COVER
COVER - shares | 9 Months Ended | |
May 31, 2024 | Jun. 30, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | May 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 000-22793 | |
Entity Registrant Name | PriceSmart, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0628530 | |
Entity Address, Address Line One | 9740 Scranton Road | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | 858 | |
Local Phone Number | 404-8800 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | PSMT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,638,993 | |
Entity Central Index Key | 0001041803 | |
Current Fiscal Year End Date | --08-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
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 |
Current Liabilities: | ||
Short-term borrowings | 10,078 | 8,679 |
Accounts payable | 491,203 | 453,229 |
Accrued salaries and benefits | 46,763 | 45,441 |
Deferred income | 37,777 | 32,613 |
Income taxes payable | 4,785 | 9,428 |
Other accrued expenses and other current liabilities (includes $2,734 and $1,913 as of May 31, 2024 and August 31, 2023, respectively, for the fair value of derivative instruments) | 42,163 | 57,273 |
Operating lease liabilities, current portion | 7,179 | 7,621 |
Dividends payable | 17,771 | 0 |
Long-term debt, current portion | 36,672 | 20,193 |
Total current liabilities | 694,391 | 634,477 |
Deferred tax liability | 1,942 | 1,936 |
Long-term income taxes payable, net of current portion | 5,039 | 5,045 |
Long-term operating lease liabilities | 108,258 | 122,195 |
Long-term debt, net of current portion | 98,426 | 119,487 |
Other long-term liabilities (includes $4,137 and $3,321 for the fair value of derivative instruments and $13,151 and $12,105 for post-employment plans as of May 31, 2024 and August 31, 2023, respectively) | 17,288 | 15,425 |
Total Liabilities | 925,344 | 898,565 |
Stockholders' Equity: | ||
Common stock $0.0001 par value, 45,000,000 shares authorized; 32,562,808 and 31,934,900 shares issued and 30,639,028 and 30,976,941 shares outstanding (net of treasury shares) as of May 31, 2024 and August 31, 2023, respectively | 3 | 3 |
Additional paid-in capital | 509,901 | 497,434 |
Accumulated other comprehensive loss | (160,080) | (163,992) |
Retained earnings | 861,158 | 817,559 |
Less: treasury stock at cost, 1,923,780 shares as of May 31, 2024 and 957,959 shares as of August 31, 2023 | (115,628) | (43,961) |
Total Stockholders' Equity | 1,095,354 | 1,107,043 |
Total Liabilities and Equity | $ 2,020,698 | $ 2,005,608 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Receivables, allowance for doubtful accounts | $ 62 | $ 67 |
Prepaid expenses and other current assets, fair value of derivative instruments | 2,606 | 0 |
Derivative asset, noncurrent | 1,979 | 7,817 |
Fair value, liabilities, current | 2,734 | 1,913 |
Other long-term liabilities, fair value of derivative instruments | 4,137 | 3,321 |
Other long-term liabilities, post-employment plans | $ 13,151 | $ 12,105 |
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 45,000,000 | 45,000,000 |
Common stock, shares issued (in shares) | 32,562,808 | 31,934,900 |
Common stock, shares outstanding (in shares) | 30,639,028 | 30,976,941 |
Treasury stock (in shares) | 1,923,780 | 957,959 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Revenues: | ||||
Total revenues | $ 1,229,428 | $ 1,096,654 | $ 3,687,853 | $ 3,293,649 |
Selling, general and administrative: | ||||
Warehouse club and other operations | 119,053 | 106,172 | 346,792 | 306,694 |
General and administrative | 40,434 | 34,343 | 114,682 | 100,274 |
Separation costs associated with Chief Executive Officer departure | 0 | 0 | 0 | 7,747 |
Pre-opening expenses | 26 | 495 | 970 | 584 |
Loss (gain) on disposal of assets | 350 | (2) | 872 | 295 |
Total operating expenses | 1,179,519 | 1,053,602 | 3,516,113 | 3,141,270 |
Operating income | 49,909 | 43,052 | 171,740 | 152,379 |
Other income (expense): | ||||
Interest income | 2,521 | 3,161 | 8,612 | 6,260 |
Interest expense | (3,579) | (2,747) | (9,688) | (8,310) |
Other expense, net | (1,882) | (1,885) | (11,044) | (11,795) |
Total other expense | (2,940) | (1,471) | (12,120) | (13,845) |
Income before provision for income taxes and income (loss) of unconsolidated affiliates | 46,969 | 41,581 | 159,620 | 138,534 |
Provision for income taxes | (14,483) | (12,019) | (49,895) | (44,647) |
Income (loss) of unconsolidated affiliates | 3 | 10 | 82 | (63) |
Net income | $ 32,489 | $ 29,572 | $ 109,807 | $ 93,824 |
Net income per share available for distribution: | ||||
Basic (in dollars per share) | $ 1.08 | $ 0.95 | $ 3.62 | $ 3.02 |
Diluted (in dollars per share) | $ 1.08 | $ 0.94 | $ 3.62 | $ 3.01 |
Shares used in per share computations: | ||||
Basic (in shares) | 29,968 | 30,800 | 30,052 | 30,752 |
Diluted (in shares) | 29,968 | 30,829 | 30,052 | 30,770 |
Net merchandise sales | ||||
Revenues: | ||||
Total revenues | $ 1,194,531 | $ 1,070,263 | $ 3,590,461 | $ 3,211,725 |
Cost of goods sold: | ||||
Cost of goods sold | 1,008,721 | 906,613 | 3,024,134 | 2,703,143 |
Export sales | ||||
Revenues: | ||||
Total revenues | 11,586 | 6,347 | 30,106 | 23,687 |
Cost of goods sold: | ||||
Cost of goods sold | 10,935 | 5,981 | 28,663 | 22,533 |
Membership income | ||||
Revenues: | ||||
Total revenues | 19,279 | 16,735 | 55,566 | 48,806 |
Other revenue and income | ||||
Revenues: | ||||
Total revenues | $ 4,032 | $ 3,309 | $ 11,720 | $ 9,431 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net income | $ 32,489 | $ 29,572 | $ 109,807 | $ 93,824 | |
Other Comprehensive Income (Loss), net of tax: | |||||
Foreign currency translation adjustments | [1] | (5,181) | 15,285 | 5,053 | 26,599 |
Defined benefit pension plan: | |||||
Net gain/(loss) arising during period | (5) | (22) | 15 | (81) | |
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | 96 | 37 | 287 | 111 | |
Total defined benefit pension plan | 302 | 30 | |||
Derivative instruments: | |||||
Unrealized gains on change in derivative obligations | [2] | 807 | 3,060 | 2,745 | 2,525 |
Unrealized losses on change in fair value of interest rate swaps | [2] | (508) | (4,271) | (4,188) | (5,904) |
Amounts reclassified from accumulated other comprehensive income to other expense, net for settlement of derivatives | [2] | 0 | 11 | 0 | 2,733 |
Total derivative instruments | [2] | 299 | (1,200) | (1,443) | (646) |
Other comprehensive income (loss) | (4,791) | 14,100 | 3,912 | 25,983 | |
Comprehensive income | $ 27,698 | $ 43,672 | $ 113,719 | $ 119,807 | |
[1] Translation adjustments arising in translating the financial statements of a foreign entity have no effect on the income taxes of that foreign entity. They may, however, affect: (a) the amount, measured in the parent entity's reporting currency, of withholding taxes assessed on dividends paid to the parent entity and (b) the amount of taxes assessed on the parent entity by the government of its country. The Company has determined that the reinvestment of earnings of its foreign subsidiaries are indefinite because of the long-term nature of the Company's foreign investment plans. Therefore, deferred taxes are not provided for on translation adjustments related to non-remitted earnings of the Company's foreign subsidiaries. See Note 8 - Derivative Instruments and Hedging Activities. |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock |
Beginning balance (in shares) at Aug. 31, 2022 | 31,698,000 | |||||
Beginning balance at Aug. 31, 2022 | $ 991,073 | $ 3 | $ 481,406 | $ (195,586) | $ 736,894 | $ (31,644) |
Treasury stock, beginning balance (in shares) at Aug. 31, 2022 | 793,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of treasury stock (in shares) | 85,000 | |||||
Purchase of treasury stock | (5,993) | $ (5,993) | ||||
Issuance of treasury stock (in shares) | (7,000) | (7,000) | ||||
Issuance of treasury stock | 0 | (546) | $ 546 | |||
Issuance of restricted stock awards (in shares) | 303,000 | |||||
Forfeiture of restricted stock awards (in shares) | (59,000) | |||||
Stock-based compensation | 13,522 | 13,522 | ||||
Dividends paid to stockholders | (14,290) | (14,290) | ||||
Dividend payable to stockholders | (14,426) | (14,426) | ||||
Net income | 93,824 | 93,824 | ||||
Other comprehensive income (loss) | 25,983 | 25,983 | ||||
Ending balance (in shares) at May. 31, 2023 | 31,935,000 | |||||
Ending balance at May. 31, 2023 | 1,089,693 | $ 3 | 494,382 | (169,603) | 802,002 | $ (37,091) |
Treasury stock, ending balance (in shares) at May. 31, 2023 | 871,000 | |||||
Beginning balance (in shares) at Feb. 28, 2023 | 31,869,000 | |||||
Beginning balance at Feb. 28, 2023 | 1,043,912 | $ 3 | 492,099 | (183,703) | 772,430 | $ (36,917) |
Treasury stock, beginning balance (in shares) at Feb. 28, 2023 | 868,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of treasury stock (in shares) | 3,000 | |||||
Purchase of treasury stock | (174) | $ (174) | ||||
Issuance of restricted stock awards (in shares) | 66,000 | |||||
Stock-based compensation | 2,283 | 2,283 | ||||
Dividends paid to stockholders | (30) | (30) | ||||
Dividend payable to stockholders | 30 | 30 | ||||
Net income | 29,572 | 29,572 | ||||
Other comprehensive income (loss) | 14,100 | 14,100 | ||||
Ending balance (in shares) at May. 31, 2023 | 31,935,000 | |||||
Ending balance at May. 31, 2023 | $ 1,089,693 | $ 3 | 494,382 | (169,603) | 802,002 | $ (37,091) |
Treasury stock, ending balance (in shares) at May. 31, 2023 | 871,000 | |||||
Beginning balance (in shares) at Aug. 31, 2023 | 30,976,941 | 31,935,000 | ||||
Beginning balance at Aug. 31, 2023 | $ 1,107,043 | $ 3 | 497,434 | (163,992) | 817,559 | $ (43,961) |
Treasury stock, beginning balance (in shares) at Aug. 31, 2023 | 957,959 | 958,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of treasury stock (in shares) | 969,000 | |||||
Purchase of treasury stock | $ (71,852) | $ (71,852) | ||||
Issuance of treasury stock (in shares) | (3,000) | (3,000) | (3,000) | |||
Issuance of treasury stock | $ 0 | (185) | $ 185 | |||
Issuance of restricted stock awards (in shares) | 662,000 | |||||
Forfeiture of restricted stock awards (in shares) | (31,000) | |||||
Stock-based compensation | 12,652 | 12,652 | ||||
Dividends paid to stockholders | (48,437) | (48,437) | ||||
Dividend payable to stockholders | (17,771) | (17,771) | ||||
Net income | 109,807 | 109,807 | ||||
Other comprehensive income (loss) | $ 3,912 | 3,912 | ||||
Ending balance (in shares) at May. 31, 2024 | 30,639,028 | 32,563,000 | ||||
Ending balance at May. 31, 2024 | $ 1,095,354 | $ 3 | 509,901 | (160,080) | 861,158 | $ (115,628) |
Treasury stock, ending balance (in shares) at May. 31, 2024 | 1,923,780 | 1,924,000 | ||||
Beginning balance (in shares) at Feb. 29, 2024 | 32,579,000 | |||||
Beginning balance at Feb. 29, 2024 | $ 1,093,874 | $ 3 | 505,349 | (155,289) | 859,325 | $ (115,514) |
Treasury stock, beginning balance (in shares) at Feb. 29, 2024 | 1,922,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of treasury stock (in shares) | 2,000 | |||||
Purchase of treasury stock | (114) | $ (114) | ||||
Issuance of restricted stock awards (in shares) | 7,000 | |||||
Forfeiture of restricted stock awards (in shares) | (23,000) | |||||
Stock-based compensation | 4,552 | 4,552 | ||||
Dividends paid to stockholders | (30,656) | (30,656) | ||||
Net income | 32,489 | 32,489 | ||||
Other comprehensive income (loss) | $ (4,791) | (4,791) | ||||
Ending balance (in shares) at May. 31, 2024 | 30,639,028 | 32,563,000 | ||||
Ending balance at May. 31, 2024 | $ 1,095,354 | $ 3 | $ 509,901 | $ (160,080) | $ 861,158 | $ (115,628) |
Treasury stock, ending balance (in shares) at May. 31, 2024 | 1,923,780 | 1,924,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2024 | May 31, 2023 | |
Operating Activities: | ||
Net income | $ 109,807 | $ 93,824 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 61,114 | 53,264 |
Allowance for doubtful accounts | (5) | (46) |
Loss on sale of property and equipment | 872 | 295 |
Deferred income taxes | 461 | (723) |
Equity in losses (gains) of unconsolidated affiliates | (82) | 63 |
Stock-based compensation | 12,652 | 13,522 |
Change in operating assets and liabilities: | ||
Receivables, prepaid expenses and other current assets, non-current assets, accrued salaries and benefits, deferred membership income and other accruals | (12,998) | (5,229) |
Merchandise inventories | (45,057) | 21,831 |
Accounts payable | 38,990 | 7,880 |
Net cash provided by operating activities | 165,754 | 184,681 |
Investing Activities: | ||
Additions to property and equipment | (141,873) | (96,557) |
Purchases of short-term investments | (134,108) | (123,317) |
Proceeds from settlements of short-term investments | 125,464 | 21,842 |
Proceeds from disposal of property and equipment | 1,138 | 218 |
Net cash used in investing activities | (149,379) | (197,814) |
Financing Activities: | ||
Proceeds from long-term bank borrowings | 16,500 | 38,712 |
Repayment of long-term bank borrowings | (21,433) | (31,407) |
Proceeds from short-term bank borrowings | 3,884 | 3,156 |
Repayment of short-term bank borrowings | (2,941) | (3,229) |
Cash dividend payments | (48,437) | (14,290) |
Purchase of treasury stock | (71,852) | (5,993) |
Net cash used in financing activities | (124,279) | (13,051) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (3,956) | 11,183 |
Net decrease in cash, cash equivalents | (111,860) | (15,001) |
Cash, cash equivalents and restricted cash at beginning of period | 252,202 | 251,373 |
Cash, cash equivalents and restricted cash at end of period | 140,342 | 236,372 |
Supplemental disclosure of noncash investing activities: | ||
Capital expenditures accrued, but not yet paid | 3,514 | 4,052 |
Dividends declared but not yet paid | 17,771 | 14,426 |
Reconciliation of cash, cash equivalents, and restricted cash: | ||
Cash and cash equivalents | 128,271 | 222,668 |
Short-term restricted cash | 2,832 | 2,965 |
Long-term restricted cash | 9,239 | 10,739 |
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ 140,342 | $ 236,372 |
COMPANY OVERVIEW AND BASIS OF P
COMPANY OVERVIEW AND BASIS OF PRESENTATION | 9 Months Ended |
May 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
COMPANY OVERVIEW AND BASIS OF PRESENTATION | 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 “2023 Form 10-K”). The interim consolidated financial statements include the accounts of PriceSmart, Inc., a Delaware corporation, and its subsidiaries. Intercompany transactions between the Company and its subsidiaries have been eliminated in consolidation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
May 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation – The consolidated financial statements of the Company included herein include the assets, liabilities and results of operations of the Company’s wholly owned subsidiaries, subsidiaries in which it has a controlling interest, and the Company’s joint ventures for which the Company has determined that it is the primary beneficiary. The consolidated financial statements also include the Company's investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. All significant inter-company accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC and reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of the results for the year. The Company determines whether any of the joint ventures in which it has made investments is a Variable Interest Entity (“VIE”) at the start of each new venture and if a reconsideration event has occurred. At this time, the Company also considers whether it must consolidate a VIE and/or disclose information about its involvement in a VIE. A reporting entity must consolidate a VIE if that reporting entity has a variable interest (or combination of variable interests) and is determined to be the primary beneficiary. If the Company determines that it is not the primary beneficiary of the VIE, then the Company records its investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. Due to the nature of the joint ventures that the Company participates in and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. 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 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 process of settlement. The Company invests some of our cash in money market funds which are considered equity securities and are held at fair value in Cash and cash equivalents on the consolidated balance sheets. The fair value of money market funds held was $19.2 million as of May 31, 2024 and $100.2 million as of August 31, 2023. We receive interest payments from the money market funds which are recorded in the Interest income line item under the Total other expense caption within the consolidated statements of income. Restricted Cash – The following table summarizes the restricted cash reported by the Company (in thousands): May 31, August 31, Short-term restricted cash $ 2,832 $ 2,865 Long-term restricted cash 9,239 9,353 Total restricted cash (1) $ 12,071 $ 12,218 (1) Restricted cash consists of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. In addition, the Company is required to maintain a certificate of deposit and/or security deposits of Trinidad dollars, as measured in U.S dollars, of approximately $5.8 million with a few of its lenders as compensating balances for several U.S. dollar and euro denominated loans payable over several years. The certificates of deposit will be reduced annually commensurate with the loan balances. Short-Term Investments – The Company considers certificates of deposit and similar time-based deposits with financial institutions with original maturities over three months and up to one year to be short-term investments. Long-Term Investments – The Company considers certificates of deposit and similar time-based deposits with financial institutions with original maturities over one year to be long-term investments. Goodwill – Goodwill totaled $43.2 million as of May 31, 2024 and $43.1 million as of August 31, 2023. The Company reviews reported goodwill at the reporting unit level for impairment. The Company tests goodwill for impairment at least annually or when events or changes in circumstances indicate that it is more likely than not that the asset is impaired. 