribution network.
However, it is important to consider the risks associated with such expansion, including the capital expenditure required and the potential for market saturation. The long-term success of new clubs will depend on the company's ability to replicate its business model effectively in diverse markets and maintain a balance between growth and profitability.
NET MERCHANDISE SALES GREW
COMPARABLE NET MERCHANDISE SALES INCREASED
Second Quarter Financial Results
Total revenues for the second quarter of fiscal year 2024 increased
The Company had 54 warehouse clubs in operation as of February 29, 2024 compared to 50 warehouse clubs in operation as of February 28, 2023.
Comparable net merchandise sales for the 50 warehouse clubs that have been open for greater than 13 ½ calendar months increased
The Company recorded operating income during the fiscal second quarter of
Adjusted net income for the second quarter of fiscal year 2024 was
Adjusted EBITDA for the second quarter of fiscal year 2024 was
Year-to-Date Financial Results
Total revenues for the six months ended February 29, 2024 increased
Comparable net merchandise sales for the 50 warehouse clubs that have been open for greater than 13 ½ calendar months increased
The Company recorded operating income during the first six months of fiscal year 2024 of
Adjusted net income for the first six months of fiscal year 2024 was
Adjusted EBITDA for the first six months of fiscal year 2024 was
Special Dividend
The Company has decided to distribute excess cash to stockholders in the form of a special dividend. On April 3, 2024, the Company's Board of Directors declared a one-time
New Club Growth
The Company has purchased land and plans to open its ninth warehouse club in
Note Regarding Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
The foregoing discussion of the Company's operating results includes references to adjusted net income, adjusted net income per diluted share, adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency, which are non-GAAP financial measures. We believe these supplemental measures are useful to investors and analysts because they exclude items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measures later in this document.
Conference Call Information
PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Wednesday, April 10, 2024, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing toll free (800) 549-8228 or (646) 564-2877 for international callers and asking to join the PriceSmart earnings call. A digital replay will be available shortly following the conclusion of the call through Wednesday, April 17, 2024 by dialing (888) 660-6264 for domestic callers, or (646) 517-3975 for international callers, and entering replay passcode 59511#.
About PriceSmart
PriceSmart, headquartered in
This press release may contain forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company" or "we") anticipated future revenues and earnings, adequacy of future cash flows, future dividends, omni-channel initiatives, proposed warehouse club openings, the Company's performance relative to competitors 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: various political, economic and compliance risks associated with our international operations, adverse changes in economic conditions in our markets, natural disasters, 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, our reliance on third party service providers, including those who support transaction and payment processing, data security and other technology services, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of Member, employee or business information, cost increases from product and service providers, interruption of supply chains, novel coronavirus (COVID-19) related factors and challenges, 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 | Six Months Ended | ||||||
February 29, | February 28, | February 29, | February 28, | ||||
Revenues: | |||||||
Net merchandise sales | $ 1,260,916 | $ 1,115,999 | $ 2,395,930 | $ 2,141,462 | |||
Export sales | 8,511 | 6,882 | 18,520 | 17,340 | |||
Membership income | 18,538 | 16,176 | 36,287 | 32,071 | |||
Other revenue and income | 3,985 | 3,132 | 7,688 | 6,122 | |||
Total revenues | 1,291,950 | 1,142,189 | 2,458,425 | 2,196,995 | |||
Operating expenses: | |||||||
Cost of goods sold: | |||||||
Net merchandise sales | 1,062,685 | 937,462 | 2,015,413 | 1,796,530 | |||
Export sales | 8,178 | 6,563 | 17,728 | 16,552 | |||
Selling, general and administrative: | |||||||
Warehouse club and other operations | 117,774 | 103,630 | 227,739 | 200,522 | |||
General and administrative | 38,809 | 32,759 | 74,248 | 65,931 | |||
Separation costs associated with Chief Executive Officer departure | — | 7,747 | — | 7,747 | |||
Pre-opening expenses | 457 | 89 | 944 | 89 | |||
