SAN DIEGO, Jan. 9, 2019 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT), operator of 41 warehouse clubs in 12 countries and one U.S. territory, today announced its results of operations for the first quarter of fiscal year 2019 which ended on November 30, 2018.
Total revenues for the first quarter of fiscal year 2019 increased 1.6% to $779.6 million compared to $767.1 million in the first quarter of the prior year. For the first quarter of fiscal year 2019, net merchandise sales increased 0.3% to $747.4 million from $745.4 million in the first quarter of fiscal year 2018. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $19.3 million or 2.6% versus the same period in the prior year.
The Company had 41 clubs in operation as of November 30, 2018, compared to 40 warehouse clubs in operation as of November 30, 2017.
Comparable net merchandise sales, for warehouse clubs that have been open for greater than 13 ½ calendar months, decreased 2.1% for the 13-week period ended December 2, 2018 compared to the same period in the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $18.7 million or 2.5% versus the same period in the prior year.
The Company recorded operating income for the first quarter of fiscal year 2019 of $24.7 million, as compared to operating income of $33.2 million in the prior year. Net income attributable to PriceSmart was $14.6 million, or $0.48 per diluted share, in the first quarter of fiscal year 2019. Net income in the first quarter of fiscal year 2018 was $22.5 million, or $0.74 per diluted share. The first quarter fiscal 2019 earnings were negatively impacted by $3.9 million or $0.13 per share from costs associated with Aeropost and omni-channel development initiatives in addition to being negatively impacted by $3.6 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. U.S. Tax reform positively impacted earnings by $1.7 million or $0.05 per share.
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 current period activities translated using 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 plans to host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Thursday, January 10, 2019, 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 ask to join the PriceSmart, Inc. earnings call. A digital replay will be available through January 17, 2019, following the conclusion of the call by dialing (877) 344-7529 for domestic callers, or (412) 317-0088 for international callers, and entering replay access code 10126894.
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 41 warehouse clubs in 12 countries and one U.S. territory (seven each in Colombia and Costa Rica; five in Panama; four each in Trinidad and Dominican Republic; three each in Guatemala and Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands). The Company has acquired property and is currently constructing warehouse clubs in Santiago, Panama and Santo Domingo, Dominican Republic that are expected to open in the spring of 2019. The Company also plans to open warehouse clubs in San Cristobal, Guatemala and an additional club in Panama City, Panama, in the fall of 2019. Once these four new clubs are open, the Company will operate 45 warehouse clubs. PriceSmart also operates a cross-border logistics and e-commerce business through Aeropost, Inc. ("Aeropost"), which was purchased in March 2018. PriceSmart is utilizing and building on the technology and talent it acquired through Aeropost to invest in and further develop omni-channel capabilities to allow its members alternative ways to shop. Aeropost operates certain segments of its business directly or via agency relationships in 38 countries in Latin America and the Caribbean, many of which overlap with markets where PriceSmart operates its warehouse clubs, and has distribution and administration facilities in Miami, Florida.
This press release may contain forward-looking statements concerning the Company's future performance. 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, the following risks:
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, 2018 filed on October 25, 2018, pursuant to the Securities Exchange Act of 1934, see "Part I - Item 1A - Risk Factors," could materially and adversely affect our business, financial condition and results of operations. These risks are not the only risks that the Company faces. The Company could also be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company currently considers to be immaterial.