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 or offset processes can take anywhere from several months to several years to complete. Additionally, we are occasionally required to make payments for tax assessments that we are appealing, notwithstanding that we believe it is more likely than not we will ultimately prevail. Minimum tax rules, applicable in some of the countries where the Company operates, require the payment of taxes based on a percentage of sales, when the resulting tax is greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). This can result in AMT payments substantially in excess of those the Company would expect to pay based on taxable income. As the Company believes that, in one country where it operates, it should only be ultimately liable for an income-based tax, it has accumulated income tax receivables of $10.9 million and $10.7 million and deferred tax assets of $3.4 million and $3.2 million as of May 31, 2024 and August 31, 2023, respectively, in this country. While the rules related to refunds of income tax receivables in this country are unclear and complex, the Company has not placed any type of allowance on the recoverability of these tax receivables, deferred tax assets or amounts that may be deemed under-paid, because the Company believes that it is more likely than not that it will ultimately succeed in its refund requests and appeals of these rules. The Company's various outstanding VAT receivables and/or income tax receivables are based on cases or appeals with their own set of facts and circumstances. The Company consults and evaluates with legal and tax advisors regularly to understand the strength of its legal arguments and probability of successful outcomes in addition to its own experience handling complex tax issues. Based on those evaluations, the Company has not placed any type of allowance on the recoverability of the remaining tax receivables or deferred tax assets, because the Company believes that it is more likely than not that it will ultimately succeed in its refund requests. The Company’s policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: • Short-term VAT and Income tax receivables, recorded as Prepaid expenses and other current assets: This classification is used for any countries where the Company’s subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. • Long-term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company’s subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. The following table summarizes the VAT receivables reported by the Company (in thousands): May 31, August 31, Prepaid expenses and other current assets $ 9,442 $ 2,774 Other non-current assets 30,275 36,060 Total amount of VAT receivables reported $ 39,717 $ 38,834 The following table summarizes the Income tax receivables reported by the Company (in thousands): May 31, August 31, Prepaid expenses and other current assets $ 15,703 $ 17,749 Other non-current assets 27,074 19,176 Total amount of income tax receivables reported $ 42,777 $ 36,925 Lease Accounting – The Company’s leases are operating leases for warehouse clubs and non-warehouse club facilities such as corporate headquarters, regional offices, and regional distribution centers. The Company determines if an arrangement is a lease and classifies it as either a finance or operating lease at lease inception. Operating leases are included in Operating lease right-of-use assets, net; Operating lease liabilities, current portion; and Long-term operating lease liabilities on the consolidated balance sheets. The Company does not have finance leases. Operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. The Company’s leases generally do not have a readily determinable implicit interest rate; therefore, the Company uses a collateralized incremental borrowing rate at the commencement date in determining the present value of future payments. The incremental borrowing rate is based on a yield curve derived from publicly traded bond offerings for companies with credit characteristics that approximate the Company's market risk profile. In addition, we adjust the incremental borrowing rate for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. The Company’s lease terms may include options to purchase, extend or terminate the lease, which are recognized when it is reasonably certain that the Company will exercise that option. The Company does not combine lease and non-lease components. The Company measures Right-of-use (“ROU”) assets based on the corresponding lease liabilities, adjusted for any initial direct costs and prepaid lease payments made to the lessor before or at the commencement date (net of lease incentives). The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the calculation of the ROU asset and the related lease liability and are recognized as incurred. The Company’s variable lease payments generally relate to amounts the Company pays for additional contingent rent based on a contractually stipulated percentage of sales. In January 2024, the Company purchased one of its club's buildings and land, which was previously leased, in Panama City, Panama, for $33.0 million. Management assessed the fair market value using the market and replacement cost methods and, per the assessment, allocated approximately 88.7% of the purchase price to the land and 11.3% of the purchase price to the building. The transaction resulted in the termination of the related ROU asset, net of tax, and lease liability, net of tax, of $8.2 million and $9.1 million, respectively. No gain or loss was recognized as the lease termination occurred due to the purchase of the leased asset. This allocation of the purchase price, after accounting for the impact of the lease termination, resulted in $28.2 million allocated to the land and $3.9 million allocated to the building. Additionally, the Company already carried approximately $8.6 million of leasehold improvements related to the club which have been reclassified to the building and remain on the balance sheet. This purchase triggered a change in the estimate of the depreciable lives of certain leasehold improvements, which were previously limited to the lease term, lowering future annual depreciation. Going forward, the lower annual depreciation expense and the cost savings on straight-line rent expense, partially offset by the depreciation expense on the building, will save approximately $1.1 million per year, net of tax, within our Warehouse club and other operations expenses in the Company's consolidated statements of income. Additionally, the Company entered into a loan agreement for $16.5 million, paid over 15 years, to partially fund the purchase of our Via Brasil club. We expect approximately $1.0 million in interest payments, net of tax, over the next 12 months associated with this loan, which will continue to decrease as the loan balance is paid off over the life of the loan. The interest expense related to this loan will be recorded within the Interest expense caption on the consolidated statements of income. Merchandise Inventories – Merchandise inventories, which include merchandise for resale, are valued at the lower of cost (average cost) or net realizable value. The Company provides for estimated inventory losses and obsolescence based on a percentage of sales. The provision is adjusted every reporting period to reflect the trend of actual physical inventory and cycle count results. In addition, the Company may be required to take markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise. Stock Based Compensation – The Company utilizes three types of equity awards: restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and, prior to fiscal year 2024, performance-based restricted stock units (“PSUs”). Compensation cost related to RSAs, RSUs and PSUs is based on the fair market value at the time of the grant. The Company recognizes the compensation cost related to RSAs and RSUs over the requisite service period as determined by the grant, amortized ratably or on a straight-line basis over the life of the grant. The Company also recognizes compensation cost for PSUs over the performance period of each tranche, adjusting this cost based on the Company's estimate of the probability that performance metrics will be achieved. As of May 31, 2024, all outstanding PSUs have successfully met all performance metrics except for the requisite service period. The Company accounts for actual forfeitures as they occur. The Company records the tax savings resulting from tax deductions in excess of expense for stock-based compensation and the tax deficiency resulting from stock-based compensation in excess of the related tax deduction as income tax expense or benefit. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as an operating cash flow in its consolidated statement of cash flows. RSAs are outstanding shares of common stock and have the same cash dividend and voting rights as other shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. Payments of dividend equivalents to employees are recorded as compensation expense. PSUs, similar to RSUs, are awarded with dividend equivalents after the performance metric has been achieved. Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost, including transaction costs and excise taxes, as treasury stock and result in the reduction of stockholders’ equity in the Company’s consolidated balance sheets. The Company may reissue these treasury shares as part of its stock-based compensation programs. When treasury shares are reissued, the Company uses the first in/first out (“FIFO”) cost method for determining cost of the reissued shares. If the issuance price is higher than the cost, the excess of the issuance price over the cost is credited to additional paid-in capital (“APIC”). If the issuance price is lower than the cost, the difference is first charged against any credit balance in APIC from treasury stock and the balance is charged to retained earnings. During the nine months ended May 31, 2024, the Company reissued approximately 3,000 treasury shares. Fair Value Measurements – The Company measures the fair value for all financial and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring or nonrecurring basis. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. ASC 820, Fair Value Measurements and Disclosures, sets forth a fair value hierarchy that categorizes inputs to valuation techniques used to measure and revalue fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company was not required to revalue any assets or liabilities utilizing Level 1 or Level 3 inputs at the balance sheet dates. The Company's Level 2 assets and liabilities revalued at the balance sheet dates, on a recurring basis, consisted of cash flow hedges (interest rate swaps and cross-currency interest rate swaps) and forward foreign exchange contracts. In addition, the Company utilizes Level 2 inputs in determining the fair value of long-term debt. Non-financial assets and liabilities are revalued and recognized at fair value subsequent to initial recognition when there is evidence of impairment. For the periods reported, no impairment of such non-financial assets were recorded. The Company’s current and long-term financial assets and liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums and debt issuance costs. There have been no significant changes in the fair market value of the Company’s current and long-term financial assets and liabilities, and there have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities disclosed in the Company’s 2023 Annual Report on Form 10-K. Derivatives Instruments and Hedging Activities – The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates. In using derivative financial instruments for the purpose of hedging the Company’s exposure to interest and currency exchange rate risks, the contractual terms of a hedged instrument closely mirror those of the hedged item and are intended to provide a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria (effective hedge) are recorded using hedge accounting. If a derivative financial instrument is an effective hedge, changes in the fair value of the instrument will be reported in accumulated other comprehensive loss until the hedged item completes its contractual term. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company did not change valuation techniques utilized in the fair value measurement of assets and liabilities presented on the Company’s consolidated balance sheets from previous practice during the reporting period. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. Cash Flow Instruments. The Company is a party to receive floating interest rate and pay fixed-rate interest rate swaps to hedge the interest rate risk of certain U.S. dollar denominated debt within its international subsidiaries. The swaps are designated as cash flow hedges of interest expense risk. These instruments are considered effective hedges and are recorded using hedge accounting. The Company is also a party to receive variable or fixed interest rate and pay fixed interest rate cross-currency interest rate swaps to hedge the interest rate and currency exposure associated with the expected payments of principal and interest of U.S. denominated debt within its international subsidiaries whose functional currency is other than the U.S. dollar. The swaps are designated as cash flow hedges of the currency risk and interest-rate risk related to payments on the U.S. denominated debt. These instruments are also considered to be effective hedges and are recorded using hedge accounting. Under cash flow hedging, the entire gain or loss of the derivative, calculated as the net present value of the future cash flows, is reported on the consolidated balance sheets in accumulated other comprehensive loss. Amounts recorded in accumulated other comprehensive loss are released to earnings in the same period that the hedged transaction impacts consolidated earnings. Refer to “Note 8 - Derivative Instruments and Hedging Activities” for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of May 31, 2024 and August 31, 2023. Fair Value Instruments. The Company is exposed to foreign currency exchange rate fluctuations in the normal course of business. This includes exposure to foreign currency exchange rate fluctuations on U.S. dollar denominated liabilities within the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flows attributable to currency exchange movements. The contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts are treated for accounting purposes as fair value instruments and do not qualify for derivative hedge accounting, and as such the Company does not apply derivative hedge accounting to record these transactions. As a result, these contracts are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company seeks to mitigate foreign currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features and are limited to less than one year in duration. Revenue Recognition – The accounting policies and other disclosures such as the disclosure of disaggregated revenues are described in “Note 3 – Revenue Recognition.” Cost of Goods Sold – The Company includes the cost of merchandise and food service and bakery raw materials in cost of goods sold - net merchandise sales. The Company also includes in cost of goods sold - net merchandise sales the external and internal distribution and handling costs for supplying merchandise, raw materials and supplies to the warehouse clubs, and, when applicable, costs of shipping to Members. External costs include inbound freight, duties, drayage, fees, insurance, and non-recoverable value-added tax related to inventory shrink, spoilage and damage. Internal costs include payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense and building and equipment depreciation at the Company's distribution facilities and payroll and other direct costs for in-club demonstrations. For export sales, the Company includes the cost of merchandise and external and internal distribution and handling costs for supplying merchandise in cost of goods sold - exports. Vendor consideration consists primarily of volume rebates, time-limited product promotions, cooperative marketing efforts, digital advertising, slotting fees, demonstration reimbursements and prompt payment discounts. Volume rebates and time-limited promotions are recognized on a systematic and rational allocation of the cash consideration as the Company progresses toward earning the rebate, provided the amounts to be earned are probable and reasonably estimable. Cooperative marketing efforts and digital advertising are related to consideration received by the Company from vendors for non-distinct online advertising services on the Company’s website and social media platforms. Slotting fees are related to consideration received by the Company from vendors for preferential "end cap" placement of the vendor's products within the warehouse club. Demonstration reimbursements are related to consideration received by the Company from vendors for the in-club promotion of the vendors' products. The Company records the reduction in cost of goods sold on a transactional basis for these programs. On a quarterly basis, the Company calculates the amount of rebates recorded in cost of goods sold that relates to inventory on hand and this amount is reclassified as a reduction to inventory, if significant. Prompt payment discounts are taken in substantially all cases and therefore are applied directly to reduce the acquisition cost of the related inventory, with the resulting effect recorded to cost of goods sold when the inventory is sold. Selling, General and Administrative – Selling, general and administrative costs consist primarily of expenses associated with operating warehouse clubs and non-income based taxes such as alternative minimum taxes based on revenue or sales. These costs include payroll and related costs, including separation costs associated with the Chief Executive Officer departure, utilities, consumable supplies, repair and maintenance, rent expense, building and equipment depreciation, bank fees, credit card processing fees, and amortization of intangibles. Also included in selling, general and administrative expenses are the payroll and related costs for the Company’s U.S. and regional management and purchasing centers. In December 2022, the Company announced that Sherry Bahrambeygui would resign as Chief Executive Officer effective February 3, 2023. In connection with her departure, the Company recognized a one-time separation charge of approximately $7.7 million ($7.2 million net of tax) in the second quarter of fiscal year 2023. This amount consists of approximately $4.2 million of non-cash charges related to the acceleration of certain equity awards and approximately $3.5 million for other separation costs. The Company recorded these charges in the second quarter of fiscal year 2023. These charges were recorded in the Separation costs associated with Chief Executive Officer departure line item under the Selling, general and administrative caption within the Consolidated Statements of Income and are recorded in the Company’s United States segment. In connection with her departure, the Company accrued for the related charges and substantially fulfilled all payment obligations by the end of the second quarter of fiscal year 2023; however, some vesting of PSUs occurred in the first quarter of fiscal year 2024. Pre-Opening Costs – The Company expenses pre-opening costs (the costs of start-up activities, including organization costs and rent) for new warehouse clubs as incurred. Asset Impairment and Closure Costs – The Company periodically evaluates its long-lived assets for indicators of impairment. Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. Loss Contingencies and Litigation – The Company records and reserves for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a m |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
