PriceSmart, Inc. May 2018
Forward Looking Statements This presentation may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow, proposed warehouse club openings, the Company's performance relative to competitors, the outcome of tax proceedings and related matters. These forward-looking statements include, but are not limited to, statements containing the words “expect,” “believe,” “will,” “may,” “should,” “project,” “estimate,” “anticipated,” “scheduled,” and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, but not limited to, the following external and internal risks: External Risks: Natural disasters that might cause damages not covered by insurance; Negative macroeconomic conditions; Volatility in foreign currency exchange rates and limitations on our ability to convert foreign currency to U.S. dollars; Changes in, and inconsistent enforcement of, laws and regulations in countries where we operate, including those related to tariffs and taxes; Compliance risks; Crime and security concerns, which can adversely affect the economies of the countries in which we operate and which require us to incur additional costs to provide additional security at our warehouse clubs; Recoverability of moneys owed to PriceSmart from governments in countries where we do business; The possibility of operational interruptions related to union work stoppages; and Political instability, such as recent unrest in Honduras and the ongoing anti-government protests in Nicaragua, which have disrupted our operations there. Internal Risks: Timely identification or effectively responding to changes in consumer shopping preferences with resulting negative effects on our sales and market share; Significant competition, including from international online retailers; Limitations on the availability of appropriate sites for new warehouse clubs could adversely affect growth; Increased costs due to delays or failure in our efforts to integrate our online commerce with our traditional brick and mortar business; Acquisitions, such as our acquisition of Aeropost, Inc. in March 2018, may expose us to additional risks; Cost increases from product and service providers; Interruption of supply chains, which might adversely impact on our ability to import merchandise; Failure to maintain our brand’s reputation; Exposure to product liability claims and product recalls; Failure to maintain our computer systems and/or disruption in those systems; Delays or cost overruns implementing our anticipated new Enterprise Resource Planning system; Any failure to maintain the security of the information we hold relating to our company, our members, employees and suppliers; Failure to attract and retain qualified employees, significant increases in wage and benefit expenses, or changes in labor laws with consequent material adverse effect on our financial performance; Changes in accounting standards affecting management's financial assumptions, projections, estimates and judgments; and A few of our stockholders own approximately 25.3% of our voting stock as of May 31, 2018, which may make it difficult to complete some corporate transactions without their support and may impede a change in control. The risks described above as well as the other risks detailed in the Company’s U.S. Securities and Exchange Commission (“SEC”) reports, including the Company’s Annual Report on Form 10-K filed for the fiscal year ended August 31, 2017 filed on October 26, 2017, pursuant to the Securities Exchange Act of 1934, see “Part I - Item 1A - Risk Factors,” could materially and adversely affect our business, financial condition and results of operations. These risks are not the only risks that the Company faces. The Company could also be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company currently considers to be immaterial. For further information, please contact Maarten O. Jager, Principal Financial Officer and Principal Accounting Officer (858) 404-8826. 2
Our Heritage 3
Today, PriceSmart is a Leading Pan-Regional Membership Warehouse Club Operator Business Overview (1) Pan-Regional Presence U.S.-style Membership warehouse club operator l Los Angeles – Distribution Center First club opened in 1996 in Panama ― San Diego – Headquarters Company went public in 1997 ― Miami – Primary Distribution Center Nasdaq Global Select Market (PSMT) ― Mexico – Distribution Center Dominican Headquarters and primary DC in the U.S. l Republic (4+1) Jamaica (1) USVI (1) $2.4B market cap l Guatemala (3) Honduras (3) Barbados (1) LTM Sales of $3.0B l Aruba (1) Nicaragua (2) El Salvador (2) Trinidad (4) Panama (5+1) 100K total transactions per day Costa Rica (7) ― Colombia (7) Annual average sales: $74.5MM/club ― 41 warehouse clubs across 13 countries l 2.0MM sq ft (sales floor space) ― Net Warehouse Sales Breakdown 80% of clubs’ real estate is owned (33/41) ― 1.5MM membership accounts l Business Colombia Over 2.8MM card holders ― 20% 12% Caribbean 85% renewal rate ― 29% Retail Central America 80% 59% Source: Company estimates Source: Company Financials Note: (1) Data as of 05/31/18 4
Attractive Warehouse Club Facilities Exteriors Interiors 5
Well-Developed Distribution Network Key Facts Distribution Network Five DC’s in North America, Costa Rica, Colombia, l Trinidad and Panama for imported merchandise Core competency of international shipping and local l import logistics expertise Managed sourcing logistics from over 20 countries l Dominican Republic (4+1) Executes over 20,000 ocean-container shipments l USVI (1) Jamaica (1) annually Barbados (1) Honduras (3) Guatemala (3) Aruba (1) Nicaragua (2) EL Salvador (2) Staff of 250 dedicated logistics associates in 13 l Trinidad (4) Costa Rica (7) Panama (5+1) countries Colombia (7) Acquired a 325,000 square foot cross-dock l distribution center in Miami in 2017 Primary DC Other / Regional DCs + 1 Future Club 6
Warehouse Club Growth l Opened two new warehouse clubs in FY2018 (#40 & #41) ― Santa Ana, Costa Rica ― Santo Domingo, Dominican Republic Santa Ana, Costa Rica l Further merchandise clubs expected in Panama and Dominican Republic in FY19 l Expanding existing warehouse clubs where the site allows for expansion ― David, Panama ― Kingston, Jamaica San Isidro, DR ― Pradera, Guatemala City l Capital investment expected to be $125- 135 million during FY18. 7
Recent Financial Performance 1 3 rd Quarter of Fiscal Year 2018: ― Net merchandise sales increased 5.6% over comparable period a year earlier. ― Membership income increased 6.8% to $12.9 million • 12-Month Renewal Rate of 85% ― Warehouse gross profits as a percent of net warehouse sales were 14.6%, an increase of 60 basis points from the 3rd quarter of fiscal 2017. ― Operating income of $28.4 million compared to $27.6 million a year ago. ― Net income for three-month period was $18.7 million, or $0.61 per diluted share compared to $18.8 million, or $0.62 per diluted share. ― Cash and cash equivalents of $144.8 million ― Total debt of $105.9 million 1 3 month period ending May 31, 2018 8
Historical Growth Performance Net Warehouse Club Sales (1) Same Store Sales Growth (1) $Bn % 3.5 2.9 30 2.7 2.8 3.0 2.4 2.2 2.5 20.1 2.0 18.1 20 2.0 1.7 14.5 1.4 1.2 1.5 1.1 9 8.7 8.2 10 1.0 4.8 2.7 2.2 0.5 1.5 0.0 0 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Total Membership Income & Accounts (1) Total Units (1) $MM MM # Warehouse Clubs 50 46 48 50 2.0 44 40 39 37 38 40 40 33 34 31 29 29 27 26 27 25 30 30 23 20 1.0 18 16 20 20 10 10 0 0.0 0 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Membership Fee Income Membership Accounts Notes: (1) Fiscal years 9
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