PriceSmart Inc. Files Q3 2024 10-Q Report

TL;DR

PriceSmart's Q3 10-Q is in. Check financials for latest performance.

AI Summary

PriceSmart Inc. filed its 10-Q for the period ending May 31, 2024. The filing details the company's financial performance and position during the third quarter of its fiscal year. Key financial data and operational updates are presented, reflecting the company's ongoing business activities and strategic initiatives.

Why It Matters

This report provides investors and analysts with a detailed look into PriceSmart's financial health and operational performance for the latest quarter, crucial for understanding its market position and future prospects.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the inherent risks of retail operations and international markets can impact PriceSmart's performance.

Key Numbers

• Q3 — Fiscal Quarter (Indicates the reporting period is the third quarter of the fiscal year.)
• 0831 — Fiscal Year End (The company's fiscal year concludes on August 31st.)

Key Players & Entities

• PRICESMART INC (company) — Filer
• 20240531 (date) — Period of Report
• 20240710 (date) — Filing Date
• SAN DIEGO (location) — Business Address City
• DE (location) — State of Incorporation

FAQ

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value PSMT NASDAQ Global Select Mar

Filing Documents

• psmt-20240531.htm (10-Q) — 1953KB
• psmt-20240531xexx311.htm (EX-31.1) — 10KB
• psmt-20240531xexx312.htm (EX-31.2) — 10KB
• psmt-20240531xexx321.htm (EX-32.1) — 4KB
• psmt-20240531xexx322.htm (EX-32.2) — 4KB
• 0001041803-24-000031.txt ( ) — 9023KB
• psmt-20240531.xsd (EX-101.SCH) — 59KB
• psmt-20240531_cal.xml (EX-101.CAL) — 93KB
• psmt-20240531_def.xml (EX-101.DEF) — 260KB
• psmt-20240531_lab.xml (EX-101.LAB) — 695KB
• psmt-20240531_pre.xml (EX-101.PRE) — 476KB
• psmt-20240531_htm.xml (XML) — 1455KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION ITEM 1.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 1 CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2024 (UNAUDITED) AND AUGUST 31, 2023 2 CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2024 AND 2023 - UNAUDITED 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2024 AND 2023 - UNAUDITED 5 CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2024 AND 2023 - UNAUDITED 6 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 2024 AND 2023 - UNAUDITED 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 10 ITEM 2.

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 34 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 62 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 62

- OTHER INFORMATION

PART II - OTHER INFORMATION ITEM 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 64 ITEM 1A.