May 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Net Merchandise Sales . The Company recognizes merchandise sales revenue, net of sales taxes, on transactions where the Company has determined that it is the principal in the sale of merchandise. These transactions may include shipping commitments and/or shipping revenue if the transaction involves delivery to the customer. Membership Fee Revenue. Membership income represents annual membership fees paid by the Company’s warehouse club Members, which are recognized ratably over the 12-month term of the membership. Our membership policy allows Members to cancel their membership in the first 60 days and receive a full refund. After the 60-day period, membership refunds are prorated over the remaining term of the membership. The Company has significant experience with membership refund patterns and expects membership refunds will not be material. Therefore, no refund reserve was required for the periods presented. Membership fee revenue is included in membership income in the Company's consolidated statements of income. The deferred membership fee is included in deferred income in the Company's consolidated balance sheets. Platinum Points Reward Programs. The Company currently offers Platinum Memberships in all of its markets. In the first nine months of fiscal year 2024, we raised the annual fee for a Platinum Membership by $5 to approximately $80 in most markets. We have completed the fee increase in most markets in the first nine months of fiscal year 2024 and will complete the remaining planned increases by the end of the fiscal year. The Platinum Membership provides Members with a 2% rebate on most items, up to an annual maximum of $500. The rebate is issued annually to Platinum Members on March 1 and expires August 31. Platinum Members can apply this rebate to future purchases at the warehouse club during the redemption period. The Company records this 2% rebate as a reduction of revenue at the time of the sales transaction. Accordingly, the Company has reduced warehouse sales and has accrued a liability within other accrued expenses and other current liabilities, platinum rewards. The Company has determined that breakage revenue is 5% of the awards issued; therefore, it records 95% of the Platinum Membership liability at the time of sale. Annually, the Company reviews for expired unused rebates outstanding, and the expired unused rebates are recognized as “Other revenue and income” on the consolidated statements of income. Co-branded Credit Card Points Reward Programs. Most of the Company’s subsidiaries have points reward programs related to co-branded credit cards. These points reward programs provide incremental points that a Member can use at a future time to acquire merchandise within the Company’s warehouse clubs. This results in two performance obligations, the first performance obligation being the initial sale of the merchandise or services purchased with the co-branded credit card and the second performance obligation being the future use of the points rewards to purchase merchandise or services. As a result, upon the initial sale, the Company allocates the transaction price to each performance obligation with the amount allocated to the future use points rewards recorded as a contract liability within other accrued expenses and other current liabilities on the consolidated balance sheet. The portion of the selling price allocated to the reward points is recognized as Net merchandise sales when the points are used or when the points expire. The Company reviews on an annual basis expired points rewards outstanding, and the expired rewards are recognized as Net merchandise sales on the consolidated statements of income within markets where the co-branded credit card agreement allows for such treatment. Gift Cards . Members’ purchases of gift cards to be utilized at the Company's warehouse clubs are not recognized as sales until the card is redeemed and the customer purchases merchandise using the gift card. The outstanding gift cards are reflected as other accrued expenses and other current liabilities in the consolidated balance sheets. These gift cards generally have a one-year stated expiration date from the date of issuance and are generally redeemed prior to expiration. However, the absence of a large volume of transactions for gift cards impairs the Company's ability to make a reasonable estimate of the redemption levels for gift cards; therefore, the Company assumes a 100% redemption rate prior to expiration of the gift cards. The Company periodically reviews unredeemed outstanding gift cards, and the gift cards that have expired are recognized as “Other revenue and income” on the consolidated statements of income. Co-branded Credit Card Revenue Sharing Agreements . As part of the co-branded credit card agreements that the Company has entered into with financial institutions within its markets, the Company often enters into revenue sharing agreements. As part of these agreements, in some countries, the Company receives a portion of the interest income generated from the average outstanding balances on the co-branded credit cards from these financial institutions (“interest generating portfolio” or “IGP”). The Company recognizes its portion of interest received as revenue during the period it is earned. The Company has determined that this revenue should be recognized as “Other revenue and income” on the consolidated statements of income. Contract Performance Liabilities Contract performance liabilities as a result of transactions with customers primarily consist of deferred membership income, other deferred income, deferred gift card revenue, Platinum points programs, and liabilities related to co-branded credit card points rewards programs which are included in deferred income and other accrued expenses and other current liabilities in the Company’s consolidated balance sheets. The following table provides these contract balances from transactions with customers as of the dates listed (in thousands): Contract Liabilities May 31, August 31, Deferred membership income $ 36,192 $ 31,079 Other contract performance liabilities $ 11,977 $ 12,347 Disaggregated Revenues In the following table, net merchandise sales are disaggregated by merchandise category (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Foods & Sundries $ 576,433 $ 537,567 $ 1,745,350 $ 1,601,613 Fresh Foods 358,764 319,706 1,055,562 940,470 Hardlines 132,004 106,937 408,774 342,225 Softlines 62,483 54,947 189,441 175,736 Food Service and Bakery 53,211 42,980 159,086 129,784 Health Services 11,636 8,126 32,248 21,897 Net Merchandise Sales $ 1,194,531 $ 1,070,263 $ 3,590,461 $ 3,211,725 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
May 31, 2024 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company presents basic net income per share using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders and that determines basic net income per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings that would have been available to common stockholders. A participating security is defined as a security that may participate in undistributed earnings with common stock. The Company’s capital structure includes securities that participate with common stock on a one-for-one basis for distribution of dividends. These are the restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) issued pursuant to the 2013 Equity Incentive Award Plan, provided that the Company does not include PSUs as participating securities until the performance conditions have been met. The Company has not issued any new PSU awards since fiscal year 2023. As of May 31, 2024, all outstanding PSUs have successfully met all performance metrics except for the requisite service period. RSAs are outstanding shares of common stock and have the same cash dividend and voting rights as other shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. PSUs, similar to RSUs, are awarded with dividend equivalents after the performance metric has been achieved. The Company determines the diluted net income per share by using the more dilutive of the two class-method or the treasury stock method and by including the basic weighted average of outstanding performance stock units in the calculation of diluted net income per share under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share under the treasury stock method. The following table sets forth the computation of net income per share for the three and nine months ended May 31, 2024 and 2023 (in thousands, except per share amounts): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Net income $ 32,489 $ 29,572 $ 109,807 $ 93,824 Less: Allocation of income to unvested stockholders (67) (456) (1,033) (1,098) Net income available for distribution $ 32,422 $ 29,116 $ 108,774 $ 92,726 Basic weighted average shares outstanding 29,968 30,800 30,052 30,752 Add dilutive effect of performance stock units (two-class method) — 29 — 18 Diluted average shares outstanding 29,968 30,829 30,052 30,770 Basic net income per share $ 1.08 $ 0.95 $ 3.62 $ 3.02 Diluted net income per share $ 1.08 $ 0.94 $ 3.62 $ 3.01 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
May 31, 2024 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Dividends The following table summarizes the dividends declared and paid during fiscal year 2024 and 2023 (amounts are per share): First Payment Second Payment Declared Amount Record Date Date Amount Record Date Date Amount 4/3/2024 $ 1.00 4/19/2024 4/30/2024 N/A $ 1.00 N/A N/A N/A N/A 2/1/2024 $ 1.16 2/15/2024 2/29/2024 N/A $ 0.58 8/15/2024 N/A 8/30/2024 $ 0.58 2/3/2023 $ 0.92 2/16/2023 2/28/2023 N/A $ 0.46 8/15/2023 8/31/2023 N/A $ 0.46 On April 3, 2024, the Company's Board of Directors declared a one-time $1.00 per share special dividend paid on April 30, 2024 to stockholders of record on April 19, 2024. The $1.00 per share special dividend is in addition to the Company’s annual cash dividend in the total amount of $1.16 per share, with $0.58 per share paid on February 29, 2024 to stockholders of record as of February 15, 2024 and $0.58 per share payable on August 30, 2024 to stockholders of record as of August 15, 2024. The Company anticipates the ongoing payment of semi-annual dividends in subsequent periods, although the actual declaration of future dividends (ongoing or otherwise), if any, the amount of such dividends, and the establishment of record and payment dates is subject to final determination by the Board of Directors at its discretion after its review of the Company’s financial performance and anticipated capital requirements, taking into account the uncertain macroeconomic conditions on our results of operations and cash flows. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss The following tables disclose the effects on accumulated other comprehensive loss of each component of other comprehensive income (loss), net of tax (in thousands): Amount Beginning balance, March 1, 2024 $ (155,289) Foreign currency translation adjustments (5,181) Defined benefit pension plans (1) 91 Derivative instruments (2) 299 Ending balance, May 31, 2024 $ (160,080) Amount Beginning balance, March 1, 2023 $ (183,703) Foreign currency translation adjustments 15,285 Defined benefit pension plans (1) 15 Derivative instruments (2) (1,200) Ending balance, May 31, 2023 $ (169,603) Amount Beginning balance, September 1, 2023 $ (163,992) Foreign currency translation adjustments 5,053 Defined benefit pension plans (1) 302 Derivative instruments (2) (1,443) Ending balance, May 31, 2024 $ (160,080) Amount Beginning balance, September 1, 2022 $ (195,586) Foreign currency translation adjustments 26,599 Defined benefit pension plans (1) 30 Derivative instruments (2) (646) Ending balance, May 31, 2023 $ (169,603) Amount Beginning balance, September 1, 2022 $ (195,586) Foreign currency translation adjustments 33,708 Defined benefit pension plans (1) (1,819) Derivative instruments (2) (443) Amounts reclassified from accumulated other comprehensive loss 148 Ending balance, August 31, 2023 $ (163,992) (1) Amounts reclassified from accumulated other comprehensive loss related to the minimum pension liability are included in warehouse club and other operations in the Company's consolidated statements of income. (2) Refer to "Note 8 - Derivative Instruments and Hedging Activities." Retained Earnings Not Available for Distribution The following table summarizes retained earnings designated as legal reserves of various subsidiaries which cannot be distributed as dividends to PriceSmart, Inc. according to applicable statutory regulations (in thousands): May 31, August 31, Retained earnings not available for distribution $ 9,529 $ 9,110 Share Repurchase Program In July 2023 we announced a program authorized by our Board of Directors to repurchase up to $75 million of our common stock. We successfully completed the program in the first quarter of fiscal year 2024. We purchased a total of approximately 1,007,000 shares of our common stock under the program. The repurchases were made on the open market pursuant to a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which permitted us to repurchase common stock at times when we might otherwise have been precluded from doing so under insider trading laws or self-imposed trading restrictions. We have no plans to continue repurchases or adopt a new repurchase plan at this time. However, the Board of Directors could choose to commence another program in the future at its discretion after its review of the Company’s financial performance and anticipated capital requirements. Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows (total cost in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Number of common shares acquired — — 935,663 — Average price per common share acquired $ — $ — $ 74.13 $ — Total cost of common shares acquired $ — $ — $ 69,362 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
May 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company and its subsidiaries are subject to legal proceedings, claims and litigation arising in the ordinary course of business related to the Company’s operations and property ownership. The Company evaluates such matters on a case by case basis, and vigorously contests any such legal proceedings or claims which the Company believes are without merit. The Company believes that the final disposition of these matters will not have a material adverse effect on its financial position, results of operations or liquidity. It is possible, however, that the Company's results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to such matters. The Company establishes an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss and the accrued amount, if any, thereof, and adjusts the amount as appropriate. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. If it is at least a reasonable possibility that a material loss will occur, the Company will provide disclosure regarding the contingency. Income Taxes For interim reporting, we estimate an annual effective tax rate (AETR) to calculate income tax expense. Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are required to file federal and state income tax returns in the United States and income tax and various other tax returns in multiple foreign jurisdictions, each with changing tax laws, regulations and administrative positions. This requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. We record the benefits of uncertain tax positions in our financial statements only after determining it is more likely than not the uncertain tax positions would sustain challenge by taxing authorities, including resolution of related appeals or litigation processes, if any. We develop our assessment of an uncertain tax position based on the specific facts and legal arguments of each case and the associated probability of our reporting position being upheld, using internal expertise and the advice of third-party experts. However, our tax returns are subject to routine reviews by the various taxing authorities in the jurisdictions in which we file our tax returns. As part of these reviews, taxing authorities may challenge, and in some cases presently are challenging, the interpretations we have used to calculate our tax liability. In addition, any settlement with the tax authority or the outcome of any appeal or litigation process might result, and in some cases has resulted, in an outcome that is materially different from our estimated liability. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate. Variations in the actual outcome of these cases could materially impact our consolidated financial statements. