QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
No o |
No o |
x | Accelerated filer | o | |||||||||
Non-accelerated filer | o | Smaller Reporting Company | |||||||||
Emerging growth company |
Yes o | No |
Page | ||||||||
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2023 (UNAUDITED) AND AUGUST 31, 2022 | ||||||||
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 AND 2022 - UNAUDITED | ||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 AND 2022 - UNAUDITED | ||||||||
CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 AND 2022 - UNAUDITED | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 2023 AND 2022 - UNAUDITED | ||||||||
May 31, 2023 (Unaudited) | August 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term restricted cash | |||||||||||
Short-term investments | |||||||||||
Receivables, net of allowance for doubtful accounts of $ | |||||||||||
Merchandise inventories | |||||||||||
Prepaid expenses and other current assets (includes $ | |||||||||||
Total current assets | |||||||||||
Long-term restricted cash | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets, net | |||||||||||
Goodwill | |||||||||||
Deferred tax assets | |||||||||||
Other non-current assets (includes $ | |||||||||||
Investment in unconsolidated affiliates | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Short-term borrowings | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued salaries and benefits | |||||||||||
Deferred income | |||||||||||
Income taxes payable | |||||||||||
Other accrued expenses and other current liabilities (includes $ | |||||||||||
Operating lease liabilities, current portion | |||||||||||
Dividends payable | |||||||||||
Long-term debt, current portion | |||||||||||
Total current liabilities | |||||||||||
Deferred tax liability | |||||||||||
Long-term income taxes payable, net of current portion | |||||||||||
Long-term operating lease liabilities | |||||||||||
Long-term debt, net of current portion | |||||||||||
Other long-term liabilities (includes $ | |||||||||||
Total Liabilities |
Stockholders' Equity: | |||||||||||
Common stock $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Less: treasury stock at cost, | ( | ( | |||||||||
Total Stockholders' Equity | |||||||||||
Total Liabilities and Equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Net merchandise sales | $ | $ | $ | $ | |||||||||||||||||||
Export sales | |||||||||||||||||||||||
Membership income | |||||||||||||||||||||||
Other revenue and income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of goods sold: | |||||||||||||||||||||||
Net merchandise sales | |||||||||||||||||||||||
Export sales | |||||||||||||||||||||||
Non-merchandise | |||||||||||||||||||||||
Selling, general and administrative: | |||||||||||||||||||||||
Warehouse club and other operations | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Separation costs associated with Chief Executive Officer departure | |||||||||||||||||||||||
Pre-opening expenses | |||||||||||||||||||||||
Loss (gain) on disposal of assets | ( | ||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
Total other expense | ( | ( | ( | ( | |||||||||||||||||||
Income before provision for income taxes and loss of unconsolidated affiliates | |||||||||||||||||||||||
Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) of unconsolidated affiliates | ( | ( | |||||||||||||||||||||
Net income | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | ( | ||||||||||||||||||||||
Net income attributable to PriceSmart, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Net income attributable to PriceSmart, Inc. per share available for distribution: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Shares used in per share computations: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Less: net income attributable to non controlling interest | ( | ||||||||||||||||||||||
Net income attributable to PriceSmart, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Other Comprehensive Income, net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustments (1) | ( | ( | |||||||||||||||||||||
Defined benefit pension plan: | |||||||||||||||||||||||
Net gain/(loss) arising during period | ( | ( | |||||||||||||||||||||
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | |||||||||||||||||||||||
Total defined benefit pension plan | |||||||||||||||||||||||
Derivative instruments:(2) | |||||||||||||||||||||||
Unrealized gains/(losses) on change in derivative obligations | ( | ||||||||||||||||||||||
Unrealized gains/(losses) on change in fair value of interest rate swaps | ( | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income to other expense, net for settlement of derivatives | |||||||||||||||||||||||
Total derivative instruments | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Less: comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
Comprehensive income attributable to PriceSmart, Inc. | $ | $ | $ | $ |
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at February 28, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock award | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock awards | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Balance at February 28, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock award | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Dividend paid to stockholders | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividend payable to stockholders | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders' Equity Attributable to PriceSmart, Inc. | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of treasury stock | ( | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock award | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock awards | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid to stockholders | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividend payable to stockholders | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | ( | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of Aeropost stock | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of treasury stock | ( | — | ( | — | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock award | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock awards | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid to stockholders | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividend payable to stockholders | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ |
Nine Months Ended | |||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||
Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Allowance for doubtful accounts | ( | ||||||||||
Loss on sale of property and equipment | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Equity in losses of unconsolidated affiliates | |||||||||||
Stock-based compensation | |||||||||||
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 | ( | ( | |||||||||
Merchandise inventories | ( | ||||||||||
Accounts payable | |||||||||||
Net cash provided by operating activities | |||||||||||
Investing Activities: | |||||||||||
Proceeds from the disposal of Aeropost, net of divested cash | |||||||||||
Additions to property and equipment | ( | ( | |||||||||
Purchases of short-term investments | ( | ( | |||||||||
Proceeds from settlements of short-term investments | |||||||||||
Proceeds from settlements of long-term investments | |||||||||||
Proceeds from disposal of property and equipment | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing Activities: | |||||||||||
Proceeds from long-term bank borrowings | |||||||||||
Repayment of long-term bank borrowings | ( | ( | |||||||||
Proceeds from short-term bank borrowings | |||||||||||
Repayment of short-term bank borrowings | ( | ( | |||||||||
Cash dividend payments | ( | ( | |||||||||
Purchase of treasury stock | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | ( | ||||||||||
Net increase (decrease) in cash, cash equivalents | ( | ||||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Supplemental disclosure of noncash investing activities: | |||||||||||
Capital expenditures accrued, but not yet paid | $ | $ | |||||||||
Dividends declared but not yet paid |
Nine Months Ended | |||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term restricted cash | |||||||||||
Long-term restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ | $ |
Real Estate Development Joint Ventures | Countries | Ownership | Basis of Presentation | |||||||||||||||||
GolfPark Plaza, S.A. | Panama | % | Equity(1) | |||||||||||||||||
Price Plaza Alajuela PPA, S.A. | Costa Rica | % | Equity(1) |
May 31, 2023 | August 31, 2022 | ||||||||||
Short-term restricted cash | $ | $ | |||||||||
Long-term restricted cash | |||||||||||
Total restricted cash(1) | $ | $ |
May 31, 2023 | August 31, 2022 | ||||||||||
Prepaid expenses and other current assets | $ | $ | |||||||||
Other non-current assets | |||||||||||
Total amount of VAT receivables reported | $ | $ |
May 31, 2023 | August 31, 2022 | ||||||||||
Prepaid expenses and other current assets | $ | $ | |||||||||
Other non-current assets | |||||||||||
Total amount of income tax receivables reported | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Effect on other comprehensive income (loss) due to foreign currency translation | $ | $ | ( | $ | $ | ( |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Currency loss | $ | ( | $ | ( | $ | ( | $ | ( |
Contract Liabilities | |||||||||||
May 31, 2023 | August 31, 2022 | ||||||||||
Deferred membership income | $ | $ | |||||||||
Other contract performance liabilities | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Foods & Sundries | $ | $ | $ | $ | |||||||||||||||||||
Fresh Foods | |||||||||||||||||||||||
Hardlines | |||||||||||||||||||||||
Softlines | |||||||||||||||||||||||
Other Business | |||||||||||||||||||||||
Net Merchandise Sales | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Net income attributable to PriceSmart, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Less: Allocation of income to unvested stockholders | ( | ( | ( | ( | |||||||||||||||||||
Net income attributable to PriceSmart, Inc. available for distribution | $ | $ | $ | $ | |||||||||||||||||||
Basic weighted average shares outstanding | |||||||||||||||||||||||
