PSMT - Earnings call transcript Q1 2025

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Operator

Good afternoon, everyone, and welcome to PriceSmart Inc.'s earnings release conference call for the first quarter of fiscal year 2025, which ended on November 30, 2024. After remarks from our company's representatives, Robert Price, Interim Chief Executive Officer; and Michael McCleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits.

As a reminder, this conference call is limited to one hour and is being recorded today, Friday, January 10, 2025. A digital replay will be available shortly following the conclusion of the call through January 17, 2025, by dialing (888) 660-6264 for domestic callers or (646) 517-3975 for international callers and entering replay access code 20154 and the pound sign.

would Financial turn Officer, I to call remarks, Chief PriceSmart's Mr. opening like the to over For Michael McCleary. Please proceed, sir.

Michael McCleary

ended fiscal Thank you, for XXXX, of call Inc.'s PriceSmart XX, which year operator, and the welcome first to on XXXX. November earnings quarter

that Also the press our we financial to in were these be which in on released measures. and provided non-GAAP information remarks, will our we We January XX-Q, both discussing earnings release X, XXXX. refer

most non-GAAP You XX-Q. GAAP directly can the a measures find press our comparable our in and financial earnings of our measures to reconciliation release

Relations These sign at documents are available on e-mail for where our also Investor can website you alerts. investors.pricesmart.com, up

company's reminder, of and related anticipated other statements all this on matters. than a historical conference forward-looking statements are call the plans, As fact, revenues made concerning statements

not statements to, estimate should, some but Forward-looking the plan, believe, words will, statements are limited may, include, expect, other expressions. and containing

update other the statements These updated current January accessible XX-Q Form report and Wednesday with forward-looking this to statements assumptions are including time. All at and annual as in filed time expectations the statements could risks are that XX-K, uncertainties subject today, no from quarterly SEC, of to to the made risks are undertakes most Form which actual detailed cause on based and differ obligation forward-looking website on SEC's be the report filings www.sec.gov. recent may company call. company's The results during materially These XXXX. to on the XX, on risks

Officer. over Chief to will Robert I Price, Executive call Now Interim the turn PriceSmart's

Francisco Velasco

we our to look XXXX the by call. and our On join management our Michael your behalf PriceSmart and stockholders, Michael answering your and thanking first questions narrative first our our forward providing for conclusion his for extremely dedication I pleasure of want Michael. and you, quarter welcoming contribution we grateful be of loyalty in to to remarks. begin quarter, continuing at Thank Board the you their soon is success. are our employees XX,XXX business. for to team to will Michael's my to investors FY It

Now Michael ask with to am to his presentation. I pleased continue

Michael McCleary

net for Thank by revenue total the increased or in $X.XX X.X% X.X% comparable by X.X% or and quarter merchandise constant currency. $X.XX billion, sales merchandise in By were America, currency billion. Net merchandise increased you, X.X% first clubs or was sales merchandise where in segment, net or in with X.X% and currency sales net constant increased had end, merchandise at in sales currency. in Robert. we Net X.X% increase comparable X.X% Central XX constant X% quarter sales a constant

sales February All is the of which in America our which except for comparable net comparable new Salvador, net XXXX, growth Central X had included positive markets club in in merchandise sales yet not merchandise opened El calculation.

X.X% or Our the currency. approximately Central at positive Caribbean, merchandise comparable sales net merchandise America basis constant X.X% comparable sales end, XX net clubs and quarter. to sales points we had first increased X.X% where consolidated constant quarter XXX in the or In impact growth for merchandise X.X% segment total of net in contributed in increased currency the

a segment in had slight comparable All sales net positive except growth in this markets merchandise of our for Barbados. decrease

in impact basis quarter. for comparable the the points in of to constant comparable quarter. or sales sales net approximately had we growth quarter, comparable impact the net first the merchandise In Our where net to Colombia, XX XX.X% approximately total or clubs at opened XX.X% increased merchandise XX.X% end currency. currency Colombia contributed and sales XX.X% net sales of basis for growth total of Caribbean contributed constant merchandise in positive positive consolidated increased our region in points the merchandise XXX first XXX consolidated

of merchandise year, approximately first our when our categories, category foods the in same grew terms X.X%. prior sales to the In quarter period comparing

increased category non-foods XX.X%. Our approximately

and services food accounts prior million bakery rate increased and health accounts X.X% XX.X% year XX, versus to grew with of X.X% pharmacy, approximately XX-month increased over XX.X%. Our the optical, our renewal approximately categories Membership November audiology services, and XXXX. X.X as including a of