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. In evaluating the exposure associated with various non-income tax filing positions, the Company accrues for probable and estimable exposures for non-income tax related tax contingencies. As of May 31, 2024 and August 31, 2023, the Company has recorded within other accrued expenses and other current liabilities a total of $1.2 million and $9.6 million, respectively, for various non-income tax related tax contingencies. While the Company believes the recorded liabilities are adequate, there are inherent limitations in projecting the outcome of litigation, in estimating probable additional income tax liability taking into account uncertain tax positions and in evaluating the probable additional tax associated with various non-income tax filing positions. As such, the Company is unable to make a reasonable estimate of the sensitivity to change of estimates affecting its recorded liabilities. As additional information becomes available, the Company assesses the potential liability and revises its estimates as appropriate. Minimum tax rules, applicable in some of the countries where the Company operates, require the payment of taxes based on a percentage of sales, when the resulting tax is greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). This can result in AMT payments substantially in excess of those the Company would expect to pay based on taxable income. As the Company believes that, in one country where it operates, it should only be ultimately liable for an income-based tax, it has accumulated income tax receivables of $10.9 million and $10.7 million and deferred tax assets of $3.4 million and $3.2 million as of May 31, 2024 and August 31, 2023, respectively, in this country. Other Commitments The Company is committed to non-cancelable construction service obligations for various warehouse club developments and expansions. As of May 31, 2024 and August 31, 2023, the Company had approximately $12.5 million and $11.3 million, respectively, in contractual obligations for construction services not yet rendered. As of May 31, 2024, the Company has signed a lease agreement for a facility to be built by the lessor related to the relocation of its warehouse club in Miraflores, Guatemala. As part of the agreement, the landlord has agreed to build a shell building which is estimated to be delivered in the first half of calendar year 2025. Once this building is ready, the Company expects to use approximately $12.1 million in cash to outfit this club. The lease will have a term of approximately 20 years, with a 5-year renewal option, and will commence upon delivery of the shell building to the Company. Per the lease agreement, the Company will pay monthly fixed base rent payments which increase annually based on the Consumer Price Index. The Company will also pay variable rent payments if the yearly warehouse sales for the location are in excess of a certain threshold. A collateralized incremental borrowing rate was used to determine the present value of estimated future minimum lease commitments. The present value of estimated future minimum lease commitments for this lease are as follows (in thousands): Twelve Months Ended May 31, Amount 2026 $ 1,132 2027 1,655 2028 1,616 2029 1,577 2030 1,540 Thereafter 19,808 Total future lease payments $ 27,328 From time to time, the Company has entered into general land purchase and land purchase option agreements. The Company’s land purchase agreements are typically subject to various conditions, including, but not limited to, the ability to obtain necessary governmental permits or approvals. A deposit under an agreement is typically returned to the Company if all permits or approvals are not obtained. Generally, the Company has the right to cancel any of its agreements to purchase land without cause by forfeiture of some or all of the deposits it has made pursuant to the agreement. As of May 31, 2024 the Company had entered into four land purchase agreements that, if completed, would result in the use of approximately $13.7 million in cash. Additionally, the Company has one lease agreement for the Miraflores warehouse club relocation, as mentioned above. Lastly, the Company has signed one promissory lease agreement for a distribution center in Guatemala. If the pending contingencies are resolved favorably, the Company would expect an increase in its total lease liability of approximately $11.8 million upon commencement. The table below summarizes the Company’s interest in real estate joint ventures, commitments to additional future investments and the Company’s maximum exposure to loss as a result of its involvement in these joint ventures as of May 31, 2024 (in thousands): Entity % Initial Additional Net Income (Loss) Company’s Commitment to Future Additional Investments (1) Company's Maximum Exposure to Loss in Entity (2) GolfPark Plaza, S.A. 50 % $ 4,616 $ 2,402 $ (124) $ 6,894 $ 99 $ 6,993 Price Plaza Alajuela PPA, S.A. 50 % 2,193 1,236 238 3,667 785 4,452 Total $ 6,809 $ 3,638 $ 114 $ 10,561 $ 884 $ 11,445 (1) The parties intend to seek alternate financing for the projects, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the projects, which could increase or decrease the amount of contributions each party is required to provide. (2) The maximum exposure is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. |
DEBT
DEBT | 9 Months Ended |
May 31, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Short-term borrowings consist of unsecured lines of credit and short-term overdraft borrowings. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands): Facilities Used Total Amount of Facilities Short-term Borrowings Letters of Credit Facilities Available Weighted average interest rate May 31, 2024 - Committed $ 75,000 $ — $ 84 $ 74,916 — % May 31, 2024 - Uncommitted 96,000 10,078 — 85,922 11.4 May 31, 2024 - Total $ 171,000 $ 10,078 $ 84 $ 160,838 — % August 31, 2023 - Committed $ 75,000 $ — — $ 75,000 — % August 31, 2023 - Uncommitted 91,000 8,376 — 82,624 13.2 August 31, 2023 - Overdraft Used (Uncommitted) — 303 — — 12.0 August 31, 2023 - Total $ 166,000 $ 8,679 $ — $ 157,624 12.7 % As of May 31, 2024 and August 31, 2023, the Company was in compliance with all covenants or amended covenants for each of its short-term facility agreements. These facilities generally expire annually or bi-annually and are normally renewed. One of these facilities is a committed credit agreement with one bank for $75.0 million. In exchange for the bank’s commitment to fund any drawdowns the Company requests, the Company pays an annual commitment fee of 0.25%, payable quarterly, on any unused portion of this facility. Additionally, the Company has uncommitted facilities in most of the countries where it operates, with drawdown requests subject to approval by the individual banks each time a drawdown is requested. The following table provides the changes in long-term debt for the nine months ended May 31, 2024: (Amounts in thousands) Current portion of long-term debt Long-term debt (net of current portion) Total Balances as of August 31, 2023 $ 20,193 $ 119,487 $ 139,680 (1) Proceeds from long-term debt incurred during the period: Panama subsidiary — 16,500 16,500 Total proceeds from long-term debt incurred during the period — 16,500 16,500 Repayments of long-term debt: (2,786) (18,647) (21,433) Reclassifications of long-term debt due in the next 12 months 19,231 (19,231) — Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 34 317 351 Balances as of May 31, 2024 $ 36,672 $ 98,426 $ 135,098 (3) (1) The carrying amount of non-cash assets assigned as collateral for these loans was $156.2 million. The carrying amount of cash assets assigned as collateral for these loans was $3.5 million. (2) These foreign currency translation adjustments are recorded within other comprehensive income. (3) The carrying amount of non-cash assets assigned as collateral for these loans was $135.2 million. The carrying amount of cash assets assigned as collateral for these loans was $2.0 million. As of May 31, 2024 and August 31, 2023, the Company had approximately $80.1 million and $91.2 million, respectively, of long-term loans held in the U.S. entity and in several foreign subsidiaries, which require these entities to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. The Company was in compliance with all covenants or amended covenants for both periods. The Company entered into a loan agreement in the second quarter of fiscal year 2024 for $16.5 million to partially fund the purchase of our Via Brasil club in Panama. This loan has a term of 15 years and an interest rate of 1.80% plus the 3-month variable Secured Overnight Financing Rate ( SOFR Annual maturities of long-term debt are as follows (in thousands): Twelve Months Ended May 31, Amount 2025 $ 36,672 2026 14,881 2027 39,122 2028 14,410 2029 4,411 Thereafter 25,602 Total $ 135,098 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
May 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to interest rate risk relating to its ongoing business operations. To manage interest rate exposure, the Company enters into hedge transactions (interest rate swaps) using derivative financial instruments. The objective of entering into interest rate swaps is to eliminate the variability of cash flows in the SOFR interest payments associated with variable-rate loans over the life of the loans. As changes in interest rates impact the future cash flow of interest payments, the hedges provide a synthetic offset to interest rate movements. In addition, the Company is exposed to foreign currency and interest rate cash flow exposure related to non-functional currency long-term debt of one of its wholly owned subsidiaries. To manage this foreign currency and interest rate cash flow exposure, the Company’s subsidiaries entered into cross-currency interest rate swaps that convert their U.S. dollar denominated floating interest payments to functional currency fixed interest payments during the life of the hedging instrument. As changes in foreign exchange and interest rates impact the future cash flow of interest payments, the hedges are intended to offset changes in cash flows attributable to interest rate and foreign exchange movements. These derivative instruments (cash flow hedging instruments) are designated and qualify as cash flow hedges, with the entire gain or loss on the derivative reported as a component of other comprehensive loss. Amounts are deferred in other comprehensive loss and reclassified into earnings in the same income statement line item that is used to present the earnings effect of the hedged item when the hedged item affects earnings. The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business, including foreign-currency exchange-rate fluctuations on U.S. dollar denominated liabilities within its international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts (NDFs) that are intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate foreign-currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. Cash Flow Hedges As of May 31, 2024, all of the Company’s interest rate swap and cross-currency interest rate swap derivative financial instruments are designated and qualify as cash flow hedges. The Company formally documents the hedging relationships for its derivative instruments that qualify for hedge accounting. The following table summarizes agreements for which the Company has recorded cash flow hedge accounting for the nine months ended May 31, 2024: Entity Date Derivative Derivative Initial US$ Loan Held With Floating Leg Fixed Rate Settlement Effective Colombia subsidiary 30-Nov-23 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 5.00% 11.27 % 30th day of each November, May and August, and 28th day of each February (except in case of a leap year, 29th day of each February) beginning on February 29, 2024 November 30, 2023 - November 30, 2026 Colombia subsidiary 12-Apr-23 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 4.00% 11.40 % 11th day of each July, October, January and April, beginning on July 11, 2023 April 12, 2023 - April 11, 2028 Colombia subsidiary 26-Sep-22 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 12,500,000 PriceSmart, Inc. 3.00% 10.35 % 24th day of each December, March, June and September beginning December 26, 2022 September 26, 2022 - September 24, 2024 Colombia subsidiary 3-May-22 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 3.00% 9.04 % 3rd day of each May, August, November and February, beginning on August 3, 2022 May 3, 2022 - May 3, 2027 Colombia subsidiary 17-Nov-21 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 3.00% 8.40 % 17th day of each February, May, August, and November, beginning on February 17, 2022 November 17, 2021 - November 18, 2024 Colombia subsidiary 3-Dec-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 7,875,000 Citibank, N.A. Variable rate 3-month SOFR plus 2.45% 7.87 % 3rd day of each December, March, June and September beginning March 3, 2020 December 3, 2019 - December 3, 2024 Colombia subsidiary 27-Nov-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 25,000,000 Citibank, N.A. Variable rate 3-month SOFR plus 2.45% 7.93 % 27th day of each November, February, May and August beginning February 27, 2020 November 27, 2019 - November 27, 2024 PriceSmart, Inc. 7-Nov-16 U.S. Bank, N.A. ("U.S. Bank") Interest rate swap $ 35,700,000 U.S. Bank Variable rate 3-month SOFR plus 1.7% 3.65 % 1st day of each month beginning on April 1, 2017 March 1, 2017 - March 1, 2027 For the three and nine months ended May 31, 2024 and May 31, 2023, the Company included the gain or loss on the hedged items (that is, variable-rate borrowings) in the same line item—interest expense—as the offsetting gain or loss on the related interest rate swaps as follows (in thousands): Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended May 31, 2024 $ 1,333 $ 703 $ 2,036 Interest expense for the three months ended, May 31, 2023 $ 1,108 $ 210 $ 1,318 Interest expense for the nine months ended May 31, 2024 $ 3,449 $ 1,775 $ 5,224 Interest expense for the nine months ended May 31, 2023 $ 3,538 $ 747 $ 4,285 (1) This amount is representative of the interest expense recognized on the underlying hedged transactions. (2) This amount is representative of the interest expense recognized on the interest rate swaps and cross-currency swaps designated as cash flow hedging instruments. The total notional balance of the Company’s pay-fixed/receive-variable interest rate swaps and cross-currency interest rate swaps was as follows (in thousands): Notional Amount as of Floating Rate Payer (Swap Counterparty) May 31, August 31, U.S. Bank $ 29,113 $ 30,069 Citibank N.A. 73,102 65,599 Total $ 102,215 $ 95,668 Derivatives listed on the table below were designated as cash flow hedging instruments. The table summarizes the effect of the fair value of interest rate swap and cross-currency interest rate swap derivative instruments that qualify for derivative hedge accounting and its associated tax effect on accumulated other comprehensive income/(loss) (in thousands): May 31, 2024 August 31, 2023 Derivatives designated as cash flow hedging instruments Balance Sheet Fair Net Tax Net Fair Net Tax Net Cross-currency interest rate swaps Other current assets $ 2,606 $ (912) $ 1,694 $ — $ — $ — Cross-currency interest rate swaps Other non-current assets — — — 5,574 (1,950) 3,624 Cross-currency interest rate swaps Other current liabilities (2,342) 820 (1,522) — — — Cross-currency interest rate swaps Other long-term liabilities (4,137) 1,448 (2,689) (3,321) 1,162 (2,159) Interest rate swaps Other non-current assets 1,979 (442) 1,537 2,243 (501) 1,742 Net fair value of derivatives designated as hedging instruments $ (1,894) $ 914 $ (980) $ 4,496 $ (1,289) $ 3,207 Fair Value Instruments From time to time the Company enters into non-deliverable forward foreign-exchange contracts. These contracts are treated for accounting purposes as fair value contracts and do not qualify for derivative hedge accounting. The use of non-deliverable forward foreign-exchange contracts is intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The following table summarizes the non-deliverable forward foreign exchange contracts that are open as of May 31, 2024: Financial Derivative Subsidiary Dates Derivative Financial Total Notional Settlement Citibank, N.A. ("Citi") Colombia 28-Feb-2024 - 21-May-2024 Forward foreign exchange contracts (USD) $ 21,500 26-Jun-2024 - 18-Dec-2024 Forward derivative gains and (losses) on non-deliverable forward foreign-exchange contracts are included in Other income (expense), net in the consolidated statements of income in the period of change, but the amounts were immaterial for the three and nine month periods ended May 31, 2024 and May 31, 2023. |
SEGMENTS
SEGMENTS | 9 Months Ended |
May 31, 2024 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS The Company and its subsidiaries are principally engaged in the international operation of membership shopping in 54 warehouse clubs located in 12 countries and one U.S. territory that are located in Central America, the Caribbean and Colombia. In addition, the Company operates distribution centers and corporate offices in the United States. The Company has aggregated its warehouse clubs, distribution centers and corporate offices into reportable segments. The Company’s reportable segments are based on management’s organization of these locations into operating segments by general geographic location, which are used by management in setting up management lines of responsibility, providing support services, and making operational decisions and assessments of financial performance. Segment amounts are presented after converting to U.S. dollars and consolidating eliminations. Certain revenues, operating costs and inter-company charges included in the United States segment are not allocated to the segments within this presentation, as it is impractical to do so, and they appear as reconciling items to reflect the amount eliminated on consolidation of intersegment transactions. From time to time, the Company revises the measurement of each segment's operating income and net income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by management. When the Company does so, the previous period amounts and balances are reclassified to conform to the current period's presentation. The following tables summarize by segment certain revenues, operating costs and balance sheet items (in thousands): United Central Caribbean Operations (1) Colombia Reconciling Items (2) Total Three Months Ended May 31, 2024 Revenue from external customers $ 11,587 $ 744,626 $ 333,219 $ 139,996 $ — $ 1,229,428 Intersegment revenues 430,236 8,777 1,597 1,415 (442,025) — Depreciation, property and equipment 1,470 11,036 4,967 3,656 — 21,129 Operating income 1,636 54,874 22,915 3,289 (32,805) 49,909 Net income (loss) (2,097) 47,588 18,707 1,096 (32,805) 32,489 Capital expenditures, net 5,515 17,216 10,270 2,511 — 35,512 Nine Months Ended May 31, 2024 Revenue from external customers $ 30,107 $ 2,225,507 $ 1,016,608 $ 415,631 $ — $ 3,687,853 Intersegment revenues 1,311,880 23,331 4,305 3,704 (1,343,220) — Depreciation, property and equipment 4,177 31,734 14,664 10,539 — 61,114 Operating income 19,481 173,086 72,965 11,498 (105,290) 171,740 Net income 4,320 146,694 58,807 5,276 (105,290) 109,807 Long-lived assets (other than deferred tax assets) 82,727 605,453 220,308 214,959 — 1,123,447 Goodwill 8,982 24,159 10,041 — — 43,182 Total assets 222,690 1,060,211 438,578 299,219 — 2,020,698 Capital expenditures, net 9,162 90,488 29,597 10,734 — 139,981 Three Months Ended May 31, 2023 Revenue from external customers $ 6,347 $ 669,691 $ 316,201 $ 104,415 $ — $ 1,096,654 Intersegment revenues 368,675 7,343 1,527 1,318 (378,863) — Depreciation, property and equipment 1,302 9,349 4,793 2,377 — 17,821 Operating income (loss) 4,066 46,023 21,184 2,961 (31,182) 43,052 Net income (loss) attributable to PriceSmart, Inc. 2,336 38,715 17,091 2,612 (31,182) 29,572 Capital expenditures, net — 24,384 6,850 12,423 — 43,657 Nine Months Ended May 31, 2023 Revenue from external customers $ 23,687 $ 1,992,980 $ 956,032 $ 320,950 $ — $ 3,293,649 Intersegment revenues 1,141,492 20,726 4,178 3,198 (1,169,594) — Depreciation, property and equipment 4,158 27,073 14,216 7,052 — 52,499 Amortization, Intangibles 765 — — — — 765 Operating income (loss) 24,622 152,786 71,161 12,491 (108,681) 152,379 Net income (loss) attributable to PriceSmart, Inc. 9,440 127,163 56,799 9,103 (108,681) 93,824 Long-lived assets (other than deferred tax assets) 70,733 543,410 212,112 188,471 — 1,014,726 Goodwill 8,981 24,127 10,044 — — 43,152 Total assets 242,003 963,929 471,817 255,597 — 1,933,346 Capital expenditures, net 8,829 52,695 14,219 21,737 — 97,480 As of August 31, 2023 Long-lived assets (other than deferred tax assets) $ 71,919 $ 566,139 $ 210,000 $ 205,295 $ — $ 1,053,353 Goodwill 8,981 24,083 10,046 — — 43,110 Investment in unconsolidated affiliates — 10,479 — — — 10,479 Total assets 302,115 995,881 425,145 282,467 — 2,005,608 (1) Management considers its club in the U.S. Virgin Islands to be part of its Caribbean operations. (2) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
