PriceSmart Announces First Quarter Results of Operations;

Trinidad Land Acquisition and December Sales Also Announced

 

San Diego, CA (January 8, 2009) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the first quarter of fiscal year 2009 which ended on November 30, 2008.

For the first quarter of fiscal year 2009, net warehouse sales increased 21.8% to $298.5 million from $245.2 million in the first quarter of fiscal year 2008.  Total revenue for the first quarter was $305.2 million compared to $250.4 million in the prior year.  The Company had 25 clubs in operation as of November 30, 2008 compared to 24 warehouse clubs in operation as of November 30, 2007.

The Company recorded operating income in the quarter of $14.9 million, compared to operating income of $10.2 million in the prior year.  Net income was $10.7 million, or $0.37 per diluted share, in the first quarter of fiscal 2009 compared to $6.7 million, or $0.23 per diluted share, in the first quarter of fiscal 2008.

On December 19, 2008, the Company acquired 30,959 square meters of land in the city of San Fernando, Trinidad upon which the Company plans to construct and operate a new PriceSmart warehouse club, which will be its fourth in Trinidad.  It is currently anticipated that the new PriceSmart warehouse club will open in the fall of 2009.  The Company also plans to develop a portion of the site as a commercial retail center, adjacent to the warehouse club.

The Company also announced that for the month of December 2008, net sales increased 14.8% to $140.8 million from $122.6 million in December a year earlier.  For the four months ended December 31, 2008, net sales increased 19.4% to $439.3 million from $367.8 million in the same period last year.  There were 25 warehouse clubs in operation at the end of December 2008 and 2007.

For the four weeks ended December 28, 2008, comparable warehouse sales for the 23 warehouse clubs open at least 12 full months increased 13.8% compared to the same four-week period last year.  For the seventeen-week period ended December 28, 2008, comparable warehouse sales increased 14.1% compared to the comparable seventeen-week period a year ago.

About PriceSmart

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 25 warehouse clubs in 11 countries and one U.S. territory (four each in Panama and Costa Rica; three each in Guatemala and Trinidad, two each in Dominican Republic, El Salvador and Honduras; and one each in Aruba, Barbados, Jamaica, Nicaragua 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 and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "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: the Company’s financial performance is dependent on international operations which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect the Company’s business; the Company faces significant competition; the Company faces difficulties in the shipment of and inherent risks in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other risks associated with international operations; declines in the economies of the countries in which the Company operates its warehouse clubs would harm its business; a few of the Company's stockholders own nearly one-half of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company’s business; the Company is subject to volatility in foreign currency exchange; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; a determination that the Company's long-lived or intangible assets have been impaired could adversely affect the Company's future results of operations and financial position; and the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; as well as the other risks detailed in the Company's SEC reports, including the Company's Annual Report on Form 10-K filed pursuant to the Securities Exchange Act of 1934 on November 12, 2008. 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 Robert E. Price, Chief Executive Officer (858) 551-2336; or John M. Heffner, Executive Vice President and Chief Financial Officer (858) 404-8826.

 

 

 

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

 

 

Three Months Ended

November 30,

 

2008

 

2007

Revenues:

 

 

 

Sales:

 

 

 

Net warehouse club

$ 298,518

 

$ 245,189

Export

           836

 

           367

Membership income

       4,325

 

       3,742

Other income

       1,529

 

       1,113

Total revenues

   305,208

 

   250,411

Operating expenses:

 

 

 

Cost of goods sold:

 

 

 

Net warehouse club

   254,426

 

   208,511

Export

           800

 

           349

Selling, general and administrative:

 

 

 

Warehouse club operations

     27,280

 

     23,227

General and administrative

       7,544

 

       7,316

Preopening expenses

             —

 

           772

Asset impairment and closure costs

           248

 

             19

Total operating expenses

   290,298

 

   240,194

Operating income

     14,910

 

     10,217

Other income (expense):

 

 

 

Interest income

           126

 

           410

Interest expense

         (581 )

 

            (59 )

Other expense, net

          (20)

 

            (47 )

Total other income (expense)

        (475)

 

           304

Income from continuing operations before provision for income taxes, loss of unconsolidated affiliates and minority interest

     14,435

 

     10,521

Provision for income taxes

     (3,647)

 

      (3,715 )

Loss of unconsolidated affiliates

             (5)

 

             —

Minority interest

          (66)

 

         (130 )

Income from continuing operations

10,717

 

       6,676

Discontinued operations income (loss), net of tax

          (19)

 

             18

Net income

$   10,698

 

$     6,694

Basic income per share:

 

 

 

Continuing operations

$       0.37

 

$       0.23

Discontinued operations

$           —

 

$           —

Net income

$       0.37

 

$       0.23

Diluted income per share:

 

 

 

Continuing operations

$       0.37

 

$       0.23

Discontinued operations

$           —

 

$           —

Net income

$       0.37

 

$       0.23

Shares used in per share computations:

 

 

 

Basic

     28,860

 

     28,781

Diluted

     29,111

 

     29,494

  Dividends per share:

$           —

 

$           —

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

 

 

N

 

 

 

November 30, 2008

 

August 31, 2008

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$            24,692

 

$         48,121

Short-term restricted cash

                   533

 

536

Receivables, net of allowance for doubtful accounts of $9 and $11 in November and August of 2008, respectively

                3,287

 

2,455

Merchandise inventories

            134,304

 

113,894

Prepaid expenses and other current assets

              18,400

 

16,669

Notes receivable – short term

                2,068

 

2,104

Assets of discontinued operations

                1,340

 

1,247

Total current assets

            184,624

 

185,026

Long-term restricted cash

                   548

 

673

Property and equipment, net

            209,739

 

199,576

Goodwill

              38,836

 

39,248

Deferred tax assets

              21,897

 

21,928

Other assets

                3,756

 

3,512

Investment in unconsolidated affiliates

                7,260

 

—

Total Assets

$          466,660

 

$       449,963

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Short-term borrowings

$              4,868

 

$           3,473

Accounts payable

            107,965

 

96,120

Accrued salaries and benefits

                7,575

 

8,271

Deferred membership income

                8,149

 

7,764

Income taxes payable

                4,743

 

3,695

Common stock subject to put agreement

                   —  

 

161

Other accrued expenses

              11,770

 

11,877

Dividend payable

                   —  

 

4,744

Long-term debt, current portion

                2,704

 

2,737

Liabilities of discontinued operations

                   296

 

277

Total current liabilities

            148,070

 

139,119

Deferred tax liability

                1,237

 

1,376

Long-term portion of deferred rent

                2,554

 

2,412

Accrued closure costs

                3,664

 

3,489

Long-term income taxes payable, net of current portion

                4,449

 

5,553

Long-term debt, net of current portion

              22,273

 

23,028

Total liabilities

            182,247

 

174,977

Minority interest

                   550

 

480

Stockholders’ Equity:

 

 

 

Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,195,788 shares issued and 29,608,772 and 29,615,226 shares outstanding (net of treasury shares), respectively

                       3

 

3

Additional paid-in capital

            374,126

 

373,192

Tax benefit from stock-based compensation

                4,565

 

4,563

Accumulated other comprehensive loss

            (15,013)

 

(12,897)

Accumulated deficit

             (66,812 )

 

(77,510)

Less: treasury stock at cost; 587,016 shares as of November 30, 2008 and 580,562 as of August 31, 2008.

             (13,006 )

 

(12,845)

Total stockholders’ equity

            283,863

 

274,506

Total Liabilities and Stockholders’ Equity

$          466,660

 

$       449,963