For further information, please contact Maarten O. Jager, 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 | |||||
November 30, | November 30, | ||||
2018 | 2017 | ||||
Revenues: | |||||
Net merchandise sales | $ | 747,443 | $ | 745,401 | |
Export sales | 8,189 | 8,147 | |||
Membership income | 12,740 | 12,375 | |||
Other revenue and income | 11,265 | 1,149 | |||
Total revenues | 779,637 | 767,072 | |||
Operating expenses: | |||||
Cost of goods sold: | |||||
Net merchandise sales | 641,155 | 637,236 | |||
Export sales | 7,778 | 7,749 | |||
Non-merchandise | 4,247 | ? | |||
Selling, general and administrative: | |||||
Warehouse club and other operations | 74,222 | 69,502 | |||
General and administrative | 27,335 | 18,830 | |||
Pre-opening expenses | 15 | 430 | |||
Loss/(gain) on disposal of assets | 215 | 159 | |||
Total operating expenses | 754,967 | 733,906 | |||
Operating income | 24,670 | 33,166 | |||
Other income (expense): | |||||
Interest income | 391 | 400 | |||
Interest expense | (1,033) | (1,255) | |||
Other income (expense), net | (1,819) | 278 | |||
Total other income (expense) | (2,461) | (577) | |||
Income before provision for income taxes and income (loss) of unconsolidated affiliates | 22,209 | 32,589 | |||
Provision for income taxes | (7,540) | (10,115) | |||
Income (loss) of unconsolidated affiliates | (24) | 16 | |||
Net income | $ | 14,645 | $ | 22,490 | |
Less: (net income) loss attributable to noncontrolling interest | (33) | ? | |||
Net income attributable to PriceSmart, Inc. | $ | 14,612 | $ | 22,490 | |
Net income attributable to PriceSmart, Inc. per share available for distribution: | |||||
Basic | $ | 0.48 | $ | 0.74 | |
Diluted | $ | 0.48 | $ | 0.74 | |
Shares used in per share computations: | |||||
Basic | 30,172 | 30,078 | |||
Diluted | 30,189 | 30,079 |
PRICESMART, INC. | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) | |||||
November 30, | |||||
2018 | August 31, | ||||
(Unaudited) | 2018 | ||||
ASSETS | |||||
Current Assets: | |||||
Cash and cash equivalents | $ | 81,047 | $ | 93,460 | |
Short-term restricted cash | 4,164 | 405 | |||
Short-term investments | 25,986 | 32,304 | |||
Receivables, net of allowance for doubtful accounts of $104 as of November 30, 2018 and $97 as of August 31, 2018, respectively. | 9,830 | 8,859 | |||
Merchandise inventories | 380,079 | 321,025 | |||
Prepaid expenses and other current assets | 33,642 | 31,800 | |||
Total current assets | 534,748 | 487,853 | |||
Long-term restricted cash | 3,175 | 3,049 | |||
Property and equipment, net | 605,612 | 594,403 | |||
Goodwill | 46,248 | 46,329 | |||
Other intangibles, net | 14,381 | 14,980 | |||
Deferred tax assets | 10,877 | 10,166 | |||
Other non-current assets (includes $4,885 and $4,364 as of November 30, 2018 and August 31, 2018, respectively, for the fair value of derivative instruments) | 51,468 | 48,854 | |||
Investment in unconsolidated affiliates | 10,734 | 10,758 | |||
Total Assets | $ | 1,277,243 | $ | 1,216,392 | |
LIABILITIES AND EQUITY | |||||
Current Liabilities: | |||||
Accounts payable | 312,390 | 255,739 | |||
Accrued salaries and benefits | 21,733 | 22,836 | |||
Deferred income | 22,584 | 23,018 | |||
Income taxes payable | 2,211 | 4,636 | |||
Other accrued expenses | 32,267 | 28,281 | |||
Long-term debt, current portion | 19,376 | 14,855 | |||
Total current liabilities | 410,561 | 349,365 | |||
Deferred tax liability | 1,923 | 1,894 | |||
Long-term portion of deferred rent | 8,817 | 8,885 | |||
Long-term income taxes payable, net of current portion | 4,610 | 4,622 | |||
Long-term debt, net of current portion | 79,877 | 87,720 | |||
Other long-term liabilities (includes $392 and $502 for the fair value of derivative instruments and $4,962 and $4,715 for post-employment plans as of November 30, 2018 and August 31, 2018, respectively) | 5,371 | 5,268 | |||
Total Liabilities | 511,159 | 457,754 | |||
Stockholders' Equity: | |||||
Common stock $0.0001 par value, 45,000,000 shares authorized; 31,405,023 and 31,372,752 shares issued and 30,492,624 and 30,460,353 shares outstanding (net of treasury shares) as of November 30, 2018 and August 31, 2018, respectively | 3 | 3 | |||
Additional paid-in capital | 438,928 | 432,882 | |||
Tax benefit from stock-based compensation | 11,486 | 11,486 | |||
Accumulated other comprehensive loss | (134,462) | (121,216) | |||
Retained earnings | 488,566 | 473,954 | |||
Less: treasury stock at cost, 912,399 shares as of both November 30, 2018 and August 31, 2018 | (39,107) | (39,107) | |||
Total stockholders' equity attributable to PriceSmart, Inc. stockholders | 765,414 | 758,002 | |||
Noncontrolling interest in consolidated subsidiaries | 670 | 636 | |||
Total stockholders' equity | 766,084 | 758,638 | |||
Total Liabilities and Equity | $ | 1,277,243 | $ | 1,216,392 |
SOURCE PriceSmart, Inc.
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