gross increase accounts to Platinum of segment from of year membership focus end as the our quarter versus first Total XX.X% percentage included represented on which XX.X% additional sales quarter as quarter XXXX. the fiscal this of and the our our the prior quarter net margin quarter in points first fiscal of first platinum of XXXX XXXX of fiscal base and fiscal the first basis XX.X% increased year merchandise first a XXXX. in and fiscal the of year decreased total is This of of of promotional due XXXX. XX% membership, to for XX important during campaigns end as X.X%

versus the period ticket year the same to per flat item and prior transactions the prior while X.X% compared first per average of price average period. increased During year-over-year, average X.X% items our same quarter, the The basket grew year. remained X.X% grew sales approximately by

as as Regarding overhead, increases a the for SG&A XX is to the as the million The total in primarily similar we the point of SG&A increase future million monetary a of million coming investments. primarily of in in interest of loss million. The expense in the due of expenses, U.S. other of expense total were prior year. year. U.S. for income income our was and fiscal $X.X into of of growth other related an expense increase to result premiums as same of million warehouse in a Operating compared million. percentage quarter currencies In XXXX losses these $X.X basis percentage revenue other an central overall net net U.S. $X.X a in $X.X dollars as first well technology of dollar-denominated business. period in We of quarter to necessary XXXX, assets club loss the several was to same $X.X at local convert $XX.X last fiscal of recorded year as last in and as quarter total markets operating unrealized first a of expense lower expenses liabilities revenue budgeted for the year year value investments increase our to increase the

first XX% impact Our many to annualized XXXX XX%. that effective for related the tax rate year rates end that rates, fiscal for XXXX. anticipate of XX.X% the diluted for can year first the that XXXX. or the optimization were Recognizing continue the balance of these tax fiscal optimization the the share undertaken was that million decrease result tax the full year initiatives in fiscal quarter in to we versus The year year We $XX anticipate overall our is tax fiscal income $X.XX range rate in of initiatives variables $XX.X effective for of of first XXXX. was be million tax lower fiscal Net XXXX XX.X% rate to or of to the quarter per ago. effective compared year primarily fiscal per $X.XX will share a tax tax in will quarter diluted at

inventory $XX.X of decrease. $X.X investments. our million the to From from plus net fiscal million totaling compared by merchandise first operating working partially perspective, cash million in compared $XX.X fiscal ended contributed offset cash with year of positions changes and $XX.X million. XXXX positive year cash generated $XXX.X short-term in EBITDA other in of million equivalents and same was quarter liabilities, cash XXXX This for activities prior quarter for the overall for year by was contributed approximately million million payable and the We net the Adjusted $XXX.X change to a the capital and million a year. $XX.X period Shifts in quarter to last assets our restricted totaled which flow first the period. provided same accounts $XX.X cash operating

$XX XXXX short-term settlements during by repayments of decreased cash stock in fewer $X.X Trinidad U.S. an of of months and equivalents million Net decrease When equipment had bank to dollars. million, X prior purchases for note of cash in $X.X long-term Honduras, and decrease to first investing reviewing local property first it the year by currency treasury convert fiscal end XXXX cash, in activities partially cash compared investments million really was in the investments. increase offset by a XXXX year same year balances, proceeds our $X.X activities primarily during the first not from Net denominated to in which and fiscal used primarily offset of first is partially to million of the year expenditures. million and quarter fiscal borrowings due and ago. important we repurchases used cash compared we our and the a a could period decreased of into that in quarter, year, financing This by the quarter of net from $XX.X in at short-term

Now growth Starting on estate. to with our real drivers.

San open will from a east club warehouse anticipated the land the located the have nearest plan purchased of property We miles area. X-acre ninth spring is club Metropolitan to open Cartago in club and XX Costa on in in our This Jose approximately and Rica in be to XXXX. Greater built

in the the be the build west of seventh XXX Quetzaltenango, lease to in of open in on built a City. Guatemala Additionally, this located club club land anticipated will capital we quarter of from and plan finalized property warehouse to execution approximately summer in and our XXXX. miles is This Guatemala club the X-acre nearest

first the X high-volume Republic. remodeling and warehouse open, XX San total. Pedro these Dominican Honduras In Sula, the in we Santiago, of months of Once XXXX, operate will are year clubs fiscal we our completed new clubs clubs in X

Additionally, Jamaica. El expansions and clubs we our Salvador Portmore, in in San completed Salvador, of December,