Add dilutive effect of performance stock units (two-class method) | |||||||||||||||||||||||
Diluted average shares outstanding | |||||||||||||||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ |
First Payment | Second Payment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Declared | Amount | Record Date | Date Paid | Date Payable | Amount | Record Date | Date Paid | Date Payable | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
2/3/2023 | $ | 2/16/2023 | 2/28/2023 | N/A | $ | 8/15/2023 | N/A | 8/31/2023 | $ | |||||||||||||||||||||||||||||||||||||||||||||||
2/3/2022 | $ | 2/15/2022 | 2/28/2022 | N/A | $ | 8/15/2022 | 8/31/2022 | N/A | $ |
Attributable to PriceSmart | Noncontrolling Interests | Total | |||||||||||||||
Beginning balance, September 1, 2022 | $ | ( | $ | $ | ( | ||||||||||||
Foreign currency translation adjustments | |||||||||||||||||
Defined benefit pension plans (1) | |||||||||||||||||
Derivative instruments (2) | ( | ( | |||||||||||||||
Ending balance, May 31, 2023 | $ | ( | $ | $ | ( |
Attributable to PriceSmart | Noncontrolling Interests | Total | |||||||||||||||
Beginning balance, September 1, 2021 | $ | ( | $ | $ | ( | ||||||||||||
Foreign currency translation adjustments | ( | ( | |||||||||||||||
Defined benefit pension plans (1) | |||||||||||||||||
Derivative instruments (2) | |||||||||||||||||
Sale of Aeropost | ( | ( | |||||||||||||||
Ending balance, May 31, 2022 | $ | ( | $ | $ | ( |
Attributable to PriceSmart | Noncontrolling Interests | Total | |||||||||||||||
Beginning balance, September 1, 2021 | $ | ( | $ | $ | ( | ||||||||||||
Foreign currency translation adjustments | ( | ( | |||||||||||||||
Defined benefit pension plans (1) | ( | ( | |||||||||||||||
Derivative instruments (2) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
Sale of Aeropost | $ | ( | ( | ||||||||||||||
Ending balance, August 31, 2022 | $ | ( | $ | $ | ( |
May 31, 2023 | August 31, 2022 | ||||||||||
Retained earnings not available for distribution | $ | $ |
Entity | % Ownership | Initial Investment | Additional Investments | Net Income (Loss) Inception to Date | Company’s Variable Interest in Entity | Commitment to Future Additional Investments(1) | Company's Maximum Exposure to Loss in Entity(2) | |||||||||||||||||||||||||||||||||||||
GolfPark Plaza, S.A. | % | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Price Plaza Alajuela PPA, S.A. | % | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Facilities Used | |||||||||||||||||||||||||||||
Total Amount of Facilities | Short-term Borrowings | Letters of Credit | Facilities Available | Weighted average interest rate | |||||||||||||||||||||||||
May 31, 2023 - Committed | $ | $ | $ | $ | % | ||||||||||||||||||||||||
May 31, 2023 - Uncommitted | |||||||||||||||||||||||||||||
May 31, 2023 - Total | $ | $ | $ | $ | % | ||||||||||||||||||||||||
August 31, 2022 - Committed | $ | $ | % | ||||||||||||||||||||||||||
August 31, 2022 - Uncommitted | |||||||||||||||||||||||||||||
August 31, 2022 - Total | $ | $ | $ | $ | % |
(Amounts in thousands) | Current portion of long-term debt | Long-term debt (net of current portion) | Total | |||||||||||||||||
Balances as of August 31, 2022 | $ | $ | $ | (1) | ||||||||||||||||
Proceeds from long-term debt incurred during the period: | ||||||||||||||||||||
Guatemala subsidiary | ||||||||||||||||||||
Barbados subsidiary | ||||||||||||||||||||
Honduras subsidiary | ||||||||||||||||||||
Trinidad subsidiary | ||||||||||||||||||||
Total proceeds from long-term debt incurred during the period | ||||||||||||||||||||
Repayments of long-term debt: | ( | ( | ( | |||||||||||||||||
Reclassifications of long-term debt due in the next 12 months | ( | |||||||||||||||||||
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar(2) | ( | ( | ||||||||||||||||||
Balances as of May 31, 2023 | $ | $ | $ | (3) |
Twelve Months Ended May 31, | Amount | |||||||
2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total | $ |
Entity | Date Entered into | Derivative Financial Counter- party | Derivative Financial Instruments | Initial US$ Notional Amount | US$ Loan Held With | Floating Leg (swap counter-party) | Fixed Rate for PSMT Subsidiary | Settlement Dates | Effective Period of swap | |||||||||||||||||||||||||||||||||||||||||||||||
Colombia subsidiary | 12-Apr-23 | Citibank, N.A. ("Citi") | Cross currency interest rate swap | $ | PriceSmart, Inc. | % | 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 | $ | PriceSmart, Inc. | % | 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 | $ | PriceSmart, Inc. | % | 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 | $ | PriceSmart, Inc. | % | 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 | $ | Citibank, N.A. | Variable rate 3-month Libor plus | % | 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 | $ | Citibank, N.A. | Variable rate 3-month Libor plus | % | 27th day of each November, February, May and August beginning February 27, 2020 | November 27, 2019 - November 27, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
PriceSmart, Inc. | 7-Nov-16 | MUFG Union Bank, N.A. ("Union Bank") | Interest rate swap | $ | Union Bank | Variable rate 3-month Libor plus | % | 1st day of each month beginning on April 1, 2017 | March 1, 2017 - March 1, 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
Income Statement Classification | Interest expense on borrowings(1) | Cost of swaps(2) | Total | |||||||||||||||||
Interest expense for the three months ended May 31, 2023 | $ | $ | $ | |||||||||||||||||
Interest expense for the three months ended May 31, 2022 | $ | $ | $ | |||||||||||||||||
Interest expense for the nine months ended, May 31, 2023 | $ | $ | $ | |||||||||||||||||
Interest expense for the nine months ended May 31, 2022 | $ | $ | $ |
Notional Amount as of | ||||||||||||||
Floating Rate Payer (Swap Counterparty) | May 31, 2023 | August 31, 2022 | ||||||||||||
Union Bank | $ | $ | ||||||||||||
Citibank N.A. | ||||||||||||||
Scotiabank | ||||||||||||||
Total | $ | $ |
May 31, 2023 | August 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Derivatives designated as cash flow hedging instruments | Balance Sheet Classification | Fair Value | Net Tax Effect | Net OCI | Fair Value | Net Tax Effect | Net OCI | |||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net fair value of derivatives designated as hedging instruments | $ | $ | ( | $ | $ | $ | ( | $ |
Financial Derivative (Counterparty) | Subsidiary | Dates Entered into (Range) | Derivative Financial Instrument | Total Notional Amounts (in thousands) | Settlement Dates (Range) | |||||||||||||||||||||||||||
Scotiabank Colpatria, S.A. | Colombia | 11-Jan-2023 - 27-Mar-2023 | Forward foreign exchange contracts (USD) | $ | 8-Sep-2023 - 21-Dec-2023 | |||||||||||||||||||||||||||
Citibank, N.A. ("Citi") | Colombia | 18-Jan-2023 - 16-Mar-2023 | Forward foreign exchange contracts (USD) | $ | 22-Jun-2023 - 16-Nov-2023 | |||||||||||||||||||||||||||
United States Operations | Central American Operations | Caribbean Operations(1) | Colombia Operations | Reconciling Items(2) | Total | |||||||||||||||||||||||||||||||||
Three Months Ended May 31, 2023 | ||||||||||||||||||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Intersegment revenues | ( | — | ||||||||||||||||||||||||||||||||||||
Depreciation, Property and equipment | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to PriceSmart, Inc. | ( | |||||||||||||||||||||||||||||||||||||
Capital expenditures, net | ||||||||||||||||||||||||||||||||||||||
Nine Months Ended May 31, 2023 | ||||||||||||||||||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Intersegment revenues | ( | — | ||||||||||||||||||||||||||||||||||||
Depreciation, Property and equipment | ||||||||||||||||||||||||||||||||||||||
Amortization, Intangibles | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to PriceSmart, Inc. | ( | |||||||||||||||||||||||||||||||||||||
Long-lived assets (other than deferred tax assets) | ||||||||||||||||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||||||||||||
Total assets | ||||||||||||||||||||||||||||||||||||||
Capital expenditures, net | ||||||||||||||||||||||||||||||||||||||
Three Months Ended May 31, 2022 | ||||||||||||||||||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Intersegment revenues | ( | — | ||||||||||||||||||||||||||||||||||||
Depreciation, Property and equipment | ||||||||||||||||||||||||||||||||||||||
Amortization, Intangibles | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to PriceSmart, Inc. | ( | ( | ||||||||||||||||||||||||||||||||||||
Capital expenditures, net | ||||||||||||||||||||||||||||||||||||||
Nine Months Ended May 31, 2022 | ||||||||||||||||||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Intersegment revenues | ( | — | ||||||||||||||||||||||||||||||||||||
Depreciation, Property and equipment | ||||||||||||||||||||||||||||||||||||||
Amortization, Intangibles | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to PriceSmart, Inc. | ( | |||||||||||||||||||||||||||||||||||||
Long-lived assets (other than deferred tax assets) | ||||||||||||||||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||||||||||||
Total assets | ||||||||||||||||||||||||||||||||||||||
Capital expenditures, net | ||||||||||||||||||||||||||||||||||||||
As of August 31, 2022 | ||||||||||||||||||||||||||||||||||||||
Long-lived assets (other than deferred tax assets) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated affiliates | ||||||||||||||||||||||||||||||||||||||
Total assets |
Country/Territory | Number of Warehouse Clubs in Operation as of May 31, 2022 | Number of Warehouse Clubs in Operation as of May 31, 2023 | Anticipated Warehouse Club Openings in Calendar Year 2023 | Anticipated Warehouse Club Openings in Calendar Year 2024 | ||||||||||||||||||||||
Colombia | 9 | 9 | 1 | — | ||||||||||||||||||||||
Costa Rica | 8 | 8 | — | — | ||||||||||||||||||||||
Panama | 7 | 7 | — | — | ||||||||||||||||||||||
Dominican Republic | 5 | 5 | — | — | ||||||||||||||||||||||
Guatemala | 5 | 5 | 1 | — | ||||||||||||||||||||||
Trinidad | 4 | 4 | — | — | ||||||||||||||||||||||
Honduras | 3 | 3 | — | — | ||||||||||||||||||||||
El Salvador | 2 | 3 | — | 1 | ||||||||||||||||||||||
Nicaragua | 2 | 2 | — | — | ||||||||||||||||||||||