Loss on disposal of assets | 429 | 139 | 522 | 297 | |||
Total operating expenses | 1,228,332 | 1,088,389 | 2,336,594 | 2,087,668 | |||
Operating income | 63,618 | 53,800 | 121,831 | 109,327 | |||
Other income (expense): | |||||||
Interest income | 3,225 | 1,942 | 6,091 | 3,099 | |||
Interest expense | (3,293) | (2,814) | (6,109) | (5,563) | |||
Other expense, net | (7,036) | (5,344) | (9,162) | (9,910) | |||
Total other expense | (7,104) | (6,216) | (9,180) | (12,374) | |||
Income before provision for income taxes and income (loss) of unconsolidated affiliates | 56,514 | 47,584 | 112,651 | 96,953 | |||
Provision for income taxes | (17,259) | (16,202) | (35,412) | (32,628) | |||
Income (loss) of unconsolidated affiliates | 16 | (35) | 79 | (73) | |||
Net income | $ 39,271 | $ 31,347 | $ 77,318 | $ 64,252 | |||
Net income per share available for distribution: | |||||||
Basic | $ 1.31 | $ 1.02 | $ 2.54 | $ 2.07 | |||
Diluted | $ 1.31 | $ 1.02 | $ 2.54 | $ 2.07 | |||
Shares used in per share computations: | |||||||
Basic | 29,920 | 30,741 | 30,095 | 30,727 | |||
Diluted | 29,920 | 30,760 | 30,095 | 30,740 | |||
PRICESMART, INC. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) | |||
February 29, | August 31, | ||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 170,563 | $ 239,984 | |
Short-term restricted cash | 2,834 | 2,865 | |
Short-term investments | 93,630 | 91,081 | |
Receivables, net of allowance for doubtful accounts of | 19,819 | 17,904 | |
Merchandise inventories | 502,292 | 471,407 | |
Prepaid expenses and other current assets (includes respectively, for the fair value of derivative instruments) | 58,514 | 53,866 | |
Total current assets | 847,652 | 877,107 | |
Long-term restricted cash | 9,178 | 9,353 | |
Property and equipment, net | 925,035 | 850,328 | |
Operating lease right-of-use assets, net | 100,175 | 114,201 | |
Goodwill | 43,131 | 43,110 | |
Deferred tax assets | 32,147 | 32,039 | |
Other non-current assets (includes fair value of derivative instruments) | 68,900 | 68,991 | |
Investment in unconsolidated affiliates | 10,558 | 10,479 | |
Total Assets | $ 2,036,776 | $ 2,005,608 | |
LIABILITIES AND EQUITY | |||
Current Liabilities: | |||
Short-term borrowings | $ 6,101 | $ 8,679 | |
Accounts payable | 507,077 | 453,229 | |
Accrued salaries and benefits | 36,016 | 45,441 | |
Deferred income | 38,277 | 32,613 | |
Income taxes payable | 8,302 | 9,428 | |
Other accrued expenses and other current liabilities (includes 2023, respectively, for the fair value of derivative instruments) | 50,390 | 57,273 | |
Operating lease liabilities, current portion | 7,181 | 7,621 | |
Dividends payable | 17,771 | — | |
Long-term debt, current portion | 37,615 | 20,193 | |
Total current liabilities | 708,730 | 634,477 | |
Deferred tax liability | 1,744 | 1,936 | |
Long-term income taxes payable, net of current portion | 5,010 | 5,045 | |
Long-term operating lease liabilities | 107,835 | 122,195 | |
Long-term debt, net of current portion | 102,350 | 119,487 | |
Other long-term liabilities (includes for post-employment plans as of February 29, 2024 and August 31, 2023, respectively) | 17,233 | 15,425 | |
Total Liabilities | 942,902 | 898,565 | |
Stockholders' Equity: | |||
Common stock 31,934,900 shares issued and 30,656,141 and 30,976,941 shares outstanding (net of treasury shares) as of February 29, 2024 and August 31, 2023, respectively | 3 | 3 | |
Additional paid-in capital | 505,349 | 497,434 | |
Accumulated other comprehensive loss | (155,289) | (163,992) | |
Retained earnings | 859,325 | 817,559 | |
Less: treasury stock at cost, 1,922,401 shares as of February 29, 2024 and 957,959 shares as of August 31, 2023 | (115,514) | (43,961) | |
Total Stockholders' Equity | 1,093,874 | 1,107,043 | |
Total Liabilities and Equity | $ 2,036,776 | $ 2,005,608 | |
Reconciliation of Non-GAAP Financial Measures
The following tables calculate the Company's adjusted net income, adjusted net income per diluted share, adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency, all of which are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures are customary for our industry and commonly used by competitors. However, these non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
The adjusted net income and adjusted net income per diluted share metrics are important measures used by management to compare the performance of our core operations between periods. We define adjusted net income as net income, as reported, adjusted for: separation costs associated with the departure of our former Chief Executive Officer, the write-off of certain Aeropost receivables, and the tax impact of the foregoing adjustments on net income. We define adjusted net income per diluted share as adjusted net income divided by the weighted-average diluted shares outstanding.