Finally, better we members. serve infrastructure our distribution seek to to continue ways actively improve to our

distribution Costa We centers in and currently Miami, have Panama. Rica major

provide products, in landed for Republic. such implementation and merchandise in-country distribution market providing of PriceSmart-operated are the will Trinidad believe We lowering Dominican net our shortening including in the positions. of DCs in-stock development for We cost Guatemala, time these centers and numerous better the as advantages, imported most to and also stages various markets of

Along are from our operate centers, we of deliver merchandise with our own trucks centers to fleet countries beginning some to additional our to in clubs. distribution distribution

through multi-club, and logistics providers. are the third-party or network opening we distribution of in operated China distribution the use by and logistics enhancing in Additionally, expected of our through centers PriceSmart each of either our

now of our Turning increase efforts membership. to value the to

to As focus a our all household offer selection brand on markets. to based of private under and in private significant our members. it brings value good apparel member food, across we've previous the brand label products be highlighted selection label, area calls, continues our members We

XXXX. XXXX, months basis That's the sales. XX.X% first merchandise of the period total our of of fiscal label our X year in up XX.X% fiscal year from represented private During XX sales points comparable

health locations on of focus to in services. We continue and clubs centers all XX in also centers pharmacy as currently optical warehouse in well clubs Rica, warehouse in We Costa as X Guatemala. have with X Panama X our

XXXX, expect Panama, in By clubs the to we Guatemala end have fiscal Rica, of Salvador. and El Costa substantially in pharmacies all

also centers open. have We audiology currently XX

Our every which with we exams optical exams activities. membership, during philanthropical quarter. in XX,XXX X our Optical pre located to over services important eye are also of eye and component the communities program our an clubs through provides performed contributions the are

online including capabilities. third drive Our app other our pricesmart.com, mile our options for members, third-party as technological last omnichannel delivery enhancing utilize and/or is well sales and website as currently our sales. driver desktop shopping via growth app our services providing to We our

sales and orders merchandise represented app period. merchandise During prior our total high XX.X% increased XX.X% and digital Total net the versus same the placed or $XX.X first value pricesmart.com of on the increased quarter, versus million transaction record net sales. in channels of total and prior a year year the average directly period the X.X% through same X.X% increased

had profile As the and our online online had first approximately pricesmart.com app our or with members our members made quarter, app. of the or of our profile pricesmart.com an with of XX% a XX.X% purchase of end an created on

to business omnichannel there digital members. channel are to significant to will an our We growth experience our we this continue in part in of believe invest provide and value our enhanced additional and opportunities that

also transform enhancements in back-office and investments productivity continuing and member-centric. are and optimize brick-and-mortar digital supply We and to our experience technology more to efficient improvements prioritize and make for initiatives the chain both experience the to

by efforts is will which this management. it modernize and of XXXX, ordering fiscal expect inventory be the We started XXXX. One example to in these we operational project substantially end and our of RELEX, year

result of streamlined this enhanced due As sales in-stock anticipate implementation, and we a diminished positions, spoilage to improved inventory efficiencies flow. and

Toshiba successfully system, implemented year ELERA, first the in product we XXXX, the of our in Additionally, countries. new quarter one point-of-sale our fiscal of

roll years. throughout We next will this fiscal application few out continue to new the

solid December second X we quarter, our year. the which office impact had were made December procurement, a weeks versus will little several the and or merchandise has up In in we we constant positive our do sales of progress X.X% process. back processes more We've for last the important and operationally that such XXXX, into proud forward employees technology X.X% for particularly currency communities as our ended business comparable implementation net in joining call of on Looking other current closing, today. in expect more front-end areas are and key our in in XX, business. merchandising our initiatives our make efficient agile you Thank us logistics

questions. your questions. will Operator, may turn the call start to you callers' our now take to the I now taking over operator

Operator

first of Kansas Braatz comes Instructions] the line Jon Capital. City [Operator from question Your from

Jon Braatz

about Michael, a cost. can talk currency we little your conversion bit

in think the looks $X.X balances up your million, XX-Q. Trinidad And million. was it during I $XX went the like per the I think, quarter, quarter, it

Your can converted Honduras in a complex Honduras but me balances lot that, idea? give $XX currencies it's you went you an Does million. quarter? know down more that I probably the only suggest about than that

Michael McCleary

just No. to able than both generated Trinidad John. Good were convert. during local in We currency We question, converted quarter. the we more

Jon Braatz

out the in to I'm there get trying convert percentage Does that percentage million costs? of currencies? to costly of to want $X.X it convert, a you currency a is sense Okay. cost how sort is call if that to

Michael McCleary

we during think before, an And on of averages the a we are allocations on and within about to mentioned kind expect to dollars we don't the always our basis year. I the like estimates access that couple that. of what we've so And those quarter. we we'd that margin annual some be to talked target structure what throughout for made have of As pricing cost I the calls, we're

this So disconnect on quarter. happened timing like

Jon Braatz

those so But is little higher strategy bit recoup the margin. a to Okay. costs through

Michael McCleary

Correct.