Jamaica | 2 | 2 | — | — | ||||||||||||||||||||||
Aruba | 1 | 1 | — | — | ||||||||||||||||||||||
Barbados | 1 | 1 | — | — | ||||||||||||||||||||||
U.S. Virgin Islands | 1 | 1 | — | — | ||||||||||||||||||||||
Totals | 50 | 51 | 2 | 1 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Net income attributable to PriceSmart as reported | $ | 29,572 | $ | 19,258 | $ | 93,824 | $ | 81,230 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Separation costs associated with Chief Executive Officer departure (1) | — | — | 7,747 | — | |||||||||||||||||||
Gain on sale of Aeropost subsidiary (2) | — | — | — | (2,736) | |||||||||||||||||||
VAT receivable write-off (3) | 2,309 | — | 2,309 | — | |||||||||||||||||||
Tax impact of adjustments to net income (4) | — | — | (550) | 1,280 | |||||||||||||||||||
Adjusted net income attributable to PriceSmart | $ | 31,881 | $ | 19,258 | $ | 103,330 | $ | 79,774 | |||||||||||||||
Net income attributable to PriceSmart per diluted share | $ | 0.94 | $ | 0.62 | $ | 3.01 | $ | 2.63 | |||||||||||||||
Separation costs associated with Chief Executive Officer departure | — | — | 0.23 | — | |||||||||||||||||||
Gain on sale of Aeropost subsidiary | — | — | — | (0.05) | |||||||||||||||||||
VAT receivable write-off | 0.08 | — | 0.08 | — | |||||||||||||||||||
Adjusted net income attributable to PriceSmart per diluted share | $ | 1.02 | $ | 0.62 | $ | 3.32 | $ | 2.58 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||||||||
Net income attributable to PriceSmart as reported | $ | 29,572 | $ | 19,258 | $ | 93,824 | $ | 81,230 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Interest expense | 2,747 | 2,796 | 8,310 | 6,824 | |||||||||||||||||||
Provision for income taxes | 12,019 | 9,776 | 44,647 | 39,729 | |||||||||||||||||||
Depreciation and amortization | 17,821 | 17,557 | 53,264 | 50,258 | |||||||||||||||||||
Interest income | (3,161) | (473) | (6,260) | (1,540) | |||||||||||||||||||
Other expense, net (1) | 1,885 | 2,423 | 11,795 | 1,833 | |||||||||||||||||||
Separation costs associated with Chief Executive Officer departure (2) | — | — | 7,747 | — | |||||||||||||||||||
VAT receivable write-off (3) | 2,309 | — | 2,309 | — | |||||||||||||||||||
Adjusted EBITDA | $ | 63,192 | $ | 51,337 | $ | 215,636 | $ | 178,334 | |||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||||||||||||||
Amount | % of net sales | Increase/ (Decrease) from prior year | Change | Amount | % of net sales | ||||||||||||||||||||||||||||||
Central America | $ | 656,719 | 61.4 | % | $ | 69,103 | 11.8 | % | $ | 587,616 | 58.8 | % | |||||||||||||||||||||||
Caribbean | 311,578 | 29.1 | 21,137 | 7.3 | 290,441 | 29.1 | |||||||||||||||||||||||||||||
Colombia | 101,966 | 9.5 | (18,988) | (15.7) | 120,954 | 12.1 | |||||||||||||||||||||||||||||
Net merchandise sales | $ | 1,070,263 | 100.0 | % | $ | 71,252 | 7.1 | % | $ | 999,011 | 100.0 | % |
Nine Months Ended | |||||||||||||||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||||||||||||||
Amount | % of net sales | Increase/ (Decrease) from prior year | Change | Amount | % of net sales | ||||||||||||||||||||||||||||||
Central America | $ | 1,955,437 | 60.9 | % | $ | 204,189 | 11.7 | % | $ | 1,751,248 | 59.3 | % | |||||||||||||||||||||||
Caribbean | 942,196 | 29.3 | 93,990 | 11.1 | 848,206 | 28.7 | |||||||||||||||||||||||||||||
Colombia | 314,092 | 9.8 | (41,404) | (11.6) | 355,496 | 12.0 | |||||||||||||||||||||||||||||
Net merchandise sales | $ | 3,211,725 | 100.0 | % | $ | 256,775 | 8.7 | % | $ | 2,954,950 | 100.0 | % |
Three Months Ended May 31, 2023 | |||||||||||||||||||||||||||||||||||
Net Merchandise Sales | Net Merchandise Sales - Constant Currency | Impact of Foreign Currency Exchange | Net Merchandise Sales Growth | Net Merchandise Sales - Constant Currency Growth | % Impact of Foreign Currency Exchange | ||||||||||||||||||||||||||||||
Central America | $ | 656,719 | $ | 623,249 | $ | 33,470 | 11.8 | % | 6.1 | % | 5.7 | % | |||||||||||||||||||||||
Caribbean | 311,578 | 310,364 | 1,214 | 7.3 | 6.9 | 0.4 | |||||||||||||||||||||||||||||
Colombia | 101,966 | 121,711 | (19,745) | (15.7) | 0.6 | (16.3) | |||||||||||||||||||||||||||||
Consolidated total | $ | 1,070,263 | $ | 1,055,324 | $ | 14,939 | 7.1 | % | 5.6 | % | 1.5 | % |
Nine Months Ended May 31, 2023 | |||||||||||||||||||||||||||||||||||
Net Merchandise Sales | Net Merchandise Sales - Constant Currency | Impact of Foreign Currency Exchange | Net Merchandise Sales Growth | Net Merchandise Sales - Constant Currency Growth | % Impact of Foreign Currency Exchange | ||||||||||||||||||||||||||||||
Central America | $ | 1,955,437 | $ | 1,908,021 | $ | 47,416 | 11.7 | % | 9.0 | % | 2.7 | % | |||||||||||||||||||||||
Caribbean | 942,196 | 933,366 | 8,830 | 11.1 | 10.0 | 1.1 | |||||||||||||||||||||||||||||
Colombia | 314,092 | 378,918 | (64,826) | (11.6) | 6.6 | (18.2) | |||||||||||||||||||||||||||||
Consolidated total | $ | 3,211,725 | $ | 3,220,305 | $ | (8,580) | 8.7 | % | 9.0 | % | (0.3) | % |
Thirteen Weeks Ended | |||||||||||
June 4, 2023 | May 29, 2022 | ||||||||||
% Increase/(Decrease) in Comparable Net Merchandise Sales | % Increase in Comparable Net Merchandise Sales | ||||||||||
Central America | 11.0 | % | 9.7 | % | |||||||
Caribbean | 4.2 | 17.4 | |||||||||
Colombia | (15.2) | 18.1 | |||||||||
Consolidated comparable net merchandise sales | 5.8 | % | 12.8 | % |
Thirty-Nine Weeks Ended | |||||||||||
June 4, 2023 | May 29, 2022 | ||||||||||
% Increase/(Decrease) in Comparable Net Merchandise Sales | % Increase in Comparable Net Merchandise Sales | ||||||||||
Central America | 10.7 | % | 11.4 | % | |||||||
Caribbean | 5.9 | 11.7 | |||||||||
Colombia | (13.0) | 5.5 | |||||||||
Consolidated comparable net merchandise sales | 6.5 | % | 10.8 | % |
Thirteen Weeks Ended June 4, 2023 | ||||||||||||||||||||
Comparable Net Merchandise Sales Growth | Comparable Net Merchandise Sales - Constant Currency Growth | % Impact of Foreign Currency Exchange | ||||||||||||||||||
Central America | 11.0 | % | 5.3 | % | 5.7 | % | ||||||||||||||
Caribbean | 4.2 | 3.8 | 0.4 | |||||||||||||||||
Colombia | (15.2) | 0.7 | (15.9) | |||||||||||||||||
Consolidated comparable net merchandise sales | 5.8 | % | 4.3 | % | 1.5 | % |
Thirty-Nine Weeks Ended June 4, 2023 | ||||||||||||||||||||
Comparable Net Merchandise Sales Growth | Comparable Net Merchandise Sales - Constant Currency Growth | % Impact of Foreign Currency Exchange | ||||||||||||||||||
Central America | 10.7 | % | 7.9 | % | 2.8 | % | ||||||||||||||
Caribbean | 5.9 | 4.9 | 1.0 | |||||||||||||||||
Colombia | (13.0) | 4.9 | (17.9) | |||||||||||||||||
Consolidated comparable net merchandise sales | 6.5 | % | 6.7 | % | (0.2) | % |
Three Months Ended | |||||||||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||||||||
Amount | Increase/ (Decrease) from prior year | % Change | Membership income % to net merchandise club sales | Amount | |||||||||||||||||||||||||
Membership income - Central America | $ | 10,126 | $ | 1,056 | 11.6 | % | 1.5 | % | $ | 9,070 | |||||||||||||||||||
Membership income - Caribbean | 4,431 | 301 | 7.3 | 1.4 | 4,130 | ||||||||||||||||||||||||
Membership income - Colombia | 2,178 | (62) | (2.8) | 2.1 | 2,240 | ||||||||||||||||||||||||
Membership income - Total | $ | 16,735 | $ | 1,295 | 8.4 | % | 1.6 | % | $ | 15,440 |
Nine Months Ended | |||||||||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||||||||
Amount | Increase/ (Decrease) from prior year | % Change | Membership income % to net merchandise club sales | Amount | |||||||||||||||||||||||||
Membership income - Central America | $ | 29,504 | $ | 2,680 | 10.0 | % | 1.5 | % | $ | 26,824 | |||||||||||||||||||
Membership income - Caribbean | 13,184 | 1,087 | 9.0 | 1.4 | 12,097 | ||||||||||||||||||||||||
Membership income - Colombia | 6,118 | (263) | (4.1) | 1.9 | 6,381 | ||||||||||||||||||||||||
Membership income - Total | $ | 48,806 | $ | 3,504 | 7.7 | % | 1.5 | % | $ | 45,302 | |||||||||||||||||||
Number of accounts - Central America | 987,025 | 44,929 | 4.8 | % | 942,096 | ||||||||||||||||||||||||
Number of accounts - Caribbean | 462,634 | 12,540 | 2.8 | 450,094 | |||||||||||||||||||||||||
Number of accounts - Colombia | 336,171 | (18,882) | (5.3) | 355,053 | |||||||||||||||||||||||||
Number of accounts - Total | 1,785,830 | 38,587 | 2.2 | % | 1,747,243 |
Three Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Increase/ (Decrease) from prior year | % Change | Amount | ||||||||||||||||||||
Miscellaneous income | $ | 2,754 | $ | 395 | 16.7 | $ | 2,359 | ||||||||||||||||
Rental income | 555 | (49) | (8.1) | 604 | |||||||||||||||||||
Other revenue | $ | 3,309 | $ | 346 | 11.7 | % | $ | 2,963 |
Nine Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Increase/ (Decrease) from prior year | % Change | Amount | ||||||||||||||||||||
Non-merchandise revenue | $ | — | $ | (3,307) | (100.0) | % | $ | 3,307 | |||||||||||||||
Miscellaneous income | 7,771 | 1,096 | 16.4 | 6,675 | |||||||||||||||||||
Rental income | 1,660 | (225) | (11.9) | 1,885 | |||||||||||||||||||
Other revenue | $ | 9,431 | $ | (2,436) | (20.5) | % | $ | 11,867 |
Three Months Ended | |||||||||||||||||
Results of Operations Consolidated | May 31, 2023 | May 31, 2022 | Increase/ (Decrease) | ||||||||||||||
(Amounts in thousands, except percentages) | |||||||||||||||||
Net merchandise sales | |||||||||||||||||
Net merchandise sales | $ | 1,070,263 | $ | 999,011 | $ | 71,252 | |||||||||||
Total gross margin | $ | 163,650 | $ | 142,199 | $ | 21,451 | |||||||||||
Total gross margin percentage | 15.3% | 14.2% | 1.1% | ||||||||||||||
Revenues | |||||||||||||||||
Total revenues | $ | 1,096,654 | $ | 1,030,810 | $ | 65,844 | |||||||||||
Percentage change from prior period | 6.4% | ||||||||||||||||
Comparable net merchandise sales | |||||||||||||||||
Total comparable net merchandise sales increase/(decrease) | 5.8% | 12.8% | (7.0)% | ||||||||||||||
Total revenue margin | |||||||||||||||||
Total revenue margin | $ | 184,060 | $ | 161,193 | $ | 22,867 | |||||||||||
Total revenue margin percentage | 16.8% | 15.6% | 1.2% | ||||||||||||||
Selling, general and administrative | |||||||||||||||||
Selling, general and administrative | $ | 141,008 | $ | 127,431 | $ | 13,577 | |||||||||||
Selling, general and administrative percentage of total revenues | 12.9% | 12.4% | 0.5 | % | |||||||||||||