We believe adjusted net income and adjusted net income per diluted share are useful metrics to investors and analysts because they present more accurate year-over-year comparisons for our net income and net income per diluted share because adjusted items are not the result of our normal operations.
The following table shows the Company's reconciliation of net income to adjusted net income and adjusted net income per diluted share for the periods indicated:
Three Months Ended | Six Months Ended | ||||||
February 29, | February 28, | February 29, | February 28, | ||||
Net income as reported | $ 39,271 | $ 31,347 | $ 77,318 | $ 64,252 | |||
Adjustments: | |||||||
Separation costs associated with Chief Executive Officer departure (1) | — | 7,747 | — | 7,747 | |||
Aeropost-related write-offs (2) | — | — | — | 2,125 | |||
Tax impact of adjustments to net income (3) | — | (550) | — | (550) | |||
Adjusted net income | $ 39,271 | $ 38,544 | $ 77,318 | $ 73,574 | |||
Net income per diluted share | $ 1.31 | $ 1.02 | $ 2.54 | $ 2.07 | |||
Separation costs associated with Chief Executive Officer departure | — | 0.23 | — | 0.23 | |||
Aeropost-related write-offs | — | — | — | 0.07 | |||
Adjusted net income per diluted share | $ 1.31 | $ 1.25 | $ 2.54 | $ 2.37 | |||
(1) | Reflects |
(2) | Reflects |
(3) | Reflects the tax effect of the above-mentioned adjustments. |
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including interest income; other income (expense), net; separation costs associated with Chief Executive Officer departure; and Aeropost-related write-offs. The following is a reconciliation of our Net income to Adjusted EBITDA for the periods presented:
Three Months Ended | Six Months Ended | ||||||
February 29, | February 28, | February 29, | February 28, | ||||
Net income as reported | $ 39,271 | $ 31,347 | $ 77,318 | $ 64,252 | |||
Adjustments: | |||||||
Interest expense | 3,293 | 2,814 | 6,109 | 5,563 | |||
Provision for income taxes | 17,259 | 16,202 | 35,412 | 32,628 | |||
Depreciation and amortization | 20,491 | 17,875 | 39,985 | 35,443 | |||
Interest income | (3,225) | (1,942) | (6,091) | (3,099) | |||
Other expense, net (1) | 7,036 | 5,344 | 9,162 | 9,910 | |||
Separation costs associated with Chief Executive Officer departure (2) | — | 7,747 | — | 7,747 | |||
Aeropost-related write-offs (3) | — | — | — | 2,125 | |||
Adjusted EBITDA | $ 84,125 | $ 79,387 | $ 161,895 | $ 154,569 | |||
(1) | Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues and foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily |
(2) | Reflects |
(3) | Reflects |
Net Merchandise Sales - Constant Currency and Comparable Net Merchandise Sales – Constant Currency
As a multinational enterprise, we are exposed to changes in foreign currency exchange rates. The translation of the operations of our foreign-based entities from their local currencies into
Net merchandise sales growth rate on a net merchandise sales - constant currency basis is calculated as follows:
February 29, 2024 | |||||||
Three Months Ended | Six Months Ended | ||||||
Net | % Growth | Net | % Growth | ||||
Net merchandise sales | $ 1,260,916 | 13.0 % | $ 2,395,930 | 11.9 % | |||
Favorable impact of foreign currency exchange | 44,151 | 4.0 % | 84,141 | 3.9 % | |||
Net merchandise sales on a constant-currency basis | $ 1,216,765 | 9.0 % | $ 2,311,789 | 8.0 % | |||
Comparable net merchandise sales growth rate on a net merchandise sales - constant currency basis is calculated as follows:
March 3, 2024 | |||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||
% Growth | % Growth | ||
Comparable net merchandise sales | 8.8 % | 8.4 % | |
Favorable impact of foreign currency exchange | 3.6 % | 3.7 % | |
Comparable net merchandise sales on a constant-currency basis | 5.2 % | 4.7 % | |
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SOURCE PriceSmart, Inc.
FAQ
What was the percentage increase in total revenues for PriceSmart in the second quarter of fiscal year 2024?
How much did net merchandise sales grow by in the second quarter of fiscal year 2024?
What was the percentage increase in comparable net merchandise sales for PriceSmart in the 13-week period ended March 3, 2024?
What was the net income for PriceSmart in the second quarter of fiscal year 2024?
How many warehouse clubs does PriceSmart plan to operate after opening its ninth club in Costa Rica?