May 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company has evaluated all events subsequent to the balance sheet date as of May 31, 2024 through the date of issuance of these consolidated financial statements and has determined that there are no subsequent events that require disclosure. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Pay vs Performance Disclosure | ||||
Net income | $ 32,489 | $ 29,572 | $ 109,807 | $ 93,824 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 9 Months Ended |
May 31, 2024 shares | May 31, 2024 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Michael McCleary [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On April 12, 2024, Michael McCleary, our Executive Vice President and Chief Financial Officer, adopted a written plan for the sale of our common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “Rule 10b5-1 Trading Plan”). Mr. McCleary’s Rule 10b5-1 Trading Plan provides for the sale of up to 12,000 shares of the Company's common stock by The McCleary Family Trust during the period beginning on July 23, 2024 and ending January 24, 2025. | |
Name | Michael McCleary | |
Title | Executive Vice President and Chief Financial Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | April 12, 2024 | |
Arrangement Duration | 185 days | |
Aggregate Available | 12,000 | 12,000 |
Francisco Velasco [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On April 12, 2024, Francisco Velasco, our Executive Vice President – Chief Legal Officer, Chief Risk & Compliance Officer and Corporate Secretary, adopted a Rule 10b5-1 Trading Plan. Mr. Velasco’s Rule 10b5-1 Trading Plan provides for the sale of up to 2,795 shares of the Company's common stock during the period beginning on July 15, 2024 and ending July 15, 2025. | |
Name | Francisco Velasco | |
Title | Executive Vice President – Chief Legal Officer, Chief Risk & Compliance Officer and Corporate Secretary | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | April 12, 2024 | |
Arrangement Duration | 365 days | |
Aggregate Available | 2,795 | 2,795 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
May 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 “2023 Form 10-K”). The interim consolidated financial statements include the accounts of PriceSmart, Inc., a Delaware corporation, and its subsidiaries. Intercompany transactions between the Company and its subsidiaries have been eliminated in consolidation. |
Principles of Consolidation | Principles of Consolidation – The consolidated financial statements of the Company included herein include the assets, liabilities and results of operations of the Company’s wholly owned subsidiaries, subsidiaries in which it has a controlling interest, and the Company’s joint ventures for which the Company has determined that it is the primary beneficiary. The consolidated financial statements also include the Company's investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. All significant inter-company accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC and reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of the results for the year. The Company determines whether any of the joint ventures in which it has made investments is a Variable Interest Entity (“VIE”) at the start of each new venture and if a reconsideration event has occurred. At this time, the Company also considers whether it must consolidate a VIE and/or disclose information about its involvement in a VIE. A reporting entity must consolidate a VIE if that reporting entity has a variable interest (or combination of variable interests) and is determined to be the primary beneficiary. If the Company determines that it is not the primary beneficiary of the VIE, then the Company records its investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. Due to the nature of the joint ventures that the Company participates in and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. 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 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 | 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 | 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 process of settlement. The Company invests some of our cash in money market funds which are considered equity securities and are held at fair value in Cash and cash equivalents on the consolidated balance sheets. The fair value of money market funds held was $19.2 million as of May 31, 2024 and $100.2 million as of August 31, 2023. We receive interest payments from the money market funds which are recorded in the Interest income line item under the Total other expense caption within the consolidated statements of income. |
Restricted Cash | Restricted Cash – The following table summarizes the restricted cash reported by the Company (in thousands): May 31, August 31, Short-term restricted cash $ 2,832 $ 2,865 Long-term restricted cash 9,239 9,353 Total restricted cash (1) $ 12,071 $ 12,218 (1) Restricted cash consists of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. In addition, the Company is required to maintain a certificate of deposit and/or security deposits of Trinidad dollars, as measured in U.S dollars, of approximately $5.8 million with a few of its lenders as compensating balances for several U.S. dollar and euro denominated loans payable over several years. The certificates of deposit will be reduced annually commensurate with the loan balances. |
Short-Term Investments | Short-Term Investments |
Long-Term Investments | Long-Term Investments – The Company considers certificates of deposit and similar time-based deposits with financial institutions with original maturities over one year to be long-term investments. |
Goodwill | Goodwill |
Receivables | 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 | 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 or offset processes can take anywhere from several months to several years to complete. Additionally, we are occasionally required to make payments for tax assessments that we are appealing, notwithstanding that we believe it is more likely than not we will ultimately prevail. The Company’s policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: • Short-term VAT and Income tax receivables, recorded as Prepaid expenses and other current assets: This classification is used for any countries where the Company’s subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. • Long-term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company’s subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. |
Lease Accounting | Lease Accounting – The Company’s leases are operating leases for warehouse clubs and non-warehouse club facilities such as corporate headquarters, regional offices, and regional distribution centers. The Company determines if an arrangement is a lease and classifies it as either a finance or operating lease at lease inception. Operating leases are included in Operating lease right-of-use assets, net; Operating lease liabilities, current portion; and Long-term operating lease liabilities on the consolidated balance sheets. The Company does not have finance leases. Operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. The Company’s leases generally do not have a readily determinable implicit interest rate; therefore, the Company uses a collateralized incremental borrowing rate at the commencement date in determining the present value of future payments. The incremental borrowing rate is based on a yield curve derived from publicly traded bond offerings for companies with credit characteristics that approximate the Company's market risk profile. In addition, we adjust the incremental borrowing rate for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. The Company’s lease terms may include options to purchase, extend or terminate the lease, which are recognized when it is reasonably certain that the Company will exercise that option. The Company does not combine lease and non-lease components. The Company measures Right-of-use (“ROU”) assets based on the corresponding lease liabilities, adjusted for any initial direct costs and prepaid lease payments made to the lessor before or at the commencement date (net of lease incentives). The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the calculation of the ROU asset and the related lease liability and are recognized as incurred. The Company’s variable lease payments generally relate to amounts the Company pays for additional contingent rent based on a contractually stipulated percentage of sales. In January 2024, the Company purchased one of its club's buildings and land, which was previously leased, in Panama City, Panama, for $33.0 million. Management assessed the fair market value using the market and replacement cost methods and, per the assessment, allocated approximately 88.7% of the purchase price to the land and 11.3% of the purchase price to the building. The transaction resulted in the termination of the related ROU asset, net of tax, and lease liability, net of tax, of $8.2 million and $9.1 million, respectively. No gain or loss was recognized as the lease termination occurred due to the purchase of the leased asset. This allocation of the purchase price, after accounting for the impact of the lease termination, resulted in $28.2 million allocated to the land and $3.9 million allocated to the building. Additionally, the Company already carried approximately $8.6 million of leasehold improvements related to the club which have been reclassified to the building and remain on the balance sheet. This purchase triggered a change in the estimate of the depreciable lives of certain leasehold improvements, which were previously limited to the lease term, lowering future annual depreciation. Going forward, the lower annual depreciation expense and the cost savings on straight-line rent expense, partially offset by the depreciation expense on the building, will save approximately $1.1 million per year, net of tax, within our Warehouse club and other operations expenses in the Company's consolidated statements of income. Additionally, the Company entered into a loan agreement for $16.5 million, paid over 15 years, to partially fund the purchase of our Via Brasil club. We expect approximately $1.0 million in interest payments, net of tax, over the next 12 months associated with this loan, which will continue to decrease as the loan balance is paid off over the life of the loan. The interest expense related to this loan will be recorded within the Interest expense caption on the consolidated statements of income. |
Merchandise Inventories | Merchandise Inventories – Merchandise inventories, which include merchandise for resale, are valued at the lower of cost (average cost) or net realizable value. The Company provides for estimated inventory losses and obsolescence based on a percentage of sales. The provision is adjusted every reporting period to reflect the trend of actual physical inventory and cycle count results. In addition, the Company may be required to take markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise. |
Stock Based Compensation | Stock Based Compensation – The Company utilizes three types of equity awards: restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and, prior to fiscal year 2024, performance-based restricted stock units (“PSUs”). Compensation cost related to RSAs, RSUs and PSUs is based on the fair market value at the time of the grant. The Company recognizes the compensation cost related to RSAs and RSUs over the requisite service period as determined by the grant, amortized ratably or on a straight-line basis over the life of the grant. The Company also recognizes compensation cost for PSUs over the performance period of each tranche, adjusting this cost based on the Company's estimate of the probability that performance metrics will be achieved. As of May 31, 2024, all outstanding PSUs have successfully met all performance metrics except for the requisite service period. The Company accounts for actual forfeitures as they occur. The Company records the tax savings resulting from tax deductions in excess of expense for stock-based compensation and the tax deficiency resulting from stock-based compensation in excess of the related tax deduction as income tax expense or benefit. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as an operating cash flow in its consolidated statement of cash flows. RSAs are outstanding shares of common stock and have the same cash dividend and voting rights as other shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. Payments of dividend equivalents to employees are recorded as compensation expense. |
Treasury Stock | Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost, including transaction costs and excise taxes, as treasury stock and result in the reduction of stockholders’ equity in the Company’s consolidated balance sheets. The Company may reissue these treasury shares as part of its stock-based compensation programs. When treasury shares are reissued, the Company uses the first in/first out (“FIFO”) cost method for determining cost of the reissued shares. If the issuance price is higher than the cost, the excess of the issuance price over the cost is credited to additional paid-in capital (“APIC”). If the issuance price is lower than the cost, the difference is first charged against any credit balance in APIC from treasury stock and the balance is charged to retained earnings. During the nine months ended May 31, 2024, the Company reissued approximately 3,000 treasury shares. |
Fair Value Measurements | Fair Value Measurements – The Company measures the fair value for all financial and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring or nonrecurring basis. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. ASC 820, Fair Value Measurements and Disclosures, sets forth a fair value hierarchy that categorizes inputs to valuation techniques used to measure and revalue fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company was not required to revalue any assets or liabilities utilizing Level 1 or Level 3 inputs at the balance sheet dates. The Company's Level 2 assets and liabilities revalued at the balance sheet dates, on a recurring basis, consisted of cash flow hedges (interest rate swaps and cross-currency interest rate swaps) and forward foreign exchange contracts. In addition, the Company utilizes Level 2 inputs in determining the fair value of long-term debt. Non-financial assets and liabilities are revalued and recognized at fair value subsequent to initial recognition when there is evidence of impairment. For the periods reported, no impairment of such non-financial assets were recorded. The Company’s current and long-term financial assets and liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums and debt issuance costs. There have been no significant changes in the fair market value of the Company’s current and long-term financial assets and liabilities, and there have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities disclosed in the Company’s 2023 Annual Report on Form 10-K. |