Jon Braatz

-- that Okay. it's secondly, in business. going -- the know And business that that business business. absence on actually sort lost elsewhere with a that of go Philippines, to forward? and of Does you've develop you're business, revenue you're -- the the to I does know then looking part big not your of -- new export I X that

Robert Price

no, answer question no. we because is the that -- I'll answer Jon, are

what that exclusively some we We've parties particularly have to division even and to a build It's countries, we we have business. the revenue where in but not for customers, agreements In our we fact, had within that that quarter, and are going level good don't our certainly sales be in the Philippines and done of be trying export number think have in at business. approached the that light first developed have focused been in made no business operations, growth that's to area fact a is, working of with basic But set from in third longer sales. some And the exports. our we've and on already countries we PriceSmart we small we're could business. up company a

Jon Braatz

Philippines there revenue first So was indeed in some the quarter?

Robert Price

-- I think, Philippines, there still of business so because tailing think some a off was of a left. in there's I the kind our but

Jon Braatz

Okay.

And good. last Very Okay. question.

that think next goal say do business? your I label think, more label business, private securing up they years. you What's can XX%. Where about of couple the over private was what Your go in

Michael McCleary

That's really a question. good

se, we it our a should. percent sales, at per haven't, We total of as looked maybe

our developed. the selection of brand, real member is that of business one value that brand in think the I we've the values

private are talk most or distributors export where small we that's interesting about these want of focused. brands, very the sales, really retailers they're fact, In label what when

American do got is of member members our products of markets And of keeping is good because a But disciplined sure North I opportunity too to the that more say, the shouldn't The aren't access thought America, wouldn't only quality building available is very thing and giving the brand think label that community. we've in we've the selection part to well, -- over is making attraction products. the branded also lot do of about going in readily into -- eliminate we the keep private let's fact many PriceSmart and of, in our and brands particularly we're value. been we're well have that really really that high North I

a think there's there. lot I of potential

Operator

And your Héctor question of from Scotiabank. comes next from the line Maya

Héctor Maya López

the the could on increase for costs to us wanted give first, know, a you of as drivers sales. details if percentage Just of more

little what the this If the also to that effect? contributed understand you And us was further? help could most region a that one please bit

Michael McCleary

So key as percentage that of you cut a was cost at a... the off right point,

Robert Price

don't the I it what real question said. can hear but to Why because hear couldn't you We you as you, repeat clear it. wasn't

maybe repeat So you could it?

Héctor Maya López

Yes.

please, the cost sales, an could increase driver and the that please? understand about most of you give what And one If was region effect the there. more this? behind wanted what effect, of percentage was the the contributed details, as percentage this I we to just to saw

Michael McCleary

Okay. to when I is heard. make I referring sure just to I it that's want what SG&A? thought you're costs,

Héctor Maya López

COGS of sales. as percentage

Michael McCleary

of goods cost sold? COGS,

Héctor Maya López

Yes.

Michael McCleary

COGS.

Okay.

Robert Price

understand it's I repeat, sure you being asked so because still Can to not me. Just I Michael? make clear what's

Michael McCleary

percentage Héctor, got My it I went me you're of correct why asking sales the about COGS, understanding was as right, of if up. question, a COGS

Héctor Maya López

basically, yes. Yes,

Robert Price

Okay. it the why went But that to up. is question as

Michael McCleary

is are But the what's up. me throwing margins

it's down, so you're I percentage are the of -- be sorry, right. So -- should COGS margins think up sales

Robert Price

the X.X%. No, margin

Michael McCleary

to QX was I QX, thinking yes.