Operational data | |||||||||||||||||
Adjusted EBITDA (1) | $ | 63,192 | $ | 51,337 | $ | 11,855 |
Three Months Ended | |||||||||||||||||||||||
Results of Operations Consolidated | May 31, 2023 | % of Total Revenue | May 31, 2022 | % of Total Revenue | |||||||||||||||||||
Operating income- by segment | |||||||||||||||||||||||
Central America | $ | 46,023 | 4.2 | % | $ | 39,458 | 3.8 | % | |||||||||||||||
Caribbean | 21,184 | 1.9 | 19,163 | 1.9 | |||||||||||||||||||
Colombia | 2,961 | 0.3 | 4,652 | 0.4 | |||||||||||||||||||
United States | 4,066 | 0.4 | 2,821 | 0.3 | |||||||||||||||||||
Reconciling Items (1) | (31,182) | (2.9) | (32,332) | (3.1) | |||||||||||||||||||
Operating income - Total | $ | 43,052 | 3.9 | % | $ | 33,762 | 3.3 | % |
Nine Months Ended | |||||||||||||||||
Results of Operations Consolidated | May 31, 2023 | May 31, 2022 | Increase/ (Decrease) | ||||||||||||||
(Amounts in thousands, except percentages and number of warehouse clubs) | |||||||||||||||||
Net merchandise sales | |||||||||||||||||
Net merchandise sales | $ | 3,211,725 | $ | 2,954,950 | $ | 256,775 | |||||||||||
Total gross margin | $ | 508,582 | $ | 451,312 | $ | 57,270 | |||||||||||
Total gross margin percentage | 15.8% | 15.3% | 0.5% | ||||||||||||||
Revenues | |||||||||||||||||
Total revenues | $ | 3,293,649 | $ | 3,044,723 | $ | 248,926 | |||||||||||
Percentage change from comparable period | 8.2% | ||||||||||||||||
Comparable net merchandise sales | |||||||||||||||||
Total comparable net merchandise sales increase/(decrease) | 6.5% | 10.8% | (4.3)% | ||||||||||||||
Total revenue margin | |||||||||||||||||
Total revenue margin | $ | 567,973 | $ | 508,189 | $ | 59,784 | |||||||||||
Total revenue margin percentage | 17.2% | 16.7% | 0.5% | ||||||||||||||
Selling, general and administrative | |||||||||||||||||
Selling, general and administrative | $ | 415,594 | $ | 380,088 | $ | 35,506 | |||||||||||
Selling, general and administrative percentage of total revenues | 12.6% | 12.5% | 0.1 | % | |||||||||||||
Operational data | |||||||||||||||||
Adjusted EBITDA (1) | $ | 215,636 | $ | 178,334 | $ | 37,302 | |||||||||||
Warehouse clubs at period end | 51 | 50 | 1 | ||||||||||||||
Warehouse club sales floor square feet at period end | 2,642 | 2,484 | 158 |
Nine Months Ended | |||||||||||||||||||||||
Results of Operations Consolidated | May 31, 2023 | % of Total Revenue | May 31, 2022 | % of Total Revenue | |||||||||||||||||||
Operating income- by segment | |||||||||||||||||||||||
Central America | $ | 152,786 | 4.6 | % | $ | 128,889 | 4.2 | % | |||||||||||||||
Caribbean | 71,161 | 2.2 | 60,796 | 2.0 | |||||||||||||||||||
Colombia | 12,491 | 0.4 | 17,154 | 0.6 | |||||||||||||||||||
United States | 24,622 | 0.7 | 17,377 | 0.6 | |||||||||||||||||||
Reconciling Items (1) | (108,681) | (3.3) | (96,115) | (3.2) | |||||||||||||||||||
Operating income - Total | $ | 152,379 | 4.6 | % | $ | 128,101 | 4.2 | % |
Three Months Ended | |||||||||||||||||||||||
May 31, 2023 | % of Total Revenue | May 31, 2022 | % of Total Revenue | ||||||||||||||||||||
Warehouse club and other operations | $ | 106,172 | 9.7 | % | $ | 96,081 | 9.3 | % | |||||||||||||||
General and administrative | 34,343 | 3.1 | 30,887 | 3.0 | |||||||||||||||||||
Pre-opening expenses | 495 | 0.1 | 306 | 0.1 | |||||||||||||||||||
Loss (gain) on disposal of assets | (2) | — | 157 | — | |||||||||||||||||||
Total Selling, general and administrative | $ | 141,008 | 12.9 | % | $ | 127,431 | 12.4 | % |
Nine Months Ended | |||||||||||||||||||||||
May 31, 2023 | % of Total Revenue | May 31, 2022 | % of Total Revenue | ||||||||||||||||||||
Warehouse club and other operations | $ | 306,694 | 9.3 | % | $ | 281,270 | 9.3 | % | |||||||||||||||
General and administrative | 100,274 | 3.0 | 96,531 | 3.2 | |||||||||||||||||||
Separation costs associated with Chief Executive Officer departure | 7,747 | 0.3 | — | — | |||||||||||||||||||
Pre-opening expenses | 584 | — | 1,406 | — | |||||||||||||||||||
Loss on disposal of assets | 295 | — | 881 | — | |||||||||||||||||||
Total Selling, general and administrative | $ | 415,594 | 12.6 | % | $ | 380,088 | 12.5 | % |
Three Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Interest income | $ | 3,161 | $ | 2,688 | $ | 473 |
Nine Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Interest income | $ | 6,260 | $ | 4,720 | $ | 1,540 |
Three Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Interest expense on loans | $ | 3,152 | $ | 992 | $ | 2,160 | |||||||||||
Interest expense related to hedging activity | 209 | (662) | 871 | ||||||||||||||
Less: Capitalized interest | (614) | (379) | (235) | ||||||||||||||
Net interest expense | $ | 2,747 | $ | (49) | $ | 2,796 |
Nine Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Interest expense on loans | $ | 8,870 | $ | 3,570 | $ | 5,300 | |||||||||||
Interest expense related to hedging activity | 746 | (1,882) | 2,628 | ||||||||||||||
Less: Capitalized interest | (1,306) | (202) | (1,104) | ||||||||||||||
Net interest expense | $ | 8,310 | $ | 1,486 | $ | 6,824 |
Three Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Change | % Change | Amount | ||||||||||||||||||||
Other expense, net | $ | (1,885) | $ | 538 | (22.2) | % | $ | (2,423) |
Nine Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Change | % Change | Amount | ||||||||||||||||||||
Other expense, net | $ | (11,795) | $ | (9,962) | 543.5% | $ | (1,833) |
Three Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Provision for income taxes | $ | 12,019 | $ | 2,243 | $ | 9,776 | |||||||||||
Effective tax rate | 28.9% | 33.7% |
Nine Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||
Amount | Change | Amount | |||||||||||||||
Provision for income taxes | $ | 44,647 | $ | 4,918 | $ | 39,729 | |||||||||||
Effective tax rate | 32.2% | 32.8% |
Three Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Change | % Change | Amount | ||||||||||||||||||||
Other Comprehensive Income (Loss) | $ | 14,100 | $ | 22,835 | 261.4 | % | $ | (8,735) |
Nine Months Ended | |||||||||||||||||||||||
May 31, 2023 | May 31, 2022 | ||||||||||||||||||||||
Amount | Change | % Change | Amount | ||||||||||||||||||||
Other Comprehensive Income (Loss) | $ | 25,983 | $ | 36,623 | 344.2% | $ | (10,640) |
May 31, 2023 | August 31, 2022 | ||||||||||
Amounts held by foreign subsidiaries | $ | 194,562 | $ | 203,952 | |||||||
Amounts held domestically | 41,810 | 47,421 | |||||||||
Total cash and cash equivalents, including restricted cash | $ | 236,372 | $ | 251,373 |
May 31, 2023 | August 31, 2022 | ||||||||||
Amounts held by foreign subsidiaries | $ | 60,842 | $ | 11,160 | |||||||
Amounts held domestically | 51,787 | — | |||||||||
Total short-term investments | $ | 112,629 | $ | 11,160 |
Nine Months Ended | |||||||||||||||||
May 31, 2023 | May 31, 2022 | Change | |||||||||||||||
Net cash provided by operating activities | $ | 184,681 | $ | 64,311 | $ | 120,370 | |||||||||||
Net cash used in investing activities | (197,814) | (61,404) | (136,410) | ||||||||||||||
Net cash provided by (used in) financing activities | (13,051) | 11,365 | (24,416) | ||||||||||||||
Effect of exchange rates | 11,183 | (7,034) | 18,217 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (15,001) | $ | 7,238 | $ | (22,239) |
First Payment | Second Payment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Declared | Amount | Record Date | Date Paid | Date Payable | Amount | Record Date | Date Paid | Date Payable | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
2/3/2023 | $ | 0.92 | 2/16/2023 | 2/28/2023 | N/A | $ | 0.46 | 8/15/2023 | N/A | 8/31/2023 | $ | 0.46 | ||||||||||||||||||||||||||||||||||||||||||||
2/3/2022 | $ | 0.86 | 2/15/2022 | 2/28/2022 | N/A | $ | 0.43 | 8/15/2022 | 8/31/2022 | N/A | $ | 0.43 |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||||||||
March 1, 2023 - March 31, 2023 | 774 | $ | 70.15 | — | — | |||||||||||||||||||||
April 1, 2023 - April 30, 2023 | 526 | 74.90 | — | — | ||||||||||||||||||||||
May 1, 2023 - May 31, 2023 | 1,094 | 73.52 | — | — | ||||||||||||||||||||||
Total | 2,394 | $ | 72.73 | — | — |
3.1(1) | |||||
3.2(2) | |||||
3.3(3) | |||||
3.4(4) | |||||
3.5(5) | |||||
101.INS | Inline XBRL Instance Document | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
PRICESMART, INC. | |||||||||||
Date: | July 10, 2023 | By: | /s/ ROBERT E. PRICE | ||||||||
Robert E. Price | |||||||||||
Interim Chief Executive Officer | |||||||||||
(Principal Executive Officer) | |||||||||||
Date: | July 10, 2023 | By: | /s/ MICHAEL L. MCCLEARY | ||||||||
Michael L. McCleary | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer and Principal Accounting Officer) |
Date: | July 10, 2023 | /s/ ROBERT E. PRICE | ||||||
Robert E. Price Interim Chief Executive Officer (Principal Executive Officer) |
Date: | July 10, 2023 | /s/ MICHAEL L. MCCLEARY | ||||||
Michael L. McCleary Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Dated: | July 10, 2023 | /s/ ROBERT E. PRICE | ||||||
Robert E. Price Interim Chief Executive Officer (Principal Executive Officer) |
Dated: | July 10, 2023 | /s/ MICHAEL L. MCCLEARY | ||||||
Michael L. McCleary Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Receivables, allowance for doubtful accounts | $ 57 | $ 103 |
Prepaid expenses and other current assets, fair value of derivative instruments | 0 | 2,761 |
Derivative asset, noncurrent | 10,759 | 11,884 |
Fair value, liabilities, current | 1,240 | 82 |
Other long-term liabilities, fair value of derivative instruments | 1,164 | 0 |
Other long-term liabilities, post-employment plans | $ 9,416 | $ 8,440 |
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) | 31,934,824 | 31,697,590 |
Common stock, shares outstanding (in shares) | 31,064,154 | 30,904,826 |
Treasury stock (in shares) | 870,670 | 792,764 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|||||
Statement of Comprehensive Income [Abstract] | ||||||||
Net income | $ 29,572 | $ 19,258 | $ 93,824 | $ 81,249 | ||||
Less: net income attributable to non controlling interest | 0 | 0 | 0 | (19) | ||||
Net income attributable to PriceSmart, Inc. | 29,572 | 19,258 | 93,824 | 81,230 | ||||
Other Comprehensive Income, net of tax: | ||||||||
Foreign currency translation adjustments | [1] | 15,285 | (9,401) | 26,599 | (15,119) | |||
Defined benefit pension plan: | ||||||||