Derivatives Instruments and Hedging Activities | Derivatives Instruments and Hedging Activities – The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates. In using derivative financial instruments for the purpose of hedging the Company’s exposure to interest and currency exchange rate risks, the contractual terms of a hedged instrument closely mirror those of the hedged item and are intended to provide a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria (effective hedge) are recorded using hedge accounting. If a derivative financial instrument is an effective hedge, changes in the fair value of the instrument will be reported in accumulated other comprehensive loss until the hedged item completes its contractual term. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company did not change valuation techniques utilized in the fair value measurement of assets and liabilities presented on the Company’s consolidated balance sheets from previous practice during the reporting period. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. Cash Flow Instruments. The Company is a party to receive floating interest rate and pay fixed-rate interest rate swaps to hedge the interest rate risk of certain U.S. dollar denominated debt within its international subsidiaries. The swaps are designated as cash flow hedges of interest expense risk. These instruments are considered effective hedges and are recorded using hedge accounting. The Company is also a party to receive variable or fixed interest rate and pay fixed interest rate cross-currency interest rate swaps to hedge the interest rate and currency exposure associated with the expected payments of principal and interest of U.S. denominated debt within its international subsidiaries whose functional currency is other than the U.S. dollar. The swaps are designated as cash flow hedges of the currency risk and interest-rate risk related to payments on the U.S. denominated debt. These instruments are also considered to be effective hedges and are recorded using hedge accounting. Under cash flow hedging, the entire gain or loss of the derivative, calculated as the net present value of the future cash flows, is reported on the consolidated balance sheets in accumulated other comprehensive loss. Amounts recorded in accumulated other comprehensive loss are released to earnings in the same period that the hedged transaction impacts consolidated earnings. Refer to “Note 8 - Derivative Instruments and Hedging Activities” for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of May 31, 2024 and August 31, 2023. Fair Value Instruments. The Company is exposed to foreign currency exchange rate fluctuations in the normal course of business. This includes exposure to foreign currency exchange rate fluctuations on U.S. dollar denominated liabilities within the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flows attributable to currency exchange movements. The contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts are treated for accounting purposes as fair value instruments and do not qualify for derivative hedge accounting, and as such the Company does not apply derivative hedge accounting to record these transactions. As a result, these contracts are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company seeks to mitigate foreign currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features and are limited to less than one year in duration. |
Revenue Recognition | Revenue Recognition – The accounting policies and other disclosures such as the disclosure of disaggregated revenues are described in “Note 3 – Revenue Recognition.” |
Cost of Goods Sold | Cost of Goods Sold – The Company includes the cost of merchandise and food service and bakery raw materials in cost of goods sold - net merchandise sales. The Company also includes in cost of goods sold - net merchandise sales the external and internal distribution and handling costs for supplying merchandise, raw materials and supplies to the warehouse clubs, and, when applicable, costs of shipping to Members. External costs include inbound freight, duties, drayage, fees, insurance, and non-recoverable value-added tax related to inventory shrink, spoilage and damage. Internal costs include payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense and building and equipment depreciation at the Company's distribution facilities and payroll and other direct costs for in-club demonstrations. For export sales, the Company includes the cost of merchandise and external and internal distribution and handling costs for supplying merchandise in cost of goods sold - exports. |
Selling, General and Administrative | Selling, General and Administrative – Selling, general and administrative costs consist primarily of expenses associated with operating warehouse clubs and non-income based taxes such as alternative minimum taxes based on revenue or sales. These costs include payroll and related costs, including separation costs associated with the Chief Executive Officer departure, utilities, consumable supplies, repair and maintenance, rent expense, building and equipment depreciation, bank fees, credit card processing fees, and amortization of intangibles. Also included in selling, general and administrative expenses are the payroll and related costs for the Company’s U.S. and regional management and purchasing centers. |
Pre-Opening Costs | Pre-Opening Costs – The Company expenses pre-opening costs (the costs of start-up activities, including organization costs and rent) for new warehouse clubs as incurred. |
Asset Impairment and Closure Costs | Asset Impairment and Closure Costs |
Loss Contingencies and Litigation | Loss Contingencies and Litigation – The Company records and reserves for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a material loss will occur, the Company does not record and reserve for a loss contingency but describes the contingency within a note and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made. |
Foreign Currency Translation | Foreign Currency Translation – The assets and liabilities of the Company’s foreign operations are translated to U.S. dollars when the functional currency in the Company’s international subsidiaries is the local currency and not U.S. dollars. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the exchange rate on the balance sheet date, and revenue, costs and expenses are translated at average rates of exchange in effect during the period. The corresponding translation gains and losses are recorded as a component of accumulated other comprehensive income or loss. These adjustments will affect net income upon the sale or liquidation of the underlying investment. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted There were no new accounting standards that had a material impact on the Company’s consolidated financial statements during the nine-month period ended May 31, 2024, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of May 31, 2024 that the Company expects to have a material impact on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
May 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Joint Ventures | 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 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. |
Schedule of Restricted Cash | The following table summarizes the restricted cash reported by the Company (in thousands): May 31, August 31, Short-term restricted cash $ 2,832 $ 2,865 Long-term restricted cash 9,239 9,353 Total restricted cash (1) $ 12,071 $ 12,218 (1) Restricted cash consists of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. In addition, the Company is required to maintain a certificate of deposit and/or security deposits of Trinidad dollars, as measured in U.S dollars, of approximately $5.8 million with a few of its lenders as compensating balances for several U.S. dollar and euro denominated loans payable over several years. The certificates of deposit will be reduced annually commensurate with the loan balances. |
Schedule of Value Added Tax Receivables | The following table summarizes the VAT receivables reported by the Company (in thousands): May 31, August 31, Prepaid expenses and other current assets $ 9,442 $ 2,774 Other non-current assets 30,275 36,060 Total amount of VAT receivables reported $ 39,717 $ 38,834 |
Schedule of Income Tax Receivables | The following table summarizes the Income tax receivables reported by the Company (in thousands): May 31, August 31, Prepaid expenses and other current assets $ 15,703 $ 17,749 Other non-current assets 27,074 19,176 Total amount of income tax receivables reported $ 42,777 $ 36,925 |
Schedule of Net Effect of Foreign Currency Translation | The following table discloses the net effect of translation into the reporting currency on other comprehensive loss for these local currency denominated accounts for the three and nine months ended on May 31, 2024 and 2023 (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Effect on other comprehensive income (loss) due to foreign currency translation $ (5,181) $ 15,285 $ 5,053 $ 26,599 |
Schedule of Foreign Currency Gains (Losses) | These foreign exchange transaction gains (losses), including transactions recorded involving these monetary assets and liabilities, are recorded as Other income (expense) in the consolidated statements of income (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Currency loss $ (1,725) $ (2,095) $ (11,563) $ (12,153) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
May 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Performance Liabilities | The following table provides these contract balances from transactions with customers as of the dates listed (in thousands): Contract Liabilities May 31, August 31, Deferred membership income $ 36,192 $ 31,079 Other contract performance liabilities $ 11,977 $ 12,347 |
Schedule of Disaggregated Revenues | In the following table, net merchandise sales are disaggregated by merchandise category (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Foods & Sundries $ 576,433 $ 537,567 $ 1,745,350 $ 1,601,613 Fresh Foods 358,764 319,706 1,055,562 940,470 Hardlines 132,004 106,937 408,774 342,225 Softlines 62,483 54,947 189,441 175,736 Food Service and Bakery 53,211 42,980 159,086 129,784 Health Services 11,636 8,126 32,248 21,897 Net Merchandise Sales $ 1,194,531 $ 1,070,263 $ 3,590,461 $ 3,211,725 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
May 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of the Computation of Net Income Per Share | The following table sets forth the computation of net income per share for the three and nine months ended May 31, 2024 and 2023 (in thousands, except per share amounts): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Net income $ 32,489 $ 29,572 $ 109,807 $ 93,824 Less: Allocation of income to unvested stockholders (67) (456) (1,033) (1,098) Net income available for distribution $ 32,422 $ 29,116 $ 108,774 $ 92,726 Basic weighted average shares outstanding 29,968 30,800 30,052 30,752 Add dilutive effect of performance stock units (two-class method) — 29 — 18 Diluted average shares outstanding 29,968 30,829 30,052 30,770 Basic net income per share $ 1.08 $ 0.95 $ 3.62 $ 3.02 Diluted net income per share $ 1.08 $ 0.94 $ 3.62 $ 3.01 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
May 31, 2024 | |
Equity [Abstract] | |
Schedule of Dividends | The following table summarizes the dividends declared and paid during fiscal year 2024 and 2023 (amounts are per share): First Payment Second Payment Declared Amount Record Date Date Amount Record Date Date Amount 4/3/2024 $ 1.00 4/19/2024 4/30/2024 N/A $ 1.00 N/A N/A N/A N/A 2/1/2024 $ 1.16 2/15/2024 2/29/2024 N/A $ 0.58 8/15/2024 N/A 8/30/2024 $ 0.58 2/3/2023 $ 0.92 2/16/2023 2/28/2023 N/A $ 0.46 8/15/2023 8/31/2023 N/A $ 0.46 |
Schedule of Components of Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss | The following tables disclose the effects on accumulated other comprehensive loss of each component of other comprehensive income (loss), net of tax (in thousands): Amount Beginning balance, March 1, 2024 $ (155,289) Foreign currency translation adjustments (5,181) Defined benefit pension plans (1) 91 Derivative instruments (2) 299 Ending balance, May 31, 2024 $ (160,080) Amount Beginning balance, March 1, 2023 $ (183,703) Foreign currency translation adjustments 15,285 Defined benefit pension plans (1) 15 Derivative instruments (2) (1,200) Ending balance, May 31, 2023 $ (169,603) Amount Beginning balance, September 1, 2023 $ (163,992) Foreign currency translation adjustments 5,053 Defined benefit pension plans (1) 302 Derivative instruments (2) (1,443) Ending balance, May 31, 2024 $ (160,080) Amount Beginning balance, September 1, 2022 $ (195,586) Foreign currency translation adjustments 26,599 Defined benefit pension plans (1) 30 Derivative instruments (2) (646) Ending balance, May 31, 2023 $ (169,603) Amount Beginning balance, September 1, 2022 $ (195,586) Foreign currency translation adjustments 33,708 Defined benefit pension plans (1) (1,819) Derivative instruments (2) (443) Amounts reclassified from accumulated other comprehensive loss 148 Ending balance, August 31, 2023 $ (163,992) (1) Amounts reclassified from accumulated other comprehensive loss related to the minimum pension liability are included in warehouse club and other operations in the Company's consolidated statements of income. (2) Refer to "Note 8 - Derivative Instruments and Hedging Activities." |
Schedule of Retained Earnings Not Available for Distribution | The following table summarizes retained earnings designated as legal reserves of various subsidiaries which cannot be distributed as dividends to PriceSmart, Inc. according to applicable statutory regulations (in thousands): May 31, August 31, Retained earnings not available for distribution $ 9,529 $ 9,110 |
Schedule of Class of Treasury Stock | Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows (total cost in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, Number of common shares acquired — — 935,663 — Average price per common share acquired $ — $ — $ 74.13 $ — Total cost of common shares acquired $ — $ — $ 69,362 $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
May 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Commitments | The present value of estimated future minimum lease commitments for this lease are as follows (in thousands): Twelve Months Ended May 31, Amount 2026 $ 1,132 2027 1,655 2028 1,616 2029 1,577 2030 1,540 Thereafter 19,808 Total future lease payments $ 27,328 |
Schedule of Variable Interest Entities Maximum Loss Exposure | The table below summarizes the Company’s interest in real estate joint ventures, commitments to additional future investments and the Company’s maximum exposure to loss as a result of its involvement in these joint ventures as of May 31, 2024 (in thousands): Entity % Initial Additional Net Income (Loss) Company’s Commitment to Future Additional Investments (1) Company's Maximum Exposure to Loss in Entity (2) GolfPark Plaza, S.A. 50 % $ 4,616 $ 2,402 $ (124) $ 6,894 $ 99 $ 6,993 Price Plaza Alajuela PPA, S.A. 50 % 2,193 1,236 238 3,667 785 4,452 Total $ 6,809 $ 3,638 $ 114 $ 10,561 $ 884 $ 11,445 (1) The parties intend to seek alternate financing for the projects, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the projects, which could increase or decrease the amount of contributions each party is required to provide. (2) The maximum exposure is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
May 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term Borrowings | Short-term borrowings consist of unsecured lines of credit and short-term overdraft borrowings. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands): Facilities Used Total Amount of Facilities Short-term Borrowings Letters of Credit Facilities Available Weighted average interest rate May 31, 2024 - Committed $ 75,000 $ — $ 84 $ 74,916 — % May 31, 2024 - Uncommitted 96,000 10,078 — 85,922 11.4 May 31, 2024 - Total $ 171,000 $ 10,078 $ 84 $ 160,838 — % August 31, 2023 - Committed $ 75,000 $ — — $ 75,000 — % August 31, 2023 - Uncommitted 91,000 8,376 — 82,624 13.2 August 31, 2023 - Overdraft Used (Uncommitted) — 303 — — 12.0 August 31, 2023 - Total $ 166,000 $ 8,679 $ — $ 157,624 12.7 % |
Schedule of Changes in Long-Term Debt | The following table provides the changes in long-term debt for the nine months ended May 31, 2024: (Amounts in thousands) Current portion of long-term debt Long-term debt (net of current portion) Total Balances as of August 31, 2023 $ 20,193 $ 119,487 $ 139,680 (1) Proceeds from long-term debt incurred during the period: Panama subsidiary — 16,500 16,500 Total proceeds from long-term debt incurred during the period — 16,500 16,500 Repayments of long-term debt: (2,786) (18,647) (21,433) Reclassifications of long-term debt due in the next 12 months 19,231 (19,231) — Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 34 317 351 Balances as of May 31, 2024 $ 36,672 $ 98,426 $ 135,098 (3) (1) The carrying amount of non-cash assets assigned as collateral for these loans was $156.2 million. The carrying amount of cash assets assigned as collateral for these loans was $3.5 million. (2) These foreign currency translation adjustments are recorded within other comprehensive income. (3) The carrying amount of non-cash assets assigned as collateral for these loans was $135.2 million. The carrying amount of cash assets assigned as collateral for these loans was $2.0 million. |
Schedule of Annual Maturities of Long-Term Debt | Annual maturities of long-term debt are as follows (in thousands): Twelve Months Ended May 31, Amount 2025 $ 36,672 2026 14,881 2027 39,122 2028 14,410 2029 4,411 Thereafter 25,602 Total $ 135,098 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
May 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | The following table summarizes agreements for which the Company has recorded cash flow hedge accounting for the nine months ended May 31, 2024: Entity Date Derivative Derivative Initial US$ Loan Held With Floating Leg Fixed Rate Settlement Effective Colombia subsidiary 30-Nov-23 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 5.00% 11.27 % 30th day of each November, May and August, and 28th day of each February (except in case of a leap year, 29th day of each February) beginning on February 29, 2024 November 30, 2023 - November 30, 2026 Colombia subsidiary 12-Apr-23 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 4.00% 11.40 % 11th day of each July, October, January and April, beginning on July 11, 2023 April 12, 2023 - April 11, 2028 Colombia subsidiary 26-Sep-22 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 12,500,000 PriceSmart, Inc. 3.00% 10.35 % 24th day of each December, March, June and September beginning December 26, 2022 September 26, 2022 - September 24, 2024 Colombia subsidiary 3-May-22 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 3.00% 9.04 % 3rd day of each May, August, November and February, beginning on August 3, 2022 May 3, 2022 - May 3, 2027 Colombia subsidiary 17-Nov-21 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 10,000,000 PriceSmart, Inc. 3.00% 8.40 % 17th day of each February, May, August, and November, beginning on February 17, 2022 November 17, 2021 - November 18, 2024 Colombia subsidiary 3-Dec-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 7,875,000 Citibank, N.A. Variable rate 3-month SOFR plus 2.45% 7.87 % 3rd day of each December, March, June and September beginning March 3, 2020 December 3, 2019 - December 3, 2024 Colombia subsidiary 27-Nov-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 25,000,000 Citibank, N.A. Variable rate 3-month SOFR plus 2.45% 7.93 % 27th day of each November, February, May and August beginning February 27, 2020 November 27, 2019 - November 27, 2024 PriceSmart, Inc. 7-Nov-16 U.S. Bank, N.A. ("U.S. Bank") Interest rate swap $ 35,700,000 U.S. Bank Variable rate 3-month SOFR plus 1.7% 3.65 % 1st day of each month beginning on April 1, 2017 March 1, 2017 - March 1, 2027 |
