8-K
PRICESMART INC (PSMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 2022
PriceSmart, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-22793 | 33-0628530 |
|---|---|---|
| (State or Other Jurisdiction of<br><br>Incorporation) | (Commission File Number) | (I.R.S. Employer<br><br>Identification No.) |
| 9740 Scranton Road | ||
| --- | ||
| San Diego, CA 92121 | ||
| (Address of principal executive offices and zip code) |
Registrant's telephone number, including area code: (858) 404-8800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2)(b)) |
| | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.0001 par value | PSMT | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 7, 2022, PriceSmart, Inc. issued a press release regarding the results of operations for its second quarter ended February 28, 2022. A copy of the press release is furnished herewith as Exhibit 99.1. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein shall be deemed “furnished” and not “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section.
Item 9.01. Exhibits.
| (d) | The following exhibit is furnished herewith: | |
|---|---|---|
| Exhibit<br>No. | Description | |
| 99.1 | Press Release of PriceSmart, Inc. dated April 7, 2022. | |
| 104 | The cover page from this Current report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: April 7, 2022 | /S/ MICHAEL L. MCCLEARY |
|---|---|
| Michael L. McCleary | |
| Executive Vice President and Chief Financial Officer | |
| (Principal Financial Officer and | |
| Principal Accounting Officer) |
EXHIBIT INDEX
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release of PriceSmart, Inc. dated April 7, 2022. |
| 104 | The cover page from this Current report on Form 8-K, formatted in Inline XBRL. |
Exhibit 99.1\_2QFY22\_Earnings Press Release
PRICESMART ANNOUNCES RECORD FISCAL 2022 SECOND QUARTER OPERATING RESULTS
NET MERCHANDISE SALES EXCEED $1 BILLION
NET MERCHANDISE SALES GREW BY 12.6%
COMPARABLE NET MERCHANDISE SALES GREW BY 10.3%
MEMBERSHIP BASE AND RENEWAL RATE INCREASED TO RECORD LEVELS
OPERATING INCOME INCREASED BY 7.4%
$1.03 DILUTED EARNINGS PER SHARE
San Diego, CA (April 7, 2022) - PriceSmart, Inc. (NASDAQ: PSMT), operator of 49 warehouse clubs in 12 countries and one U.S. territory, today announced record operating results for the fiscal second quarter of 2022, which ended on February 28, 2022.
Comments from Sherry S. Bahrambeygui, Chief Executive Officer:
“Our team achieved a record second quarter, with net merchandise sales of more than $1 billion for the first time in our Company’s history. The favorable results for the quarter were driven by net merchandise sales growth of 12.6% and comparable net merchandise sales growth of 10.3% as compared to the same period last year. Our 12-month trailing membership renewal rate was a record 89.8%, and our membership base has grown to its all-time high.
“This quarter marks record performance in net merchandise sales, earnings per share, membership base and renewal rates. We continue the pursuit of our three drivers of growth that include expanding our real estate footprint, enhancing Member benefits and increasing incremental sales through PriceSmart.com. With respect to real estate, we plan to open our second club in Jamaica next week, located in the city of Portmore, marking the Company’s 50th warehouse club.
“We continue to invest in enhancing our Membership benefits, including our Wellness and other initiatives. PriceSmart.com is gaining traction as more members shop with us online. Through our digital presence we are increasing our engagement with Members which also helps drive in-club sales. We believe that our investments in these drivers of growth are providing positive momentum and results for the Company.
“I am proud of our team’s results despite facing and solving for supply chain issues being faced by many in our industry.”
Second Quarter Financial Results
Total revenues for the second quarter of fiscal year 2022 increased 10.8% to $1.04 billion compared to $937.6 million in the comparable period of the prior year. For the second quarter of fiscal year 2022, net merchandise sales increased 12.6% to $1.01 billion from $898.4 million in the second quarter of fiscal year 2021. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $26.3 million, or 3.0%, versus the same period in the prior year.
The Company had 49 warehouse clubs in operation as of February 28, 2022 compared to 47 warehouse clubs in operation as of February 28, 2021.