Net gain/(loss) arising during period | (22) | 5 | (81) | 42 | ||||
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | 37 | 34 | 111 | 98 | ||||
Total defined benefit pension plan | 15 | 39 | 30 | 140 | ||||
Derivative instruments: | ||||||||
Unrealized gains/(losses) on change in derivative obligations | [2] | 3,060 | 272 | 2,525 | (147) | |||
Unrealized gains/(losses) on change in fair value of interest rate swaps | [2] | (4,271) | 355 | (5,904) | 4,486 | |||
Amounts reclassified from accumulated other comprehensive income to other expense, net for settlement of derivatives | [2] | 11 | 0 | 2,733 | 0 | |||
Total derivative instruments | [2] | (1,200) | 627 | (646) | 4,339 | |||
Other comprehensive income (loss) | 14,100 | (8,735) | 25,983 | (10,640) | ||||
Comprehensive income | 43,672 | 10,523 | 119,807 | 70,590 | ||||
Less: comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 3 | ||||
Comprehensive income attributable to PriceSmart, Inc. | $ 43,672 | $ 10,523 | $ 119,807 | $ 70,587 | ||||
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COMPANY OVERVIEW AND BASIS OF PRESENTATION |
9 Months Ended |
---|---|
May 31, 2023 | |
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 and services offered both online and at warehouse clubs similar to, but typically smaller in size than, warehouse clubs in the United States. As of May 31, 2023, the Company had 51 warehouse clubs in operation in 12 countries and one U.S. territory (nine in Colombia; eight in Costa Rica; seven in Panama; five in the Dominican Republic and Guatemala; four in Trinidad; three each in El Salvador and Honduras; two 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 a warehouse club in Medellín, Colombia in August 2023, a club in Escuintla, Guatemala in the fall of 2023 and a warehouse club in Santa Ana, El Salvador in early 2024. Once these three new clubs are open, the Company will operate 54 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, 2022 (the “2022 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.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation – The interim 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 Company’s net income excludes income attributable to non-controlling interests. The Company reports non-controlling interests in consolidated entities as a component of equity separate from the Company’s equity. The interim 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 interim 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, 2023 are listed below:
(1)Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. Use of Estimates – The 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 in certain debt securities, primarily U.S. treasury bills, as part of our cash management policy. Purchases of debt securities are classified as trading, held-to-maturity, or available-for-sale at the time of purchase based on the individual security. All of our debt securities are currently classified as held-to-maturity and are reported at amortized cost. The Company has the ability and intent to hold these investments until maturity. All of these investments are currently included in Cash and cash equivalents on the consolidated balance sheets. In addition, 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. Restricted Cash – The following table summarizes the restricted cash reported by the Company (in thousands):
(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 $7.8 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 as short-term investments, certificates of deposit and similar time-based deposits with financial institutions with maturities over three months and up to one year. Long-Term Investments – The Company considers as long-term investments, certificates of deposit and similar time-based deposits with financial institutions with maturities over one year. Goodwill – Goodwill totaled $43.2 million as of May 31, 2023 and $43.3 million as of August 31, 2022. 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. In two countries where the Company operates, minimum income tax rules require the Company to pay taxes based on the percentage of sales rather than income. As a result, the Company is making income tax payments substantially in excess of those it would expect to pay based on taxable income. The Company had income tax receivables of $11.3 million and $11.0 million and deferred tax assets of $3.6 million and $3.5 million as of May 31, 2023 and August 31, 2022, respectively, in these countries. While the rules related to refunds of income tax receivables in these countries are either unclear or complex, the Company has not placed any type of allowance on the recoverability of these 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. In one of the countries with a significant VAT receivable balance, the Company received unfavorable rulings at the supreme court level of that country denying a portion of the Company’s appeals for refund of over-withholdings of VAT. After evaluating the merits of the Company’s arguments, the court’s decision, and probability that the other related refund appeals would receive the same judgment, the Company concluded that a total of $2.3 million of related VAT receivables would not be recoverable and this amount was written-off in the third quarter of fiscal year 2023. These charges were recorded in the Warehouse club and other expenses line item under the Selling, general and administrative caption within the consolidated statements of income. 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):
The following table summarizes the Income tax receivables reported by the Company (in thousands):
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 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 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. 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 performance-based restricted stock units (“PSUs”). Compensation related to RSAs, RSUs and PSUs is based on the fair market value at the time of 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. If the Company determines that an award is unlikely to vest, any previously recorded expense is then reversed. 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, provided that such amounts become payable only if the performance metric is achieved. At the time the Compensation Committee confirms the performance metric has been achieved, the accrued dividend equivalents are paid on the PSUs. Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost 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, 2023, the Company reissued approximately 7,000 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 non-recurring 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. The Company has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring and revaluing 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 was 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 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 2022 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, 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 interest rate, 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, 2023 and August 31, 2022. 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.” Gain Contingencies and Recoveries – A gain contingency is an existing condition, situation, or set of circumstances involving uncertainty as to a possible gain that will ultimately be resolved when one or more future events occur or fail to occur. During the ordinary course of our business, gain contingencies arise when we have the opportunity to recover costs or damages we incur from insurance carriers or other third parties. Anticipated proceeds in excess of the amount of loss recognized are considered contingent gains. Anticipated proceeds in excess of a loss recognized in the financial statements are not recognized until all contingencies related to the collectability, timing and amount are realizable. 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. Until the disposal of Aeropost in the first quarter of fiscal year 2022, the Company included the costs for the marketplace and casillero operations of external and internal shipping, handling and other direct costs incurred to provide delivery, insurance and customs processing services in cost of goods sold - non-merchandise. 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 freight forwarding operations. 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, 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. Given that Ms. Bahrambeygui had substantially rendered the required services per her separation agreement, 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. The Company substantially fulfilled all payment obligations by the end of the second quarter of fiscal year 2023; however, some vesting of PSUs will occur 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. 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. Related Party Transactions – On February 3, 2023, Robert E. Price, a Company founder and Chairman of the Board, became Interim Chief Executive Officer. Mr. Price has elected not to receive compensation for his role as Interim Chief Executive Officer. Therefore, the financial statements do not include compensation charges for his services. We have estimated the fair value of these services, based on a number of factors, to be approximately $5.1 million on an annual basis. We acknowledge that this may not be representative of what ultimately could be the cost to the Company when a replacement Chief Executive Officer is hired. 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. 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 May 31, 2023 and 2022 (in thousands):
Monetary assets and liabilities denominated in currencies other than the functional currency of the respective entity (primarily U.S. dollars) are revalued to the functional currency using the exchange rate on the balance sheet date. 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):
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, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of May 31, 2023 that the Company expects to have a material impact on its consolidated financial statements.