Schedule of Cash Flow Hedging Instruments | For the three and nine months ended May 31, 2024 and May 31, 2023, the Company included the gain or loss on the hedged items (that is, variable-rate borrowings) in the same line item—interest expense—as the offsetting gain or loss on the related interest rate swaps as follows (in thousands): Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended May 31, 2024 $ 1,333 $ 703 $ 2,036 Interest expense for the three months ended, May 31, 2023 $ 1,108 $ 210 $ 1,318 Interest expense for the nine months ended May 31, 2024 $ 3,449 $ 1,775 $ 5,224 Interest expense for the nine months ended May 31, 2023 $ 3,538 $ 747 $ 4,285 (1) This amount is representative of the interest expense recognized on the underlying hedged transactions. (2) This amount is representative of the interest expense recognized on the interest rate swaps and cross-currency swaps designated as cash flow hedging instruments. |
Schedule of Notional Amounts of Outstanding Derivative Positions | The total notional balance of the Company’s pay-fixed/receive-variable interest rate swaps and cross-currency interest rate swaps was as follows (in thousands): Notional Amount as of Floating Rate Payer (Swap Counterparty) May 31, August 31, U.S. Bank $ 29,113 $ 30,069 Citibank N.A. 73,102 65,599 Total $ 102,215 $ 95,668 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table summarizes the effect of the fair value of interest rate swap and cross-currency interest rate swap derivative instruments that qualify for derivative hedge accounting and its associated tax effect on accumulated other comprehensive income/(loss) (in thousands): May 31, 2024 August 31, 2023 Derivatives designated as cash flow hedging instruments Balance Sheet Fair Net Tax Net Fair Net Tax Net Cross-currency interest rate swaps Other current assets $ 2,606 $ (912) $ 1,694 $ — $ — $ — Cross-currency interest rate swaps Other non-current assets — — — 5,574 (1,950) 3,624 Cross-currency interest rate swaps Other current liabilities (2,342) 820 (1,522) — — — Cross-currency interest rate swaps Other long-term liabilities (4,137) 1,448 (2,689) (3,321) 1,162 (2,159) Interest rate swaps Other non-current assets 1,979 (442) 1,537 2,243 (501) 1,742 Net fair value of derivatives designated as hedging instruments $ (1,894) $ 914 $ (980) $ 4,496 $ (1,289) $ 3,207 |
Schedule of Open Non-Deliverable Forward Foreign Exchange Contract | The following table summarizes the non-deliverable forward foreign exchange contracts that are open as of May 31, 2024: Financial Derivative Subsidiary Dates Derivative Financial Total Notional Settlement Citibank, N.A. ("Citi") Colombia 28-Feb-2024 - 21-May-2024 Forward foreign exchange contracts (USD) $ 21,500 26-Jun-2024 - 18-Dec-2024 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
May 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenues, Operating Costs and Balance Sheet Items | The following tables summarize by segment certain revenues, operating costs and balance sheet items (in thousands): United Central Caribbean Operations (1) Colombia Reconciling Items (2) Total Three Months Ended May 31, 2024 Revenue from external customers $ 11,587 $ 744,626 $ 333,219 $ 139,996 $ — $ 1,229,428 Intersegment revenues 430,236 8,777 1,597 1,415 (442,025) — Depreciation, property and equipment 1,470 11,036 4,967 3,656 — 21,129 Operating income 1,636 54,874 22,915 3,289 (32,805) 49,909 Net income (loss) (2,097) 47,588 18,707 1,096 (32,805) 32,489 Capital expenditures, net 5,515 17,216 10,270 2,511 — 35,512 Nine Months Ended May 31, 2024 Revenue from external customers $ 30,107 $ 2,225,507 $ 1,016,608 $ 415,631 $ — $ 3,687,853 Intersegment revenues 1,311,880 23,331 4,305 3,704 (1,343,220) — Depreciation, property and equipment 4,177 31,734 14,664 10,539 — 61,114 Operating income 19,481 173,086 72,965 11,498 (105,290) 171,740 Net income 4,320 146,694 58,807 5,276 (105,290) 109,807 Long-lived assets (other than deferred tax assets) 82,727 605,453 220,308 214,959 — 1,123,447 Goodwill 8,982 24,159 10,041 — — 43,182 Total assets 222,690 1,060,211 438,578 299,219 — 2,020,698 Capital expenditures, net 9,162 90,488 29,597 10,734 — 139,981 Three Months Ended May 31, 2023 Revenue from external customers $ 6,347 $ 669,691 $ 316,201 $ 104,415 $ — $ 1,096,654 Intersegment revenues 368,675 7,343 1,527 1,318 (378,863) — Depreciation, property and equipment 1,302 9,349 4,793 2,377 — 17,821 Operating income (loss) 4,066 46,023 21,184 2,961 (31,182) 43,052 Net income (loss) attributable to PriceSmart, Inc. 2,336 38,715 17,091 2,612 (31,182) 29,572 Capital expenditures, net — 24,384 6,850 12,423 — 43,657 Nine Months Ended May 31, 2023 Revenue from external customers $ 23,687 $ 1,992,980 $ 956,032 $ 320,950 $ — $ 3,293,649 Intersegment revenues 1,141,492 20,726 4,178 3,198 (1,169,594) — Depreciation, property and equipment 4,158 27,073 14,216 7,052 — 52,499 Amortization, Intangibles 765 — — — — 765 Operating income (loss) 24,622 152,786 71,161 12,491 (108,681) 152,379 Net income (loss) attributable to PriceSmart, Inc. 9,440 127,163 56,799 9,103 (108,681) 93,824 Long-lived assets (other than deferred tax assets) 70,733 543,410 212,112 188,471 — 1,014,726 Goodwill 8,981 24,127 10,044 — — 43,152 Total assets 242,003 963,929 471,817 255,597 — 1,933,346 Capital expenditures, net 8,829 52,695 14,219 21,737 — 97,480 As of August 31, 2023 Long-lived assets (other than deferred tax assets) $ 71,919 $ 566,139 $ 210,000 $ 205,295 $ — $ 1,053,353 Goodwill 8,981 24,083 10,046 — — 43,110 Investment in unconsolidated affiliates — 10,479 — — — 10,479 Total assets 302,115 995,881 425,145 282,467 — 2,005,608 (1) Management considers its club in the U.S. Virgin Islands to be part of its Caribbean operations. (2) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
COMPANY OVERVIEW AND BASIS OF_2
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Narrative) (Details) | Aug. 31, 2025 warehouse | May 31, 2024 warehouse country |
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 54 | |
Ownership interest | 100% | |
Scenario, Forecast | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 55 | |
Colombia | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 10 | |
Costa Rica | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 8 | |
Panama | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 7 | |
Guatemala | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 6 | |
Dominican Republic | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 5 | |
Trinidad | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 4 | |
El Salvador | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 4 | |
Honduras | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 3 | |
Nicaragua | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 2 | |
Jamaica | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 2 | |
Aruba | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 1 | |
Barbados | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 1 | |
United States Virgin Islands | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of stores | 1 | |
Foreign Countries | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of countries | country | 12 | |
Domestic Territories | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of countries | country | 1 | |
Domestic Territories | United States | ||
Company Overview And Basis Of Presentation [Line Items] | ||
Number of countries | country | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Joint Ventures) (Details) | 9 Months Ended |
May 31, 2024 | |
GolfPark Plaza, S.A. | |
Schedule of Equity Method Investments [Line Items] | |
Ownership | 50% |
Price Plaza Alajuela PPA, S.A. | |
Schedule of Equity Method Investments [Line Items] | |
Ownership | 50% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) shares in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jan. 31, 2024 USD ($) | Dec. 31, 2022 USD ($) | May 31, 2024 USD ($) | May 31, 2023 USD ($) | May 31, 2024 USD ($) award shares | May 31, 2023 USD ($) | Aug. 31, 2023 USD ($) | |
Tax Receivables [Line Items] | |||||||
Money market funds, at fair value | $ 19,200,000 | $ 19,200,000 | $ 100,200,000 | ||||
Goodwill | 43,182,000 | $ 43,152,000 | 43,182,000 | $ 43,152,000 | 43,110,000 | ||
Income taxes receivable | 42,777,000 | 42,777,000 | 36,925,000 | ||||
Payments to acquire property, plant, and equipment | $ 33,000,000 | 141,873,000 | 96,557,000 | ||||
Decrease in operating lease, right-of-use asset | 8,200,000 | ||||||
Decrease in operating lease, liability net of tax | 9,100,000 | ||||||
Property, plant, and equipment, potential annual savings | $ 1,100,000 | ||||||
Long-term debt | 135,098,000 | $ 135,098,000 | 139,680,000 | ||||
Number of types of equity awards issued | award | 3 | ||||||
Reissued treasury shares (in shares) | shares | 3 | ||||||
Asset impairment charge | 0 | $ 0 | $ 0 | $ 0 | |||
One-time separation charge | $ 7,700,000 | ||||||
One-time charge, net of tax | 7,200,000 | ||||||
One time separation charge, non-cash charges | 4,200,000 | ||||||
One-time separation charge, other separation costs | $ 3,500,000 | ||||||
Via Brasil Club | |||||||
Tax Receivables [Line Items] | |||||||
Long-term debt | 16,500,000 | $ 16,500,000 | |||||
Debt instrument, term | 15 years | ||||||
Interest payments | 1,000,000 | $ 1,000,000 | |||||
Land | |||||||
Tax Receivables [Line Items] | |||||||
Percentage of allocated purchase price | 88.70% | ||||||
Purchase price | $ 28,200,000 | ||||||
Building | |||||||
Tax Receivables [Line Items] | |||||||
Percentage of allocated purchase price | 11.30% | ||||||
Purchase price | $ 3,900,000 | ||||||
Leasehold Improvements | |||||||
Tax Receivables [Line Items] | |||||||
Purchase price | $ 8,600,000 | ||||||
Two Countries | |||||||
Tax Receivables [Line Items] | |||||||
Income taxes receivable | 10,900,000 | 10,900,000 | 10,700,000 | ||||
Deferred tax assets, net | $ 3,400,000 | $ 3,400,000 | $ 3,200,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Restricted Cash) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 | May 31, 2023 |
Cash and Cash Equivalents [Line Items] | |||
Short-term restricted cash | $ 2,832 | $ 2,865 | $ 2,965 |
Long-term restricted cash | 9,239 | 9,353 | $ 10,739 |
Total restricted cash | 12,071 | $ 12,218 | |
Certificates of Deposit | |||
Cash and Cash Equivalents [Line Items] | |||
Total restricted cash | $ 5,800 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Value Added Tax Receivables) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 9,442 | $ 2,774 |
Other non-current assets | 30,275 | 36,060 |
Total amount of VAT receivables reported | $ 39,717 | $ 38,834 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Income Tax Receivables) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 15,703 | $ 17,749 |
Other non-current assets | 27,074 | 19,176 |
Total amount of income tax receivables reported | $ 42,777 | $ 36,925 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Net Effect of Foreign Currency Translation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | ||
Accounting Policies [Abstract] | |||||
Effect on other comprehensive income (loss) due to foreign currency translation | [1] | $ (5,181) | $ 15,285 | $ 5,053 | $ 26,599 |
[1] Translation adjustments arising in translating the financial statements of a foreign entity have no effect on the income taxes of that foreign entity. They may, however, affect: (a) the amount, measured in the parent entity's reporting currency, of withholding taxes assessed on dividends paid to the parent entity and (b) the amount of taxes assessed on the parent entity by the government of its country. The Company has determined that the reinvestment of earnings of its foreign subsidiaries are indefinite because of the long-term nature of the Company's foreign investment plans. Therefore, deferred taxes are not provided for on translation adjustments related to non-remitted earnings of the Company's foreign subsidiaries. |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Foreign Currency Gains (Losses)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Accounting Policies [Abstract] | ||||
Currency loss | $ (1,725) | $ (2,095) | $ (11,563) | $ (12,153) |
REVENUE RECOGNITION (Narrative)
REVENUE RECOGNITION (Narrative) (Details) | 9 Months Ended |
May 31, 2024 USD ($) | |
Disaggregation of Revenue [Line Items] | |
Period where membership income is recognized ratably | 12 months |
Period where members can cancel membership | 60 days |
Period after which membership refunds are prorated over remaining term | 60 days |
Platinum membership fee period increase | $ 5 |
Annual membership fee | $ 80 |
Platinum membership rebate (as percent) | 2% |
Maximum platinum annual membership rebate | $ 500 |
Breakage revenue (as percent) | 5% |
Platinum membership recorded liability (as percent) | 95% |
Platinum membership redemption rate (as percent) | 100% |
Gift Card | |
Disaggregation of Revenue [Line Items] | |
Platinum membership redemption period | 1 year |
REVENUE RECOGNITION (Schedule o
REVENUE RECOGNITION (Schedule of Contract Performance Liabilities) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Deferred membership income | ||
Disaggregation of Revenue [Line Items] | ||
Contract Liabilities | $ 36,192 | $ 31,079 |
Other contract performance liabilities | ||
Disaggregation of Revenue [Line Items] | ||
Contract Liabilities | $ 11,977 | $ 12,347 |
REVENUE RECOGNITION (Schedule_2
REVENUE RECOGNITION (Schedule of Disaggregated Revenues) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | $ 1,229,428 | $ 1,096,654 | $ 3,687,853 | $ 3,293,649 |
Net merchandise sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 1,194,531 | 1,070,263 | 3,590,461 | 3,211,725 |
Foods & Sundries | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 576,433 | 537,567 | 1,745,350 | 1,601,613 |
Fresh Foods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 358,764 | 319,706 | 1,055,562 | 940,470 |
Hardlines | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 132,004 | 106,937 | 408,774 | 342,225 |
Softlines | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 62,483 | 54,947 | 189,441 | 175,736 |
Food Service and Bakery | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 53,211 | 42,980 | 159,086 | 129,784 |
Health Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | $ 11,636 | $ 8,126 | $ 32,248 | $ 21,897 |
EARNINGS PER SHARE (Schedule of
EARNINGS PER SHARE (Schedule of the Computation of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 32,489 | $ 29,572 | $ 109,807 | $ 93,824 |
Less: Allocation of income to unvested stockholders | (67) | (456) | (1,033) | (1,098) |
Net income available for distribution | $ 32,422 | $ 29,116 | $ 108,774 | $ 92,726 |
Basic weighted average shares outstanding (in shares) | 29,968 | 30,800 | 30,052 | 30,752 |
Add dilutive effect of performance stock units (two-class method) (in shares) | 0 | 29 | 0 | 18 |
Diluted average shares outstanding (in shares) | 29,968 | 30,829 | 30,052 | 30,770 |
Basic net income per share (in dollars per share) | $ 1.08 | $ 0.95 | $ 3.62 | $ 3.02 |
Diluted net income per share (in dollars per share) | $ 1.08 | $ 0.94 | $ 3.62 | $ 3.01 |
STOCKHOLDERS' EQUITY (Schedule
STOCKHOLDERS' EQUITY (Schedule of Dividends) (Details) - $ / shares | Aug. 30, 2024 | Apr. 30, 2024 | Apr. 03, 2024 | Feb. 29, 2024 | Feb. 01, 2024 | Aug. 31, 2023 | Feb. 28, 2023 | Feb. 03, 2023 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Common stock dividend declares (usd per share) | $ 1 | $ 1.16 | $ 0.92 | |||||
Common stock dividends, cash paid (usd per share) | $ 1 | $ 0.58 | $ 0.46 | $ 0.46 | ||||
Scenario, Forecast | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Common stock dividends, cash paid (usd per share) | $ 0.58 |
STOCKHOLDERS' EQUITY (Schedul_2
STOCKHOLDERS' EQUITY (Schedule of Components of Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | Aug. 31, 2023 | |
Amount | |||||
Beginning balance | $ 1,093,874 | $ 1,043,912 | $ 1,107,043 | $ 991,073 | $ 991,073 |
Ending balance | 1,095,354 | 1,089,693 | 1,095,354 | 1,089,693 | 1,107,043 |
Accumulated Other Comprehensive Loss | |||||
Amount | |||||
Beginning balance | (155,289) | (183,703) | (163,992) | (195,586) | (195,586) |
Ending balance | (160,080) | (169,603) | (160,080) | (169,603) | (163,992) |
Foreign currency translation adjustments | |||||
Amount | |||||
Other comprehensive income, before reclassification | (5,181) | 15,285 | 5,053 | 26,599 | 33,708 |
Defined benefit pension plan | |||||
Amount | |||||
Other comprehensive income, before reclassification | 91 | 15 | 302 | 30 | (1,819) |
Derivative instruments | |||||
Amount | |||||
Other comprehensive income, before reclassification | $ 299 | $ (1,200) | $ (1,443) | $ (646) | (443) |
Amounts reclassified from accumulated other comprehensive loss | |||||
Amount | |||||
Amounts reclassified from accumulated other comprehensive loss | $ 148 |
STOCKHOLDERS' EQUITY (Schedul_3
STOCKHOLDERS' EQUITY (Schedule of Retained Earnings Not Available for Distribution) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Equity [Abstract] | ||
Retained earnings not available for distribution | $ 9,529 | $ 9,110 |
STOCKHOLDERS' EQUITY (Share Rep
STOCKHOLDERS' EQUITY (Share Repurchase Program) (Details) - Share Repurchase Program - USD ($) | 3 Months Ended | 9 Months Ended | 10 Months Ended | |||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | May 31, 2024 | Jul. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Authorized amount | $ 75,000,000 | |||||
Purchase of treasury stock (in shares) | 0 | 0 | 935,663 | 0 | 1,007,000 |
STOCKHOLDERS' EQUITY (Schedul_4
STOCKHOLDERS' EQUITY (Schedule of Share-Based Payment Arrangement, Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 10 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | May 31, 2024 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Total cost of common shares acquired | $ 114 | $ 174 | $ 71,852 | $ 5,993 | |
Share Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Number of common shares acquired (in shares) | 0 | 0 | 935,663 | 0 | 1,007,000 |
Average price per common share acquired (in dollars per share) | $ 0 | $ 0 | $ 74.13 | $ 0 | |
