PRICESMART INC Q3 FY2024 earnings call

• Thanked nearly 12,000 employees in 13 countries for their performance. - Highlighted the warehouse club format's continuous innovation. - Detailed strong fourth quarter and fiscal year sales figures. - Outlined segment performances in Central America, Caribbean, and Colombia. - Noted membership growth, including a 4.7% increase in accounts and platinum membership penetration. - Discussed gross margin improvements, SG&A expense changes, and tax rate fluctuations. - Described a strong balance sheet with cash, cash equivalents, and investments. - Outlined growth drivers: real estate expansion (new club openings and remodels), membership value initiatives (private label sales, health services), omnichannel shopping (digital sales growth and technology investments), and environmental/social responsibility activities (recycling centers, philanthropy).

In the fourth quarter of Fiscal Year 2024, net merchandise sales reached nearly $1.2 billion, with total revenue over $1.2 billion. Net merchandise sales increased by 9.5% (or 9.3% in constant currency), and comparable net merchandise sales grew by 6.2% (or 6% in constant currency). For the fiscal year ended August 31, 2024, total net merchandise sales were nearly $4.8 billion and total revenues exceeded $4.9 billion. Net merchandise sales rose by 11.2% (or 8.6% in constant currency), and comparable net merchandise sales increased by 7.7% (or 5.2% in constant currency) for the 12-month and 52-week periods respectively. In Central America (30 clubs at quarter end), net merchandise sales increased 9.1% (or 7.9% in constant currency), with comparable net merchandise sales up 6.1% (or 4.9% in constant currency). The Caribbean region (14 clubs at quarter end) saw net merchandise sales increase 6.9% (or 9.4% in constant currency) and comparable net merchandise sales up 6.7% (or 9.2% in constant currency). Colombia (10 clubs open at quarter end) had net merchandise sales up 18.7% (or 16.8% in constant currency) and comparable net merchandise sales up 5.4% (or 3.8% in constant currency). Membership accounts grew 4.7% to nearly 1.9 million, with platinum memberships at 12.3% of the total. Fourth quarter gross margin was 15.7% (a 10-basis point increase from prior year). Operating income for the quarter increased 53.1% to $49.2 million, and for the fiscal year, it rose 19.7% to $22.9 million. Net income for the fourth quarter was $29.1 million ($0.94 per diluted share), and for the fiscal year, it was $138.9 million ($4.57 per diluted share).

• Anticipates the effective tax rate to decrease to between 27% and 29% in fiscal year 2025. - Comparable net merchandise sales for the 8 weeks ended October 27, 2024 were up 5.6% in U.S. dollars and 5.7% in constant currency. - Plans for new club openings in Costa Rica (Cartago) and Guatemala (Quetzaltenango), and ongoing technology projects like RELX and a new point-of-sale system.

• Risks detailed in the company's most recent annual report on Form 10-K and other SEC filings, including exchange rate fluctuations, market environment changes, and policy uncertainties that could cause actual results to differ materially from forward-looking statements.

Q: Could you talk a little bit more about the tax optimization program that you're looking at for 2025 and a lower tax rate?

A: As our business model focuses on reducing costs, we're looking to use tax credits against U.S. profits to save taxes, which involves better utilizing tax credits from operating subsidiaries against U.S. profits.

Q: Would it be fair to say that the benefits that you get from these tax savings will not necessarily flow to the bottom line because you're going to invest those tax savings into lower prices?

A: We will take some of the tax savings and leave some for other uses.

Q: What happened to the Philippines business?

A: S&R (formerly PriceSmart) in the Philippines can buy direct now, and we're focusing export business in the Hemisphere.

Q: Could you give an update on how the consumer environment has continued to evolve in Colombia?

A: Our acceptance in Colombia is growing, though the peso weakening against the dollar has some impact, but our sales remain good.

Q: What would you say that makes you most excited about 2025?

A: Excited about technology initiatives (like RELX and new point-of-sale system), remodels/expansions of clubs, improvements in nonfood buying, distribution center initiatives, and a new government relations team.