PriceSmart (PSMT) Q3 2024 earnings summary

Executive summary

• Net merchandise sales for Q3 FY2024 grew 11.6% year-over-year to $1.19 billion, with total revenues up 12.1% to $1.23 billion and membership income rising 15.2%.

• Net income for Q3 FY2024 was $32.5 million ($1.08 per diluted share), up from $29.6 million ($0.94 per share) last year; adjusted EBITDA reached $71.0 million.

• Membership accounts grew 4.8% to almost 1.9 million, with a renewal rate of 88.1% and Platinum Memberships rising to 11% of total members.

• Operates 54 warehouse clubs in 12 countries and one U.S. territory as of May 31, 2024, with a 55th club planned for Costa Rica in 2025.

• Strong performance across all regions, with notable growth in Colombia and successful expansion of Platinum Membership.

Financial highlights

• Gross margin increased 30 basis points to 15.6%, and total revenue margin rose to 17.1% for Q3 FY2024.

• Q3 operating income was $49.9 million (4.1% of total revenue), up from $43.1 million (3.9%) in Q3 FY2023.

• Adjusted EBITDA for Q3 was $71.0 million, up from $63.9 million; for the nine months, adjusted EBITDA was $232.9 million, up from $218.4 million.

• Cash and cash equivalents at May 31, 2024 were $140.3 million, with $99.9 million in short-term investments.

• Membership income rose 15.2% to $19.3 million, with a renewal rate of 88.1%.

Outlook and guidance

• Expecting a solid Q4 performance, with comparable net merchandise sales for the first four weeks of Q4 up 6.4% (6.1% in constant currency).

• Anticipate ending FY2024 with an annualized effective tax rate of 31%-32%.

• Plans to invest in remodeling, new club openings, and distribution centers, including a new club in Cartago, Costa Rica in spring 2025.

• Ongoing investments in technology, club remodels, and omni-channel initiatives are expected to drive future growth.

• Management anticipates continued semi-annual dividends, subject to board approval and financial performance.