Comparable net merchandise sales for the 47 warehouse clubs that have been open for greater than 13 ½ calendar months increased 10.3% for the 13-week period ended February 27, 2022 compared to the comparable period of the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $24.2 million or 2.7% versus the same period in the prior year.
The Company recorded operating income during the fiscal second quarter of $48.3 million compared to operating income of $45.0 million in the prior year period. Net income attributable to PriceSmart was $31.5 million, or $1.03 per diluted share, in the second quarter of fiscal year 2022 as compared to $28.2 million, or $0.92 per diluted share, in the second quarter of fiscal year 2021.
Conference Call Information
PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, April 8, 2022, 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 April 15, 2022, 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 5341114.
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 49 warehouse clubs in 12 countries and one U.S. territory (nine in Colombia; eight in Costa Rica; seven in Panama; five in the Dominican Republic and Guatemala, four in Trinidad; 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 plans to open a new warehouse club in Portmore, Jamaica in April 2022 and has begun construction on a club in Medellín, Colombia that is anticipated to open in the summer of 2023. Once these two new clubs are open, the Company will operate at least 51 warehouse clubs, depending on the timing of the development and construction of other warehouse club projects in our pipeline.
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,” “plans,” “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 SHARE DATA)
| | ||||||||
|---|---|---|---|---|---|---|---|---|
| | ||||||||
| | Three Months Ended | Six Months Ended | ||||||
| | February 28, | February 28, | February 28, | February 28, | ||||
| | 2022 | 2021 | 2022 | 2021 | ||||
| Revenues: | ||||||||
| Net merchandise sales | $ | 1,011,896 | $ | 898,404 | $ | 1,955,939 | $ | 1,736,773 |
| Export sales | 8,674 | 9,706 | 19,208 | 20,587 | ||||
| Membership income | 15,071 | 13,799 | 29,862 | 27,098 | ||||
| Other revenue and income | 2,916 | 15,660 | 8,904 | 30,543 | ||||
| Total revenues | 1,038,557 | 937,569 | 2,013,913 | 1,815,001 | ||||
| Operating expenses: | ||||||||
| Cost of goods sold: | ||||||||
| Net merchandise sales | 853,633 | 755,108 | 1,646,826 | 1,458,727 | ||||
| Export sales | 8,215 | 9,315 | 18,282 | 19,748 | ||||
| Non-merchandise | — | 6,268 | 1,809 | 12,092 | ||||
| Selling, general and administrative: | ||||||||
| Warehouse club and other operations | 93,993 | 90,449 | 185,189 | 175,281 | ||||
| General and administrative | 33,951 | 31,270 | 65,644 | 58,791 | ||||
| Pre-opening expenses | 130 | 48 | 1,100 | 650 | ||||
| Loss on disposal of assets | 313 | 132 | 724 | 202 | ||||
| Total operating expenses | 990,235 | 892,590 | 1,919,574 | 1,725,491 | ||||
| Operating income | 48,322 | 44,979 | 94,339 | 89,510 | ||||
| Other income (expense): | ||||||||
| Interest income | 549 | 445 | 1,067 | 936 | ||||
| Interest expense | (2,438) | (2,228) | (4,028) | (4,261) | ||||
| Other income (expense), net | (819) | (292) | 590 | (1,837) | ||||
| Total other expense | (2,708) | (2,075) | (2,371) | (5,162) | ||||
| Income before provision for income taxes and <br>loss of unconsolidated affiliates | 45,614 | 42,904 | 91,968 | 84,348 | ||||
| Provision for income taxes | (14,139) | (14,565) | (29,953) | (28,183) | ||||
| Loss of unconsolidated affiliates | (14) | (12) | (24) | (21) | ||||
| Net income | 31,461 | 28,327 | 61,991 | 56,144 | ||||
| Less: net income attributable to noncontrolling interest | — | (91) | (19) | (171) | ||||
| Net income attributable to PriceSmart, Inc. | $ | 31,461 | $ | 28,236 | $ | 61,972 | $ | 55,973 |