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REVENUE RECOGNITION |
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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 net 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. Non-merchandise Sales. Until the disposal of Aeropost in the first quarter of fiscal year 2022, the Company recognized non-merchandise revenue, net of sales taxes, on transactions where the Company had determined that it was the agent in the transaction. These transactions primarily consisted of contracts the Company entered into with its customers to provide delivery, insurance and customs processing services for products its customers purchased online in the United States either directly from other vendors utilizing the vendor’s website or through the Company’s marketplace site. Revenue was recognized when the Company’s performance obligations were completed (that is when delivery of the items have been made to the destination point) and was recorded in “non-merchandise revenue” on the consolidated statements of income. Prepayment for orders for which the Company had not fulfilled its performance obligation were recorded as deferred income. Additionally, the Company recorded revenue at the net amounts retained, i.e., the amount paid by the customer less amounts remitted to the respective merchandise vendors, as the Company was acting as an agent and was not the principal in the sale of those goods being purchased from the vendors by the Company’s customers. 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. The annual fee for a Platinum Membership is approximately $75. 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 can be used 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):
Disaggregated Revenues In the following table, net merchandise sales are disaggregated by merchandise category (in thousands):
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EARNINGS PER SHARE |
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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 and restricted stock units issued pursuant to the 2013 Equity Incentive Award Plan. The Company does not include performance stock units as participating securities until the performance criteria are satisfied. 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 for which performance criteria have not been met 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, 2023 and 2022 (in thousands, except per share amounts):
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STOCKHOLDERS' EQUITY |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Dividends The following table summarizes the dividends declared and paid during fiscal year 2023 and 2022 (amounts are per share):
The Company anticipates the ongoing payment of semi-annual dividends in subsequent periods, although the actual declaration of future dividends, 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):
(1)Amounts reclassified from accumulated other comprehensive income (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):
Repurchases of Common Stock The Board of Directors authorized a program to repurchase up to $75 million of our common stock (the "Stock Buyback Program"). Under the Stock Buyback Program, shares of common stock may be repurchased from time to time on a discretionary basis through open market repurchases, privately negotiated transactions, block purchases, or other means, and will be structured to occur in compliance with applicable securities laws. In addition, open market repurchases of common stock could be made pursuant to trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. The Stock Buyback Program does not obligate us to acquire any specific number of shares. The timing and actual number of shares repurchased will depend on a variety of factors, including the common stock price, trading volume, market conditions, our cash flow and liquidity profile, the capital needs of the business, and other considerations. Repurchases are funded with existing cash on hand. The Stock Buyback Program has no expiration date and may be modified, suspended or terminated at any time by the Board of Directors at its discretion. During the three and nine-months ended May 31, 2023, no repurchases were made under the Stock Buyback Program.
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COMMITMENTS AND CONTINGENCIES |
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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. On August 5, 2022, PriceSmart received notice from Click USA Inc. and Aeropost, Inc. alleging that PriceSmart had breached certain provisions of a Stock Purchase Agreement between PriceSmart and Click USA, Inc. dated October 1, 2021, concerning the sale of Aeropost, Inc. to Click USA Inc. In this notice, Click USA Inc. and Aeropost, Inc. allege that PriceSmart made inaccurate or incomplete representations and warranties relating to Aeropost, Inc.’s cyber security and the condition of its IT systems in connection with the sale. Click USA Inc. and Aeropost, Inc. further asserted that, in or around April 2022, Aeropost, Inc. suffered cyberattacks, and they seek to hold PriceSmart liable for some amount of damages due to alleged losses directly relating to the cyberattacks as well as due to possible third-party claims as a result of the cyber-attacks. The notice suggested that aggregate losses attributable to these losses and future claims could exceed $3.0 million. On October 17, 2022, PriceSmart received a letter from Click USA Inc. supplementing its August 5, 2022 notice with additional information concerning Click USA Inc.’s direct losses and the existence or likelihood of third-party claims and potential related losses. Click USA Inc.’s letter estimates its total losses for direct and third-party claims at $2.9 million. Per the express terms of the agreement, the maximum amount of all losses for which PriceSmart may be liable for claims arising out of allegations concerning the above-referenced representations and warranties is $4.0 million. In its October 17, 2022 letter, Click USA Inc. notified PriceSmart of a separate and unrelated claim for breach of representations and warranties in the Stock Purchase Agreement relating to the alleged misclassification of an employee in Costa Rica. Click USA Inc. alleges that the amount of possible loss relating to this claim is approximately $300,000. PriceSmart intends to settle this litigation with Click USA Inc. and offered to release Aeropost, Inc. from an approximately $750,000 receivable owed to PriceSmart, Inc in exchange for release of the aforementioned claims. The Company has determined that settlement is probable as of May 31, 2023, and has written-off the receivable with the expense being recorded in the General and administrative line item in the Company's consolidated statements of income. Income Taxes For interim reporting, the Company uses an estimated 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 subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense. 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 its ability to recover deferred tax assets in the jurisdictions 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 adjusted for the results of discontinued operations 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, the Company considers three years of cumulative operating income (loss). The Company is required to file federal and state tax returns in the United States and various other tax returns in foreign jurisdictions. The preparation of these tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company, in consultation with its tax advisors, bases its tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various taxing authorities in the jurisdictions in which the Company files its returns. As part of these reviews, a taxing authority may disagree with the interpretations the Company used to calculate its tax liability and therefore require the Company to pay additional taxes. The Company accrues an amount for its estimate of probable additional income tax liability. In certain cases, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. There were no material changes in the Company’s uncertain income tax positions during the nine months ended May 31, 2023. 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, 2023 and August 31, 2022, the Company has recorded within other accrued expenses and other current liabilities a total of $1.0 million and $1.1 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. In two countries where the Company operates, minimum income tax rules require the Company to pay taxes based on a percentage of sales rather than income. As a result, the Company is making income tax payments substantially in excess of those it would expect to pay based on taxable income. The Company had income tax receivables of $11.3 million and $11.0 million, as of May 31, 2023 and August 31, 2022, respectively, and deferred tax assets of $3.6 million and $3.5 million as of May 31, 2023 and August 31, 2022, respectively, in these countries. While the rules related to refunds of income tax receivables in these countries are either unclear or complex, the Company has not placed any type of allowance on the recoverability of these 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. Other Commitments The Company is also committed to non-cancelable construction service obligations for various warehouse club developments and expansions. As of May 31, 2023 and August 31, 2022, the Company had approximately $9.1 million and $16.5 million, respectively, in contractual obligations for construction services not yet rendered. 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, 2023, the Company had entered into three land purchase agreements that, if completed, would result in the use of approximately $9.2 million in cash. 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 venture as of May 31, 2023 (in thousands):
(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.
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Short-term borrowings consist of unsecured lines of credit. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands):
As of May 31, 2023 and August 31, 2022, 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, 2023:
(1)The carrying amount of non-cash assets assigned as collateral for these loans was $155.6 million. The carrying amount of cash assets assigned as collateral for these loans was $5.3 million. (2)These foreign currency translation adjustments are recorded within Other comprehensive income (loss). (3)The carrying amount of non-cash assets assigned as collateral for these loans was $160.9 million. The carrying amount of cash assets assigned as collateral for these loans was $3.9 million. As of May 31, 2023 and August 31, 2022, the Company had approximately $94.6 million and $110.7 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. Annual maturities of long-term debt are as follows (in thousands):
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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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 LIBOR 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, 2023, 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, 2023:
For the three and nine months ended May 31, 2023 and May 31, 2022, 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):
(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):
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):
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, 2023:
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, 2023 and May 31, 2022.
