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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2022

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  _______  to 

COMMISSION FILE NUMBER 000-22793

PriceSmart, Inc.

(Exact name of registrant as specified in its charter)

Delaware

33-0628530

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9740 Scranton Road, San Diego, CA

92121

(Address of principal executive offices)

(Zip Code)

(858) 404-8800

(Registrant’s telephone number, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes  x

No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  x

No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x

Accelerated filer  ¨

Non-accelerated filer  ¨ 

Smaller Reporting Company  ¨

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.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨

No  x

The registrant had 30,873,938 shares of its common stock, par value $0.0001 per share, outstanding at March 31, 2022. 

 


 

PRICESMART, INC.

INDEX TO FORM 10-Q

Page

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

1

CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 2022 (UNAUDITED) AND AUGUST 31, 2021

2

CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2022 AND 2021 - UNAUDITED

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2022 AND 2021 - UNAUDITED

5

CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2022 AND 2021 - UNAUDITED

6

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED FEBRUARY 28, 2022 AND 2021 - UNAUDITED

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

10

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

32

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

56

ITEM 4.

CONTROLS AND PROCEDURES

57

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

58

ITEM 1A.

RISK FACTORS

58

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

58

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

58

ITEM 4.

MINE SAFETY DISCLOSURES

58

ITEM 5.

OTHER INFORMATION

58

ITEM 6.

EXHIBITS

59

 

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PriceSmart, Inc.’s (“PriceSmart,” “we” or the “Company”) unaudited consolidated balance sheet as of February 28, 2022 and the consolidated balance sheet as of August 31, 2021, the unaudited consolidated statements of income for the three and six months ended February 28, 2022 and 2021, the unaudited consolidated statements of comprehensive income for the three and six months ended February 28, 2022 and 2021, the unaudited consolidated statements of equity for the three and six months ended February 28, 2022 and 2021, and the unaudited consolidated statements of cash flows for the six months ended February 28, 2022 and 2021 are included herein. Also included herein are the notes to the unaudited consolidated financial statements.

 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

February 28,

2022

August 31,

(Unaudited)

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

 

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

See accompanying notes. 

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER 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
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

See accompanying notes. 

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS)

Three Months Ended

Six Months Ended

February 28,

February 28,

February 28,

February 28,

2022

2021

2022

2021

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

Other Comprehensive Income, net of tax:

Foreign currency translation adjustments (1)

2,413

(2,331)

(5,718)

430

Defined benefit pension plan:

Net gain arising during period

20

2

37

62

Amortization of prior service cost and actuarial gains included in net periodic pensions cost

30

33

64

66

Total defined benefit pension plan

50

35

101

128

Derivative instruments: (2)

Unrealized gains/(losses) on change in derivative

obligations

883

(75)

(418)

1,155

Unrealized gains on change in

fair value of interest rate swaps

880

1,251

4,130

329

Total derivative instruments