Total cost of common shares acquired | $ 0 | $ 0 | $ 69,362 | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) $ in Thousands | May 31, 2024 USD ($) agreement | Aug. 31, 2023 USD ($) |
Commitments And Contingencies [Line Items] | ||
Accrual for taxes other than income taxes, current | $ 1,200 | $ 9,600 |
Income taxes receivable | 42,777 | 36,925 |
Contractual obligation | $ 12,500 | 11,300 |
Lease not yet commenced, term | 20 years | |
Lease note yet commenced, renewal term | 5 years | |
Land purchase option, number of agreements | agreement | 4 | |
Purchase options, land | $ 13,700 | |
Lease not yet commenced, liability | 11,800 | |
Two Countries | ||
Commitments And Contingencies [Line Items] | ||
Income taxes receivable | 10,900 | 10,700 |
Deferred tax assets, net | 3,400 | $ 3,200 |
Building | ||
Commitments And Contingencies [Line Items] | ||
Lease not yet commenced, liability | $ 12,100 | |
Warehouse | ||
Commitments And Contingencies [Line Items] | ||
Number of lease options agreements | agreement | 1 | |
Number of lease agreements not yet signed | agreement | 1 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Estimated Future Minimum Lease) (Details) - Guatemala $ in Thousands | May 31, 2024 USD ($) |
Other Commitments [Line Items] | |
2026 | $ 1,132 |
2027 | 1,655 |
2028 | 1,616 |
2029 | 1,577 |
2030 | 1,540 |
Thereafter | 19,808 |
Total | $ 27,328 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Schedule of Variable Interest Entities Maximum Loss Exposure) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2024 | Aug. 31, 2023 | |
Variable Interest Entity [Line Items] | ||
Initial Investment | $ 6,809 | |
Additional Investments | 3,638 | |
Net Income (Loss) Inception to Date | 114 | |
Company’s Variable Interest in Entity | 10,561 | $ 10,479 |
Commitment to Future Additional Investments | 884 | |
Company's Maximum Exposure to Loss in Entity | $ 11,445 | |
GolfPark Plaza, S.A. | ||
Variable Interest Entity [Line Items] | ||
Ownership | 50% | |
Initial Investment | $ 4,616 | |
Additional Investments | 2,402 | |
Net Income (Loss) Inception to Date | (124) | |
Company’s Variable Interest in Entity | 6,894 | |
Commitment to Future Additional Investments | 99 | |
Company's Maximum Exposure to Loss in Entity | $ 6,993 | |
Price Plaza Alajuela PPA, S.A. | ||
Variable Interest Entity [Line Items] | ||
Ownership | 50% | |
Initial Investment | $ 2,193 | |
Additional Investments | 1,236 | |
Net Income (Loss) Inception to Date | 238 | |
Company’s Variable Interest in Entity | 3,667 | |
Commitment to Future Additional Investments | 785 | |
Company's Maximum Exposure to Loss in Entity | $ 4,452 |
DEBT (Schedule of Short-Term Bo
DEBT (Schedule of Short-Term Borrowings) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Committed | ||
Short-Term Debt [Line Items] | ||
Total Amount of Facilities | $ 75,000 | $ 75,000 |
Facilities Available | $ 74,916 | $ 75,000 |
Weighted average interest rate | 0% | 0% |
Uncommitted | ||
Short-Term Debt [Line Items] | ||
Total Amount of Facilities | $ 96,000 | $ 91,000 |
Facilities Available | $ 85,922 | $ 82,624 |
Weighted average interest rate | 11.40% | 13.20% |
Overdraft Used Uncommitted | ||
Short-Term Debt [Line Items] | ||
Total Amount of Facilities | $ 0 | |
Facilities Available | $ 0 | |
Weighted average interest rate | 12% | |
Facilities | ||
Short-Term Debt [Line Items] | ||
Total Amount of Facilities | $ 171,000 | $ 166,000 |
Facilities Used | 10,078 | 8,679 |
Facilities Available | $ 160,838 | $ 157,624 |
Weighted average interest rate | 0% | 12.70% |
Short-term Borrowings | Committed | ||
Short-Term Debt [Line Items] | ||
Facilities Used | $ 0 | $ 0 |
Short-term Borrowings | Uncommitted | ||
Short-Term Debt [Line Items] | ||
Facilities Used | 10,078 | 8,376 |
Short-term Borrowings | Overdraft Used Uncommitted | ||
Short-Term Debt [Line Items] | ||
Facilities Used | 303 | |
Letters of Credit | Committed | ||
Short-Term Debt [Line Items] | ||
Facilities Used | 84 | 0 |
Letters of Credit | Uncommitted | ||
Short-Term Debt [Line Items] | ||
Facilities Used | 0 | 0 |
Letters of Credit | Overdraft Used Uncommitted | ||
Short-Term Debt [Line Items] | ||
Facilities Used | 0 | |
Letters of Credit | Facilities | ||
Short-Term Debt [Line Items] | ||
Facilities Used | $ 84 | $ 0 |
DEBT (Narrative) (Details)
DEBT (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Feb. 29, 2024 USD ($) | May 31, 2024 USD ($) facility bank | Aug. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |||
Number of facilities in a committed credit agreement | facility | 1 | ||
Number of banks | bank | 1 | ||
Annual commitment fee | 0.25% | ||
Total future lease payments | $ 135,098 | $ 139,680 | |
Committed | |||
Debt Instrument [Line Items] | |||
Credit facility current borrowing capacity | 75,000 | ||
Group of Subsidiaries | Covenants | |||
Debt Instrument [Line Items] | |||
Total future lease payments | $ 80,100 | $ 91,200 | |
Panama subsidiary | Short-term Borrowings | |||
Debt Instrument [Line Items] | |||
Total future lease payments | $ 16,500 | ||
Debt instrument, term | 15 years | ||
Basis spread on variable rate | 1.80% | ||
Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration] | Secured Overnight Financing Rate (SOFR) [Member] | ||
Panama subsidiary | Short-term Borrowings | Special Interest Compensation Fund (FECI) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1% |
DEBT (Schedule of Changes in Lo
DEBT (Schedule of Changes in Long-Term Debt) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | Aug. 31, 2023 | |
Debt [Roll Forward] | |||
Current portion of long-term debt | $ 20,193 | ||
Long-term debt (net of current portion) | 119,487 | ||
Total | 139,680 | ||
Proceeds from long-term debt incurred during the period: | |||
Current portion of long-term debt | 0 | ||
Long-term debt (net of current portion) | 16,500 | ||
Total | 16,500 | $ 38,712 | |
Repayments of long-term debt: | |||
Current portion of long-term debt | (2,786) | ||
Long-term debt (net of current portion) | (18,647) | ||
Total | (21,433) | $ (31,407) | |
Reclassifications of long-term debt due in the next 12 months | |||
Current portion of long-term debt | 19,231 | ||
Long-term debt (net of current portion) | (19,231) | ||
Total | 0 | ||
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar | |||
Current portion of long-term debt | 34 | ||
Long-term debt (net of current portion) | 317 | ||
Total | 351 | ||
Current portion of long-term debt | 36,672 | ||
Long-term debt (net of current portion) | 98,426 | ||
Total | 135,098 | ||
Panama subsidiary | |||
Proceeds from long-term debt incurred during the period: | |||
Current portion of long-term debt | 0 | ||
Long-term debt (net of current portion) | 16,500 | ||
Total | 16,500 | ||
Non-cash Assets | |||
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar | |||
Collateral amount | 135,200 | $ 156,200 | |
Cash Assets | |||
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar | |||
Collateral amount | $ 2,000 | $ 3,500 |
DEBT (Schedule of Annual Maturi
DEBT (Schedule of Annual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Debt Disclosure [Abstract] | ||
2025 | $ 36,672 | |
2026 | 14,881 | |
2027 | 39,122 | |
2028 | 14,410 | |
2029 | 4,411 | |
Thereafter | 25,602 | |
Total | $ 135,098 | $ 139,680 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Interest Rate Derivatives) (Details) - Cash Flow Hedging | May 31, 2024 USD ($) |
Colombia $10M Cross Currency Interest Rate Swap 1 | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 10,000,000 |
Floating Leg (swap counter-party) | 5% |
Fixed Rate for PSMT Subsidiary | 11.27% |
Colombia 10m Cross Currency Interest Rate Swap 2 | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 10,000,000 |
Floating Leg (swap counter-party) | 4% |
Fixed Rate for PSMT Subsidiary | 11.40% |
Colombia $12.5M Cross Currency Interest Rate Swap | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 12,500,000 |
Floating Leg (swap counter-party) | 3% |
Fixed Rate for PSMT Subsidiary | 10.35% |
Colombia 10M Cross Currency Interest Rate Swap 3 | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 10,000,000 |
Floating Leg (swap counter-party) | 3% |
Fixed Rate for PSMT Subsidiary | 9.04% |
Colombia 10m Cross Currency Interest Rate Swap 4 | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 10,000,000 |
Floating Leg (swap counter-party) | 3% |
Fixed Rate for PSMT Subsidiary | 8.40% |
Colombia $7.875M Cross Currency Interest Rate Swap | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 7,875,000 |
Floating Leg (swap counter-party) | 2.45% |
Fixed Rate for PSMT Subsidiary | 7.87% |
Colombia $25M Cross Currency Interest Rate Swap | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 25,000,000 |
Floating Leg (swap counter-party) | 2.45% |
Fixed Rate for PSMT Subsidiary | 7.93% |
Pricesmart $35.7M Cross Currency Interest Rate Swap | |
Derivative [Line Items] | |
Initial US$ Notional Amount | $ 35,700,000 |
Floating Leg (swap counter-party) | 1.70% |
Fixed Rate for PSMT Subsidiary | 3.65% |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Cash Flow Hedging Instruments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | |
Derivative [Line Items] | ||||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest Expense, Nonoperating | Interest Expense, Nonoperating | Interest Expense, Nonoperating | Interest Expense, Nonoperating |
Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net | $ 2,036 | $ 1,318 | $ 5,224 | $ 4,285 |
Interest expense on borrowings | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net | 1,333 | 1,108 | 3,449 | 3,538 |
Cost of swaps | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net | $ 703 | $ 210 | $ 1,775 | $ 747 |
DERIVATIVE INSTRUMENTS AND HE_5
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Notional Amounts of Outstanding Derivative Positions) (Details) - Cash Flow Hedging - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Derivative [Line Items] | ||
Derivative liability, notional amount | $ 102,215 | $ 95,668 |
U.S. Bank | ||
Derivative [Line Items] | ||
Derivative liability, notional amount | 29,113 | 30,069 |
Citibank N.A. | ||
Derivative [Line Items] | ||
Derivative liability, notional amount | $ 73,102 | $ 65,599 |
DERIVATIVE INSTRUMENTS AND HE_6
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) - USD ($) $ in Thousands | May 31, 2024 | Aug. 31, 2023 |
Derivative [Line Items] | ||
Derivative asset, noncurrent | $ 1,979 | $ 7,817 |
Derivative liability, current | (2,734) | (1,913) |
Derivative liability, noncurrent | $ (4,137) | $ (3,321) |
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Prepaid Expense and Other Assets, Current | Prepaid Expense and Other Assets, Current |
Derivative Asset, Noncurrent, Statement of Financial Position [Extensible Enumeration] | 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) | 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) |
Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued expenses and other current liabilities (includes $2,734 and $1,913 as of May 31, 2024 and August 31, 2023, respectively, for the fair value of derivative instruments) | Other accrued expenses and other current liabilities (includes $2,734 and $1,913 as of May 31, 2024 and August 31, 2023, respectively, for the fair value of derivative instruments) |
Derivative Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities (includes $4,137 and $3,321 for the fair value of derivative instruments and $13,151 and $12,105 for post-employment plans as of May 31, 2024 and August 31, 2023, respectively) | Other long-term liabilities (includes $4,137 and $3,321 for the fair value of derivative instruments and $13,151 and $12,105 for post-employment plans as of May 31, 2024 and August 31, 2023, respectively) |
Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair Value | $ (1,894) | $ 4,496 |
Net Tax Effect | 914 | (1,289) |
Net OCI | (980) | 3,207 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair value of asset, current | 2,606 | 0 |
Net Tax Effect | (912) | 0 |
Net OCI | 1,694 | 0 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Derivative asset, noncurrent | 0 | 5,574 |
Net Tax Effect | 0 | (1,950) |
Net OCI | 0 | 3,624 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Derivative liability, current | (2,342) | 0 |
Net Tax Effect | 820 | 0 |
Net OCI | (1,522) | 0 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Derivative liability, noncurrent | (4,137) | (3,321) |
Net Tax Effect | 1,448 | 1,162 |
Net OCI | (2,689) | (2,159) |
Interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Derivative asset, noncurrent | 1,979 | 2,243 |
Net Tax Effect | (442) | (501) |
Net OCI | $ 1,537 | $ 1,742 |
DERIVATIVE INSTRUMENTS AND HE_7
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule Of Open Non-Deliverable Forward Foreign Exchange Contract) (Details) | May 31, 2024 USD ($) |
Forward foreign exchange contracts | 26-Jun-2024 - 18-Dec-2024 | Fair Value Hedging | |
Derivative [Line Items] | |
Notional amount | $ 21,500,000 |
SEGMENTS (Narrative) (Details)
SEGMENTS (Narrative) (Details) | May 31, 2024 warehouse country |
Segment Reporting Information [Line Items] | |
Number of stores | warehouse | 54 |
Foreign Countries | |
Segment Reporting Information [Line Items] | |
Number of countries | 12 |
Domestic Territories | |
Segment Reporting Information [Line Items] | |
Number of countries | 1 |
SEGMENTS (Schedule of Segment R
SEGMENTS (Schedule of Segment Revenues, Operating Costs and Balance Sheet Items) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2024 | May 31, 2023 | May 31, 2024 | May 31, 2023 | Aug. 31, 2023 | |
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | $ 1,229,428 | $ 1,096,654 | $ 3,687,853 | $ 3,293,649 | |
Depreciation, property and equipment | 21,129 | 17,821 | 61,114 | 52,499 | |
Amortization, Intangibles | 765 | ||||
Operating income (loss) | 49,909 | 43,052 | 171,740 | 152,379 | |
Net income (loss) attributable to PriceSmart, Inc. | 32,489 | 29,572 | 109,807 | 93,824 | |
Long-lived assets (other than deferred tax assets) | 1,123,447 | 1,014,726 | 1,123,447 | 1,014,726 | $ 1,053,353 |
Goodwill | 43,182 | 43,152 | 43,182 | 43,152 | 43,110 |
Investment in unconsolidated affiliates | 10,479 | ||||
Total assets | 2,020,698 | 1,933,346 | 2,020,698 | 1,933,346 | 2,005,608 |
Capital expenditures, net | 35,512 | 43,657 | 139,981 | 97,480 | |
Operating Segments | United States Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 11,587 | 6,347 | 30,107 | 23,687 | |
Depreciation, property and equipment | 1,470 | 1,302 | 4,177 | 4,158 | |
Amortization, Intangibles | 765 | ||||
Operating income (loss) | 1,636 | 4,066 | 19,481 | 24,622 | |
Net income (loss) attributable to PriceSmart, Inc. | (2,097) | 2,336 | 4,320 | 9,440 | |
Long-lived assets (other than deferred tax assets) | 82,727 | 70,733 | 82,727 | 70,733 | 71,919 |
Goodwill | 8,982 | 8,981 | 8,982 | 8,981 | 8,981 |
Investment in unconsolidated affiliates | 0 | ||||
Total assets | 222,690 | 242,003 | 222,690 | 242,003 | 302,115 |
Capital expenditures, net | 5,515 | 0 | 9,162 | 8,829 | |
Operating Segments | Central American Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 744,626 | 669,691 | 2,225,507 | 1,992,980 | |
Depreciation, property and equipment | 11,036 | 9,349 | 31,734 | 27,073 | |
Amortization, Intangibles | 0 | ||||
Operating income (loss) | 54,874 | 46,023 | 173,086 | 152,786 | |
Net income (loss) attributable to PriceSmart, Inc. | 47,588 | 38,715 | 146,694 | 127,163 | |
Long-lived assets (other than deferred tax assets) | 605,453 | 543,410 | 605,453 | 543,410 | 566,139 |
Goodwill | 24,159 | 24,127 | 24,159 | 24,127 | 24,083 |
Investment in unconsolidated affiliates | 10,479 | ||||
Total assets | 1,060,211 | 963,929 | 1,060,211 | 963,929 | 995,881 |
Capital expenditures, net | 17,216 | 24,384 | 90,488 | 52,695 | |
Operating Segments | Caribbean Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 333,219 | 316,201 | 1,016,608 | 956,032 | |
Depreciation, property and equipment | 4,967 | 4,793 | 14,664 | 14,216 | |
Amortization, Intangibles | 0 | ||||
Operating income (loss) | 22,915 | 21,184 | 72,965 | 71,161 | |
Net income (loss) attributable to PriceSmart, Inc. | 18,707 | 17,091 | 58,807 | 56,799 | |
Long-lived assets (other than deferred tax assets) | 220,308 | 212,112 | 220,308 | 212,112 | 210,000 |
Goodwill | 10,041 | 10,044 | 10,041 | 10,044 | 10,046 |
Investment in unconsolidated affiliates | 0 | ||||
Total assets | 438,578 | 471,817 | 438,578 | 471,817 | 425,145 |
Capital expenditures, net | 10,270 | 6,850 | 29,597 | 14,219 | |
Operating Segments | Colombia Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 139,996 | 104,415 | 415,631 | 320,950 | |
Depreciation, property and equipment | 3,656 | 2,377 | 10,539 | 7,052 | |
Amortization, Intangibles | 0 | ||||
Operating income (loss) | 3,289 | 2,961 | 11,498 | 12,491 | |
Net income (loss) attributable to PriceSmart, Inc. | 1,096 | 2,612 | 5,276 | 9,103 | |
Long-lived assets (other than deferred tax assets) | 214,959 | 188,471 | 214,959 | 188,471 | 205,295 |
Goodwill | 0 | 0 | 0 | 0 | 0 |
Investment in unconsolidated affiliates | 0 | ||||
Total assets | 299,219 | 255,597 | 299,219 | 255,597 | 282,467 |
Capital expenditures, net | 2,511 | 12,423 | 10,734 | 21,737 | |
Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | (442,025) | (378,863) | (1,343,220) | (1,169,594) | |
Intersegment Eliminations | United States Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 430,236 | 368,675 | 1,311,880 | 1,141,492 | |
Intersegment Eliminations | Central American Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 8,777 | 7,343 | 23,331 | 20,726 | |
Intersegment Eliminations | Caribbean Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 1,597 | 1,527 | 4,305 | 4,178 | |
Intersegment Eliminations | Colombia Operations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 1,415 | 1,318 | 3,704 | 3,198 | |
Reconciling Items | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from external customers | 0 | 0 | 0 | 0 | |
Depreciation, property and equipment | 0 | 0 | 0 | 0 | |
Amortization, Intangibles | 0 | ||||
Operating income (loss) | (32,805) | (31,182) | (105,290) | (108,681) | |
Net income (loss) attributable to PriceSmart, Inc. | (32,805) | (31,182) | (105,290) | (108,681) | |
Long-lived assets (other than deferred tax assets) | 0 | 0 | 0 | 0 | 0 |
Goodwill | 0 | 0 | 0 | 0 | 0 |
Investment in unconsolidated affiliates | 0 | ||||
Total assets | 0 | 0 | 0 | 0 | $ 0 |
Capital expenditures, net | $ 0 | $ 0 | $ 0 | $ 0 |