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SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS | SEGMENTSThe Company and its subsidiaries are principally engaged in the international operation of membership shopping in 51 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):
(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.
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SUBSEQUENT EVENTS |
9 Months Ended |
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May 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company has evaluated all events subsequent to the balance sheet date as of May 31, 2023 through the date of issuance of these consolidated financial statements and has determined that, except as set forth below, there are no subsequent events that require disclosure. On May 30, 2023, the Company entered into a lease agreement for land and a building, which commenced on June 5, 2023 when the asset was made available to the Company. The purpose of the lease is the relocation of a distribution center in Panama. The lease agreement will result in the recognition of a lease liability and right-of-use asset of approximately $7.3 million.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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May 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2022 (the “2022 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.
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Principles of Consolidation | Principles of Consolidation – The interim 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 Company’s net income excludes income attributable to non-controlling interests. The Company reports non-controlling interests in consolidated entities as a component of equity separate from the Company’s equity. The interim 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 interim 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.
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Use of Estimates | Use of Estimates – The 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 in certain debt securities, primarily U.S. treasury bills, as part of our cash management policy. Purchases of debt securities are classified as trading, held-to-maturity, or available-for-sale at the time of purchase based on the individual security. All of our debt securities are currently classified as held-to-maturity and are reported at amortized cost. The Company has the ability and intent to hold these investments until maturity. All of these investments are currently included in Cash and cash equivalents on the consolidated balance sheets. In addition, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash | Restricted Cash – The following table summarizes the restricted cash reported by the Company (in thousands):
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Short-Term Investments | Short-Term Investments – The Company considers as short-term investments, certificates of deposit and similar time-based deposits with financial institutions with maturities over three months and up to one year. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Investments | Long-Term Investments – The Company considers as long-term investments, certificates of deposit and similar time-based deposits with financial institutions with maturities over one year. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill – Goodwill totaled $43.2 million as of May 31, 2023 and $43.3 million as of August 31, 2022. 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 – 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. 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.
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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 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 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.
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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 performance-based restricted stock units (“PSUs”). Compensation related to RSAs, RSUs and PSUs is based on the fair market value at the time of 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. If the Company determines that an award is unlikely to vest, any previously recorded expense is then reversed. 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, provided that such amounts become payable only if the performance metric is achieved. At the time the Compensation Committee confirms the performance metric has been achieved, the accrued dividend equivalents are paid on the PSUs.
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Treasury Stock | Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 non-recurring 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. The Company has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring and revaluing 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 was 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 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 2022 Annual Report on Form 10-K.
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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, 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 interest rate, 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, 2023 and August 31, 2022. 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.
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Revenue Recognition | Revenue Recognition – The accounting policies and other disclosures such as the disclosure of disaggregated revenues are described in “Note 3 – Revenue Recognition.” | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain Contingencies and Recoveries | Gain Contingencies and Recoveries – A gain contingency is an existing condition, situation, or set of circumstances involving uncertainty as to a possible gain that will ultimately be resolved when one or more future events occur or fail to occur. During the ordinary course of our business, gain contingencies arise when we have the opportunity to recover costs or damages we incur from insurance carriers or other third parties. Anticipated proceeds in excess of the amount of loss recognized are considered contingent gains. Anticipated proceeds in excess of a loss recognized in the financial statements are not recognized until all contingencies related to the collectability, timing and amount are realizable. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. Until the disposal of Aeropost in the first quarter of fiscal year 2022, the Company included the costs for the marketplace and casillero operations of external and internal shipping, handling and other direct costs incurred to provide delivery, insurance and customs processing services in cost of goods sold - non-merchandise. 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.
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Selling, General and Administrative | Selling, General and Administrative – Selling, general and administrative costs consist primarily of expenses associated with operating warehouse clubs and freight forwarding operations. 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, 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. Given that Ms. Bahrambeygui had substantially rendered the required services per her separation agreement, 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. The Company substantially fulfilled all payment obligations by the end of the second quarter of fiscal year 2023; however, some vesting of PSUs will occur in the first quarter of fiscal year 2024.
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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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions – On February 3, 2023, Robert E. Price, a Company founder and Chairman of the Board, became Interim Chief Executive Officer. Mr. Price has elected not to receive compensation for his role as Interim Chief Executive Officer. Therefore, the financial statements do not include compensation charges for his services. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 AdoptedThere 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, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of May 31, 2023 that the Company expects to have a material impact on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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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, 2023 are listed below:
(1)Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets.
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Summary of Restricted Cash | The following table summarizes the restricted cash reported by the Company (in thousands):
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Summary of Value Added Tax Receivables | The following table summarizes the VAT receivables reported by the Company (in thousands):
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Summary of Income Tax Receivables | The following table summarizes the Income tax receivables reported by the Company (in thousands):
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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 May 31, 2023 and 2022 (in thousands):
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Summary 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):
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REVENUE RECOGNITION (Tables) |
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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):
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Schedule of Disaggregated Revenues | In the following table, net merchandise sales are disaggregated by merchandise category (in thousands):
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EARNINGS PER SHARE (Tables) |
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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, 2023 and 2022 (in thousands, except per share amounts):
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STOCKHOLDERS' EQUITY (Tables) |
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May 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dividends | The following table summarizes the dividends declared and paid during fiscal year 2023 and 2022 (amounts are per share):
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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):
(1)Amounts reclassified from accumulated other comprehensive income (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.
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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):
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 venture as of May 31, 2023 (in thousands):
(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.
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DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-Term Borrowings | Short-term borrowings consist of unsecured lines of credit. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands):
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Schedule of Changes in Long-Term Debt | The following table provides the changes in long-term debt for the nine months ended May 31, 2023:
(1)The carrying amount of non-cash assets assigned as collateral for these loans was $155.6 million. The carrying amount of cash assets assigned as collateral for these loans was $5.3 million. (2)These foreign currency translation adjustments are recorded within Other comprehensive income (loss). (3)The carrying amount of non-cash assets assigned as collateral for these loans was $160.9 million. The carrying amount of cash assets assigned as collateral for these loans was $3.9 million.
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Schedule of Annual Maturities of Long-Term Debt | Annual maturities of long-term debt are as follows (in thousands):
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2023:
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Schedule of Cash Flow Hedging Instruments | For the three and nine months ended May 31, 2023 and May 31, 2022, 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):
(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.
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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):
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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):
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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, 2023:
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SEGMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
(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.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Joint Ventures) (Details) |
May 31, 2023 |
---|---|
GolfPark Plaza, S.A. | |
Schedule of Equity Method Investments [Line Items] | |
Ownership | 50.00% |
