PRICESMART INC [PSMT] Filings

10-Q 1 psmt-20220228x10q.htm 10-Q psmt-20220228x10q

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


¨	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

Table of Contents

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.

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Table of Contents

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

‎

Table of Contents



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.
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Table of Contents

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.
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Table of Contents

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

PRICESMART INC [PSMT] Filings
10-Q	[2022-04-07]
10-Q	[2022-01-06]
10-K	[2021-10-21]
10-Q	[2021-07-08]
10-Q	[2021-04-08]
10-Q	[2021-01-07]
10-K	[2020-10-30]
10-Q	[2020-07-09]
10-Q	[2020-04-08]
10-Q	[2020-01-09]
10-K	[2019-10-29]
10-Q	[2019-07-10]
10-Q	[2019-04-09]
10-Q	[2019-01-09]
10-K	[2018-10-25]
10-Q	[2018-07-05]
10-Q	[2018-04-05]
10-Q	[2018-01-04]
10-K	[2017-10-26]
10-Q	[2017-07-05]
10-Q	[2017-04-06]
10-Q	[2017-01-05]
10-K	[2016-10-27]
10-Q	[2016-07-07]
10-Q	[2016-04-07]
10-Q	[2016-01-07]
10-K	[2015-10-29]
10-Q	[2015-07-09]
10-Q	[2015-04-09]
10-Q	[2015-01-08]
10-K	[2014-10-30]
10-Q	[2014-07-10]
10-Q	[2014-04-09]
10-Q	[2014-01-09]
10-K	[2013-10-30]
10-Q	[2013-07-10]
10-Q	[2013-04-09]
10-Q	[2013-01-09]
10-K	[2012-10-30]
10-Q	[2012-07-09]
10-Q	[2012-04-04]
10-Q	[2012-01-09]