RISK FACTORS

RISK FACTORS 64 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 64 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 64 ITEM 4. MINE SAFETY DISCLOSURES 64 ITEM 5. OTHER INFORMATION 65 ITEM 6. EXHIBITS 65 i Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS PriceSmart, Inc.'s ("PriceSmart," "we," the "Company" or "our") unaudited consolidated balance sheet as of May 31, 2024 and the consolidated balance sheet as of August 31, 2023, the unaudited consolidated statements of income for the three and nine months ended May 31, 2024 and 2023, the unaudited consolidated statements of comprehensive income for the three and nine months ended May 31, 2024 and 2023, the unaudited consolidated statements of equity for the three and nine months ended May 31, 2024 and 2023, and the unaudited consolidated statements of cash flows for the nine months ended May 31, 2024 and 2023 are included herein. Also included herein are the notes to the unaudited consolidated financial statements. 1 Table of Contents PRICESMART, INC. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) May 31, 2024 (Unaudited) August 31, 2023 ASSETS Current Assets: Cash and cash equivalents $ 128,271 $ 239,984 Short-term restricted cash 2,832 2,865 Short-term investments 99,904 91,081 Receivables, net of allowance for doubtful accounts of $ 62 as of May 31, 2024 and $ 67 as of August 31, 2023 17,842 17,904 Merchandise inventories 516,464 471,407 Prepaid expenses and other current assets (includes $ 2,606 and $ 0 as of May 31, 2024 and August 31, 2023, respectively, for the fair value of derivative instruments) 57,515 53,866 Total current assets 822,828 877,107 Long-term restricted cash 9,239 9,353 Property and equipment, net 938,336 850,328 Operating lease right-of-use assets, net 100,391 114,201 Goodwill 43,182 43,110 Deferred tax assets 31,241 32,039 Other non-current assets (includes $ 1,979 and $ 7,817 as of May 31, 2024 and August 31, 2023, respectively, for the fair value of derivative instruments) 64,920 68,991 Investment in unconsolidated affiliates 10,561 10,479 Total Assets $ 2,020,698 $ 2,005,608 LIABILITIES AND EQUITY Current Liabilities: Short-term borrowings $ 10,078 $ 8,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) May 31, 2024 NOTE 1 – COMPANY OVERVIEW AND BASIS OF PRESENTATION PriceSmart, Inc.'s ("PriceSmart," the "Company," "we" or "our") business consists primarily of international membership shopping warehouse clubs similar to, but typically smaller in size than, warehouse clubs in the United States. As of May 31, 2024, the Company had 54 warehouse clubs in operation in 12 countries and one U.S. territory ( ten in Colombia; eight in Costa Rica; seven in Panama; six in Guatemala; five in Dominican Republic; four each in Trinidad and El Salvador; three in Honduras; two each in Nicaragua and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands), of which the Company owns 100 % of the corresponding legal entities (see Note 2 - Summary of Significant Accounting Policies). In addition, the Company plans to open one warehouse club in Cartago, Costa Rica in the spring of 2025. Once this new club is open, the Company will operate 55 warehouse clubs. Our operating segments are the United States, Central America, the Caribbean and Colombia. PriceSmart continues to invest in technology and talent to support the following three major drivers of growth: 1. Invest in Remodeling Current PriceSmart Clubs, Adding New PriceSmart Locations and Opening More Distribution Centers; 2. Increase Membership Value; and 3. Drive Incremental Sales via PriceSmart.com and Enhanced Online, Digital and Technological Capabilities. Basis of Presentation – The interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2023 (the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) In the case of the Company's ownership interest in real estate development joint ventures, both parties to each joint venture share all rights, obligations and the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. As a result, the Company has determined that it is not the primary beneficiary of the VIEs and, therefore, has accounted for these entities under the equity method. Under the equity method, the Company's investments in unconsolidated affiliates are initially recorded as an investment in the stock of an investee at cost and are adjusted for the carrying amount of the investment to recognize the investor's share of the earnings or losses of the investee after the date of the initial investment. The Company's ownership interest in real estate development joint ventures the Company has recorded under the equity method as of May 31, 2024 are listed below: Real Estate Development Joint Ventures Countries Ownership Basis of Presentation GolfPark Plaza, S.A. Panama 50.0 % Equity (1) Price Plaza Alajuela PPA, S.A. Costa Rica 50.0 % Equity (1) (1) Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. Use of Estimates – T he preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable. Actual results could differ from those estimates and assumptions. Cash and Cash Equivalents – The Company considers as cash and cash equivalents all cash on deposit, highly liquid investments with a maturity of three months or less at the date of purchase and proceeds due from credit and debit card transactions in the proce

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Receivables – Receivables consist primarily of credit card receivables and receivables from vendors and are stated net of allowances for credit losses. The determination of the allowance for credit losses is based on the Company's assessment of collectability along with the consideration of current and expected market conditions that could impact collectability. Tax Receivables – The Company pays Value Added Tax ("VAT") or similar taxes, income taxes, and other taxes within the normal course of business in most of the countries in which it operates related to the procurement of merchandise and/or services the Company acquires and/or on sales and taxable income. VAT is a form of indirect tax applied to the value added at each stage of production (primary, manufacturing, wholesale and retail). This tax is similar to, but operates somewhat differently than, sales tax paid in the United States. The Company generally collects VAT from its Members upon sale of goods and services and pays VAT to its vendors upon purchase of goods and services. Periodically, the Company submits VAT reports to governmental agencies and reconciles the VAT paid and VAT received. The net overpaid VAT may be refunded or applied to subsequent returns, and the net underpaid VAT must be remitted to the government. With respect to income taxes paid, if the estimated income taxes paid or withheld exceed the actual income tax due this creates an income tax receivable. In most countries where the Company operates, the governments have implemented additional collection procedures, such as requiring credit card processors to remit a portion of sales processed via credit and debit cards directly to the government as advance payments of VAT and/or income tax. This collection mechanism generally leaves the Company with net VAT and/or income tax receivables, forcing the Company to process significant refund claims on a recurring basis. These refund

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