Price Plaza Alajuela PPA, S.A. | |
Schedule of Equity Method Investments [Line Items] | |
Ownership | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Restricted Cash) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Short-term restricted cash | $ 2,965 | $ 3,013 |
Long-term restricted cash | 10,739 | 10,650 |
Total restricted cash | 13,704 | $ 13,663 |
Certificates of Deposit | ||
Cash and Cash Equivalents [Line Items] | ||
Total restricted cash | $ 7,800 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Goodwill and Other Intangibles) (Narrative) (Details) - USD ($) $ in Millions |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Accounting Policies [Abstract] | ||
Goodwill and other intangibles, net | $ 43.2 | $ 43.3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tax Receivables) (Narrative) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
May 31, 2023
USD ($)
country
|
May 31, 2023
USD ($)
country
|
Aug. 31, 2022
USD ($)
|
|
Tax Receivables [Line Items] | |||
Number of countries where method of computing minimum tax payments has changed | country | 2 | ||
Income taxes receivable | $ 37,751 | $ 37,751 | $ 32,062 |
Value Added Tax Receivable, Writeoff | $ 2,300 | ||
Number of countries with significant VAT receivable balance | country | 1 | 1 | |
Two Countries | |||
Tax Receivables [Line Items] | |||
Income taxes receivable | $ 11,300 | $ 11,300 | 11,000 |
Deferred tax assets, net | $ 3,600 | $ 3,600 | $ 3,500 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Value Added Tax Receivables) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 4,274 | $ 3,890 |
Other non-current assets | 33,613 | 32,460 |
Total amount of VAT receivables reported | $ 37,887 | $ 36,350 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Income Tax Receivables) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 17,809 | $ 12,077 |
Other non-current assets | 19,942 | 19,985 |
Total amount of income tax receivables reported | $ 37,751 | $ 32,062 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stock Based Compensation) (Narrative) (Details) |
9 Months Ended |
---|---|
May 31, 2023
award
| |
Accounting Policies [Abstract] | |
Number of types of equity awards issued | 3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Treasury Stock) (Narrative) (Details) shares in Thousands |
9 Months Ended |
---|---|
May 31, 2023
shares
| |
Accounting Policies [Abstract] | |
Reissued treasury shares (in shares) | 7 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fair Value Measurements) (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|
Accounting Policies [Abstract] | ||||
Non-financial asset impairment | $ 0 | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Selling, General and Administrative) (Details) $ in Millions |
1 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Accounting Policies [Abstract] | |
One-time separation charge | $ 7.7 |
One-time charge, net of tax | 7.2 |
One time separation charge, non-cash charges | 4.2 |
One-time separation charge, other separation costs | $ 3.5 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Related Party Transactions) (Details) $ in Millions |
Feb. 03, 2023
USD ($)
|
---|---|
Affiliated Entity | Chief Executive Officer | |
Related Party Transaction [Line Items] | |
Estimated compensation expense | $ 5.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Net Effect of Foreign Currency Translation) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|||
Accounting Policies [Abstract] | ||||||
Effect on other comprehensive income (loss) due to foreign currency translation | [1] | $ 15,285 | $ (9,401) | $ 26,599 | $ (15,119) | |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Foreign Currency Gains (Losses)) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|
Accounting Policies [Abstract] | ||||
Currency loss | $ (2,095) | $ (2,504) | $ (12,153) | $ (6,142) |
REVENUE RECOGNITION (Narrative) (Details) |
9 Months Ended |
---|---|
May 31, 2023
USD ($)
country
| |
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 |
Annual membership fee | $ 75 |
Platinum membership rebate (as percent) | 2.00% |
Maximum Platinum annual membership rebate | $ 500 |
Breakage revenue (as percent) | 5.00% |
Platinum membership recorded liability (as percent) | 95.00% |
Platinum membership redemption rate (as percent) | 100.00% |
Foreign Countries | |
Disaggregation of Revenue [Line Items] | |
Number of countries | country | 12 |
Gift Card | |
Disaggregation of Revenue [Line Items] | |
Platinum membership redemption period | 1 year |
REVENUE RECOGNITION (Schedule of Contract Performance Liabilities) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Deferred membership income | ||
Disaggregation of Revenue [Line Items] | ||
Contract Liabilities | $ 31,155 | $ 28,000 |
Other contract performance liabilities | ||
Disaggregation of Revenue [Line Items] | ||
Contract Liabilities | $ 10,013 | $ 10,473 |
REVENUE RECOGNITION (Schedule of Disaggregated Revenues) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | $ 1,096,654 | $ 1,030,810 | $ 3,293,649 | $ 3,044,723 |
Net merchandise sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 1,070,263 | 999,011 | 3,211,725 | 2,954,950 |
Foods & Sundries | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 537,567 | 490,268 | 1,601,613 | 1,453,993 |
Fresh Foods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 319,706 | 293,148 | 940,470 | 851,945 |
Hardlines | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 106,937 | 111,677 | 342,225 | 343,953 |
Softlines | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | 54,947 | 57,322 | 175,736 | 172,355 |
Other Business | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Merchandise Sales | $ 51,106 | $ 46,596 | $ 151,681 | $ 132,704 |
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, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to PriceSmart, Inc. | $ 29,572 | $ 19,258 | $ 93,824 | $ 81,230 |
Less: Allocation of income to unvested stockholders | (456) | (312) | (1,098) | (869) |
Net income attributable to PriceSmart, Inc. available for distribution | $ 29,116 | $ 18,946 | $ 92,726 | $ 80,361 |
Basic weighted average shares outstanding (in shares) | 30,800 | 30,615 | 30,752 | 30,582 |
Add dilutive effect of performance stock units (two-class method) (in shares) | 29 | 14 | 18 | 6 |
Diluted average shares outstanding (in shares) | 30,829 | 30,629 | 30,770 | 30,588 |
Basic net income per share (in dollars per share) | $ 0.95 | $ 0.62 | $ 3.02 | $ 2.63 |
Diluted net income per share (in dollars per share) | $ 0.94 | $ 0.62 | $ 3.01 | $ 2.63 |
STOCKHOLDERS' EQUITY (Schedule of Dividends) (Details) - $ / shares |
Aug. 31, 2023 |
Feb. 28, 2023 |
Feb. 03, 2023 |
Aug. 31, 2022 |
Feb. 28, 2022 |
Feb. 03, 2022 |
---|---|---|---|---|---|---|
Distribution Made to Limited Partner [Line Items] | ||||||
Dividends declared (in dollars per share) | $ 0.92 | $ 0.86 | ||||
Cash paid (in dollars per share) | $ 0.46 | $ 0.43 | $ 0.43 | |||
Scenario, Forecast | ||||||
Distribution Made to Limited Partner [Line Items] | ||||||
Cash paid (in dollars per share) | $ 0.46 |
STOCKHOLDERS' EQUITY (Schedule of Retained Earnings Not Available for Distribution) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Equity [Abstract] | ||
Retained earnings not available for distribution | $ 9,102 | $ 8,648 |
STOCKHOLDERS' EQUITY (Repurchases of Common Stock) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
May 31, 2023 |
May 18, 2023 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Purchase of treasury stock | 0 | |
Stock Buyback Program | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Authorized amount | $ 75,000,000 |
DEBT (Narrative) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
May 31, 2023 |
Aug. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Total amount of facilities | $ 166,000 | $ 166,000 |
Annual commitment fee | 0.25% | |
Total | $ 144,388 | 137,271 |
Committed | ||
Debt Instrument [Line Items] | ||
Total amount of facilities | 75,000 | |
Group of Subsidiaries | Covenants | ||
Debt Instrument [Line Items] | ||
Total | $ 94,600 | $ 110,700 |
DEBT (Schedule of Annual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Debt Disclosure [Abstract] | ||
2024 | $ 19,757 | |
2025 | 37,049 | |
2026 | 14,902 | |
2027 | 39,160 | |
2028 | 18,330 | |
Thereafter | 15,190 | |
Total | $ 144,388 | $ 137,271 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Cash Flow Hedging Instruments) (Details) - Cash Flow Hedging - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2023 |
May 31, 2022 |
May 31, 2023 |
May 31, 2022 |
|
Derivative [Line Items] | ||||
Interest expense | $ 1,318 | $ 1,489 | $ 4,285 | $ 4,348 |
Interest expense on borrowings | ||||
Derivative [Line Items] | ||||
Interest expense | 1,108 | 618 | 3,538 | 1,720 |
Cost of swaps | ||||
Derivative [Line Items] | ||||
Interest expense | $ 210 | $ 871 | $ 747 | $ 2,628 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Notional Amounts of Outstanding Derivative Positions) (Details) - Cash Flow Hedging - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Derivative [Line Items] | ||
Derivative liability, notional amount | $ 96,819 | $ 106,322 |
Union Bank | ||
Derivative [Line Items] | ||
Derivative liability, notional amount | 30,388 | 31,344 |
Citibank N.A. | ||
Derivative [Line Items] | ||
Derivative liability, notional amount | 66,431 | 66,353 |
Scotiabank | ||
Derivative [Line Items] | ||
Derivative liability, notional amount | $ 0 | $ 8,625 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) - USD ($) $ in Thousands |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|
Derivative [Line Items] | ||
Fair value of asset, noncurrent | $ 10,759 | $ 11,884 |
Fair value, liabilities, current | (1,240) | (82) |
Derivative liability, noncurrent | $ (1,164) | $ 0 |
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 $10,759 and $11,884 as of May 31, 2023 and August 31, 2022, respectively, for the fair value of derivative instruments) | Other non-current assets (includes $10,759 and $11,884 as of May 31, 2023 and August 31, 2022, 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 $1,240 and $82 as of May 31, 2023 and August 31, 2022, respectively, for the fair value of derivative instruments) | Other accrued expenses and other current liabilities (includes $1,240 and $82 as of May 31, 2023 and August 31, 2022, respectively, for the fair value of derivative instruments) |
Derivative Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities (includes $1,164 and $0 for the fair value of derivative instruments and $9,416 and $8,440 for post-employment plans as of May 31, 2023 and August 31, 2022, respectively) | Other long-term liabilities (includes $1,164 and $0 for the fair value of derivative instruments and $9,416 and $8,440 for post-employment plans as of May 31, 2023 and August 31, 2022, respectively) |
Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair Value | $ 9,595 | $ 14,539 |
Net Tax Effect | (3,114) | (4,888) |
Net OCI | 6,481 | 9,651 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair value of asset, current | 0 | 2,736 |
Net Tax Effect | 0 | (348) |
Net OCI | 0 | 2,388 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair value of asset, noncurrent | 8,873 | 10,289 |
Net Tax Effect | (3,105) | (4,559) |
Net OCI | 5,768 | 5,730 |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair value, liabilities, current | 0 | (82) |
Net Tax Effect | 0 | 25 |
Net OCI | 0 | (57) |
Cross-currency interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Derivative liability, noncurrent | (1,164) | 0 |
Net Tax Effect | 407 | 0 |
Net OCI | (757) | 0 |
Interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Fair value of asset, noncurrent | 1,886 | 1,596 |
Net Tax Effect | (416) | (6) |
Net OCI | $ 1,470 | $ 1,590 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule Of Open Non-Deliverable Forward Foreign Exchange Contract) (Details) - Forward foreign exchange contracts - Not Designated as Hedging Instrument |
May 31, 2023
USD ($)
|
---|---|
Settlement Date At December 21,2023 | |
Derivative [Line Items] | |
Notional Amount | $ 4,500,000 |
Settlement Date at November 16, 2023 | |
Derivative [Line Items] | |
Notional Amount | $ 8,000,000 |
SEGMENTS (Narrative) (Details) |
May 31, 2023
warehouse
country
|
---|---|
Segment Reporting Information [Line Items] | |
Number of stores | warehouse | 51 |
Foreign Countries | |
Segment Reporting Information [Line Items] | |
Number of countries | 12 |
Domestic Territories | |
Segment Reporting Information [Line Items] | |
Number of countries | 1 |
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands |
Jun. 05, 2023 |
May 31, 2023 |
Aug. 31, 2022 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Right-of-use asset | $ 106,411 | $ 111,810 | |
GUATEMALA | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Lease liability | $ 7,300 | ||
Right-of-use asset | $ 7,300 |
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