PriceSmart Inc. (PSMT, Financial) filed Quarterly Report for the period ended 2012-11-30.
Pricesmart, Inc. has a market cap of $2.33 billion; its shares were traded at around $77.94 with a P/E ratio of 33.6 and P/S ratio of 1.1. The dividend yield of Pricesmart, Inc. stocks is 0.8%. Pricesmart, Inc. had an annual average earning growth of 17.5% over the past 10 years.
The Company opened its second warehouse club in Colombia and thirtieth overall in mid-October 2012 which contributed to the 11.8% growth in the first quarter of fiscal 2013 compared the same quarter last year. Transactions grew 8.3% in the quarter from the same period last year and average tickets grew 3.3%. While all merchandise categories recorded sales increases, the food merchandise category had the highest growth, driven by sales in grocery, fresh and bakery. The overall mix of imported products was 52%, compared to 51% last year.
For the three months ended November 30, 2012, warehouse gross profit margins as a percent of sales improved 43 basis points (0.43%) compared to the first quarter of fiscal year 2012. End-cap income, vendor promotions, reduced shrink and fewer mark downs contributed 29 basis points (0.29%) of the increase. The remaining 14 basis point (0.14%) improvement results from the incremental importation costs for the then new Barranquilla warehouse club in Colombia incurred last year in the first fiscal quarter. Importation costs in Colombia for both warehouse clubs have now reverted to a normal run rate.
Net Income from Operating Activities in the current three month period increased over the same period in fiscal year 2012 primarily as a result of higher sales, improved margins and membership income growth. Net non-cash related expenses increased year over year due to increases in the amortization of stock-based compensation and the increase of deferred income taxes attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These items resulted in the year on year increase in cash for approximately $7.3 million. The changes in inventory and accounts payable resulted in a year over year decrease in cash used in operating activities during the current three month period of $14.6 million. In addition, the year over year decrease in cash use for inventory and accounts payable was offset by a net increase in operating liabilities over operating assets that resulted in a year on year increase in cash use of approximately $1.2 million.
The Company had U.S. federal and state tax net operating loss carry-forwards, or NOLs, at November 30, 2012 of approximately $17.6 million and $8.0 million, respectively. In calculating the tax provision, and assessing the likelihood that the Company will be able to utilize the federal deferred tax assets, the Company considered and weighed all of the evidence, both positive and negative, and both objective and subjective. The Company factored into its analysis the inherent risk of forecasting revenue and expenses over an extended period of time and also considered the potential risks associated with its business. Because of the Company's U.S. income from continuing operations and based on projections of future taxable income in the United States, the Company was able to determine that there was sufficient positive evidence to support the conclusion that it was more likely than not that the Company would be able to realize substantially all of its U.S. federal NOLs by generating taxable income during the carry-forward period. However, if the Company does not achieve its projections of future taxable income in the United States, the Company could be required to take a charge to earnings related to the recoverability of these deferred tax assets. Due to the deemed change of ownership (as defined in Section 382 of the Internal Revenue Code) in October 2004, there are annual limitations in the amount of U.S. income that may be offset by NOLs. The NOLs generated prior to the deemed ownership change date, as well as a significant portion of the losses generated as a result of the PSMT Philippines disposal in August 2005, are limited on an annual basis. The Company does not believe this will impact the recoverability of these NOLs. During fiscal year 2012, the Company recorded a valuation allowance of $697,000 against its California net operating loss (NOL), because it does not anticipate being able to utilize the NOL. The Company intends to make a single sales factor election for fiscal year 2012 and subsequent years. This election will significantly reduce the California apportionment factor and, therefore, California taxable income. The Company had net foreign deferred tax assets of $9.0 million and $8.7 million as of November 30, 2012 and August 31, 2012, respectively.
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Pricesmart, Inc. has a market cap of $2.33 billion; its shares were traded at around $77.94 with a P/E ratio of 33.6 and P/S ratio of 1.1. The dividend yield of Pricesmart, Inc. stocks is 0.8%. Pricesmart, Inc. had an annual average earning growth of 17.5% over the past 10 years.
Highlight of Business Operations:
Warehouse sales gross profits (net warehouse club sales less associated cost of goods sold) increased 15.1% over the prior year period and warehouse sales gross profits as a percent of net warehouse sales increased 43 basis points (0.43%) to 15.0% compared to the same period last year despite ongoing price reductions.The Company opened its second warehouse club in Colombia and thirtieth overall in mid-October 2012 which contributed to the 11.8% growth in the first quarter of fiscal 2013 compared the same quarter last year. Transactions grew 8.3% in the quarter from the same period last year and average tickets grew 3.3%. While all merchandise categories recorded sales increases, the food merchandise category had the highest growth, driven by sales in grocery, fresh and bakery. The overall mix of imported products was 52%, compared to 51% last year.
For the three months ended November 30, 2012, warehouse gross profit margins as a percent of sales improved 43 basis points (0.43%) compared to the first quarter of fiscal year 2012. End-cap income, vendor promotions, reduced shrink and fewer mark downs contributed 29 basis points (0.29%) of the increase. The remaining 14 basis point (0.14%) improvement results from the incremental importation costs for the then new Barranquilla warehouse club in Colombia incurred last year in the first fiscal quarter. Importation costs in Colombia for both warehouse clubs have now reverted to a normal run rate.
Net Income from Operating Activities in the current three month period increased over the same period in fiscal year 2012 primarily as a result of higher sales, improved margins and membership income growth. Net non-cash related expenses increased year over year due to increases in the amortization of stock-based compensation and the increase of deferred income taxes attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These items resulted in the year on year increase in cash for approximately $7.3 million. The changes in inventory and accounts payable resulted in a year over year decrease in cash used in operating activities during the current three month period of $14.6 million. In addition, the year over year decrease in cash use for inventory and accounts payable was offset by a net increase in operating liabilities over operating assets that resulted in a year on year increase in cash use of approximately $1.2 million.
The Company had U.S. federal and state tax net operating loss carry-forwards, or NOLs, at November 30, 2012 of approximately $17.6 million and $8.0 million, respectively. In calculating the tax provision, and assessing the likelihood that the Company will be able to utilize the federal deferred tax assets, the Company considered and weighed all of the evidence, both positive and negative, and both objective and subjective. The Company factored into its analysis the inherent risk of forecasting revenue and expenses over an extended period of time and also considered the potential risks associated with its business. Because of the Company's U.S. income from continuing operations and based on projections of future taxable income in the United States, the Company was able to determine that there was sufficient positive evidence to support the conclusion that it was more likely than not that the Company would be able to realize substantially all of its U.S. federal NOLs by generating taxable income during the carry-forward period. However, if the Company does not achieve its projections of future taxable income in the United States, the Company could be required to take a charge to earnings related to the recoverability of these deferred tax assets. Due to the deemed change of ownership (as defined in Section 382 of the Internal Revenue Code) in October 2004, there are annual limitations in the amount of U.S. income that may be offset by NOLs. The NOLs generated prior to the deemed ownership change date, as well as a significant portion of the losses generated as a result of the PSMT Philippines disposal in August 2005, are limited on an annual basis. The Company does not believe this will impact the recoverability of these NOLs. During fiscal year 2012, the Company recorded a valuation allowance of $697,000 against its California net operating loss (NOL), because it does not anticipate being able to utilize the NOL. The Company intends to make a single sales factor election for fiscal year 2012 and subsequent years. This election will significantly reduce the California apportionment factor and, therefore, California taxable income. The Company had net foreign deferred tax assets of $9.0 million and $8.7 million as of November 30, 2012 and August 31, 2012, respectively.
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