Robert Price

way. The why you're margins is up question Be what of could are down, kind COGS asking? that is or why be either asked

Héctor Maya López

yes. Yes,

Robert Price

of it's you're bit talking XX.X% -- little It difference. little I a right, Okay. -- been a year-to-year. XX.X% year-to-year, a big didn't a if versus not I've studying that guess, bit. was we

but think on remember I of it did if particularly have ago, really be exports, grasp order have in the trying sales. electronics aggressive don't areas I getting it it, were could think it about and in necessarily on actually local about And big-ticket was I the well more -- that of again, as that a be as aggressive more to was margin items, where exports. it a year we could sales, merchandise, be in we some the primarily lost right, but total little to a get might other I on we

Michael McCleary

question, the got Yes. about The reason I confused Héctor.

to QX, XX points. if QX XX look So at we're to points. basis we're you QX, down sequentially, QX basis up

think on calls, one particular basis couple mentioned XX trend. we don't XX I of So make of points a in a ranges necessarily to quarter

The other a full attention year. thing little historically, bit call have your I'd to the higher QX is, than margins been

you full year, year at if year QX. So year last to prior look the full compared

Robert Price

would Colombia, have might notice depreciating if the in in local margin XX% believe, be in Colombia, in from exports during in them the studied of terms adjusting prices but in other again, think right? terms something it of close haven't increases, it Colombia. the lost call totally, to that, what we I the Wasn't our I -- that especially say in sales like factor quarter, U.S., largest But the to decrease of In increase, the peso. I imports, Michael? peso we the you And the the our some to on and currency, may I first increased we sales this, was because

Michael McCleary

so. think I

Robert Price

year down noticed portion And was quite the -- ago from import I bit. a our a that

situation. the currency So I gotten have might hurt think on we

Héctor Maya López

the very give understand. XXXX, and fiscal the end that talking in you of were more also could in technology, the sales behind please? efficiencies of expect That's And also details by Got us that, it. year of you implementation could the your also improved if terms helpful. I about you on investments

Robert Price

of question to trying about understand a again. Make kind want I can little -- question a -- sure little specific your what more it's your we be you is determine?

Héctor Maya López

were on also from mentioning business report you in optimization. expenses the achieve you Yes, to that made technology

your your the XXXX improved expected prepared about to of remarks, were you wanted maybe talking goals end your also fiscal and just in sales So efficiencies and year. understand

to more details about I wanted So understand that.

Robert Price

XXXX. that all happening. to what's efficiencies play not try of me will I'm Let sure these out explain in

years back probably that's have that likely back not I'll under-invested our technology there we are with a in in -- couple -- of -- things the think office. I think number of the for not business that in start -- and a office I

being and we've dependent spend the our buyers support the I in operate think we phase, occur, the and a people we to that have catch-up we our to money. I efficiently takes the they distribution get need trying our the are years. distribution will business, money portion the for to the now up give mean, area now need and less the of team of benefits the -- resources for in buying get that tools over to to on paper and hopefully that end

and would -- I that's that technology area much of everywhere. back one that's the is in say the So pretty office area

of implement Trinidad. we're efficiencies And we point-of-sale think technology balance technology stages the allow system. then the hopefully, be there. get will in technology in and guess I year, I be accounting to also with to our under of and efficiencies it's significant more the in technology move the this in I the think early try enough that we'll technology And there, ELERA more -- is technology, invested over haven't us which create Toshiba new called to throughout at able to working implementing And really registers is the we're thing service that's members of productive better. that the to to other

of it. piece So one that's

the business that maximizing requiring our on with investment the the some the And terms of interface as think online the XX% business. grew that had business although about a to where important we thing increase that I I very we other what relate online The than is really online of is it's well, in still it be past. as sales. also well still Michael of areas our the think online in more we to in members quality are is We interface and -- support not done because need -- reported

this impact our year, on continuation corporate that side. going So we're overhead the experience in to of think I

the too, the operating our quarter the to clubs, think, point better. wanted very cost close to lower in level, important is being I of maybe same, warehouse that percent Now slightly out, at operating first a I actually, this level club had at pretty we've

doing there. So better we are

in And comments, really think developing I a particularly a many regional to was to of of We're own company, I we're And extent sense think the it sales, to our headed distribution dividends but other our it's important in where this pretty Michael's those thing my buildings distribution want efficiencies even as build centers, me, centers. in point markets. be to really these mode critical emphasize, out. terms I these in cost for have in big in of markets in paid to the aggressive

there's result in all but impact a lot year So year. isn't to this line works, in it the going bottom this a

okay. do we'll think I

the Our for look good, of will this hopefully more that important had company. but really is future numbers I the feel we do something that be that to

Operator

back Mr. at There I are questions this McCleary no closing for to will further remarks. call hand time. you. Michael Thank now the any

Michael McCleary

send impacted that Take thank we care. a best to the you in Well, Thank joining Los happy the to to for New you, our our want of wishes want to Okay. call Year Angeles, you. we and today. all wish anybody conference by fires has everybody, call. on been

Operator

for you Thank call. today's concludes this And you. participating. Thank

You may disconnect. all

PriceSmart (PSMT) 10 Jan 252025 Q1 Earnings call transcript