| Net income attributable to PriceSmart, Inc. per share available for distribution: | ||||||||
| Basic | $ | 1.03 | $ | 0.92 | $ | 2.01 | $ | 1.82 |
| Diluted | $ | 1.03 | $ | 0.92 | $ | 2.01 | $ | 1.82 |
| Shares used in per share computations: | ||||||||
| Basic | 30,578 | 30,376 | 30,565 | 30,387 | ||||
| Diluted | 30,582 | 30,404 | 30,593 | 30,412 |
PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
| | |||
|---|---|---|---|
| | |||
| | |||
| | August 31, | ||
| | 2021 | ||
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | 178,705 | $ | 202,060 |
| Short-term restricted cash | 4,172 | 3,647 | |
| Short-term investments | 26,933 | 50,233 | |
| Receivables, net of allowance for doubtful accounts of 52 as of February 28, 2022 and 94 as of August 31, 2021, respectively | 15,001 | 12,359 | |
| Merchandise inventories | 470,313 | 389,711 | |
| Prepaid expenses and other current assets (includes 1,566 and 0 as of February 28, 2022 and August 31, 2021, respectively, for the fair value of derivative instruments) | 46,156 | 39,194 | |
| Total current assets | 741,280 | 697,204 | |
| Long-term restricted cash | 12,036 | 9,772 | |
| Property and equipment, net | 753,671 | 730,204 | |
| Operating lease right-of-use assets, net | 115,290 | 123,655 | |
| Goodwill | 43,334 | 45,095 | |
| Other intangibles, net | 1,542 | 7,762 | |
| Deferred tax assets | 26,258 | 24,225 | |
| Other non-current assets (includes 4,583 and 2,464 as of February 28, 2022 and August 31, 2021, respectively, for the fair value of derivative instruments) | 69,399 | 57,329 | |
| Investment in unconsolidated affiliates | 10,520 | 10,544 | |
| Total Assets | 1,773,330 | $ | 1,705,790 |
| LIABILITIES AND EQUITY | |||
| Current Liabilities: | |||
| Short-term borrowings | 15,342 | $ | — |
| Accounts payable | 380,778 | 388,791 | |
| Accrued salaries and benefits | 32,239 | 41,896 | |
| Deferred income | 30,793 | 26,898 | |
| Income taxes payable | 10,164 | 8,310 | |
| Other accrued expenses and other current liabilities | 42,240 | 39,736 | |
| Operating lease liabilities, current portion | 6,808 | 8,526 | |
| Dividends payable | 13,430 | — | |
| Long-term debt, current portion | 28,761 | 19,395 | |
| Total current liabilities | 560,555 | 533,552 | |
| Deferred tax liability | 1,946 | 1,568 | |
| Long-term income taxes payable, net of current portion | 5,602 | 4,160 | |
| Long-term operating lease liabilities | 122,602 | 129,256 | |
| Long-term debt, net of current portion | 120,057 | 110,110 | |
| Other long-term liabilities (includes 958 and 3,010 for the fair value of derivative instruments and 7,726 and 7,380 for post-employment plans as of February 28, 2022 and August 31, 2021, respectively) | 8,684 | 10,930 | |
| Total Liabilities | 819,446 | 789,576 |
All values are in US Dollars.
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PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
| Stockholders' Equity: | |||
|---|---|---|---|
| Common stock 0.0001 par value, 45,000,000 shares authorized; 31,626,219 and 31,467,971 shares issued and 30,871,179 and 30,755,308 shares outstanding (net of treasury shares) as of February 28, 2022 and August 31, 2021, respectively | 3 | 3 | |
| Additional paid-in capital | 473,277 | 465,015 | |
| Accumulated other comprehensive loss | (184,413) | (182,508) | |
| Retained earnings | 694,186 | 658,919 | |
| Less: treasury stock at cost, 755,040 shares as of February 28, 2022 and 712,663 shares as of August 31, 2021 | (29,169) | (26,084) | |
| Total stockholders' equity attributable to PriceSmart, Inc. stockholders | 953,884 | 915,345 | |
| Noncontrolling interest in consolidated subsidiaries | — | 869 | |
| Total Stockholders' Equity | 953,884 | 916,214 | |
| Total Liabilities and Equity | 1,773,330 | $ | 1,705,790 |
All values are in US Dollars.