PRICESMART INC

Previous wording

As of November 30, 2023, we had 53 warehouse clubs in operation in 12 countries, plus the U.S. Virgin Islands, with revenues in excess of $4.4 billion in fiscal year 2023. We believe PriceSmart has become one of the most respected and trusted brands in the region. With nearly two million membership accounts and more than three million cardholders, PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart's markets.

Current wording

As of February 29, 2024, we had 54 warehouse clubs in operation in 12 countries, plus the U.S. Virgin Islands, with revenues in excess of $4.4 billion in fiscal year 2023. We believe PriceSmart has become one of the most respected and trusted brands in the region. With nearly two million membership accounts and more than three million cardholders, we believe PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart's markets.

Previous wording

With more than 11,000 employees, PriceSmart supports the best working conditions possible for its employees. We provide safe and pleasant working environments for our employees, along with excellent pay and benefits, including healthcare and retirement benefits.

Current wording

With more than 11,000 employees, PriceSmart supports the best working conditions possible for its employees. We seek to provide safe and pleasant working environments for our employees, along with excellent pay and benefits, including healthcare and retirement benefits.

Previous wording

We believe that operating our business at the highest standards, providing outstanding jobs for our employees and being good stewards of the communities in which we operate, results in PriceSmart being a good investment for our stockholders.

Current wording

We believe that operating our business at the highest standards, providing outstanding jobs for our employees and being good stewards of the communities in which we operate result in PriceSmart being a good investment for our stockholders.

Previous wording

We have purchased land and plan to open our fourth warehouse club in El Salvador, located in Santa Ana, approximately 40 miles west from the nearest club in the capital of San Salvador. The club is being built on a five-acre property and is anticipated to open in February 2024. Once this new club is open, we will operate 54 warehouse clubs.

Current wording

We have purchased land and plan to open our ninth warehouse club in Costa Rica, located in Cartago, approximately 10 miles east from the nearest club in the capital of San Jose. The club will be built on a six-acre property and is anticipated to open early 2025. Once this new club is open, we will operate 9 warehouse clubs in Costa Rica and 55 warehouse clubs in total.

Previous wording

Although we have seen recent inflationary pressures subsiding, substantial product cost increases or commodity price increases have and could continue to impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. As experienced during and subsequently after the novel coronavirus outbreak (COVID-19), events directly or indirectly related to COVID-19 resulted in market and supply-chain disruptions which increasedthe complexity of managing our inventory flow and business and resulted in substantial inventory markdowns on certain non-food product categories in the third quarter of fiscal year 2022. In addition, shipping and freight rates increased dramatically during that time. While supply chains and transportation rates have normalized, we are continually remaining vigilant and working to hold down and/or mitigate the price increases passed on to our Members while maintaining the right inventory mix to grow sales. One key factor has been our expanded network of distribution centers, which has facilitated alternative shipping routes, increased throughput, and provided flexibility to mitigate our supply chain challenges and risks more effectively.

Current wording

Although we have seen recent inflationary pressures subsiding, substantial product cost increases and commodity price increases have and could continue to impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. Events directly or indirectly related to COVID-19 resulted in market and supply-chain disruptions, which increasedthe complexity of managing our inventory flow and business and resulted in substantial inventory markdowns on certain non-food product categories in the third quarter of fiscal year 2022. In addition, shipping and freight rates increased dramatically during that time. While supply chains and transportation rates have normalized, we continue to work to hold down and/or mitigate the price increases passed on to our Members while maintaining the right inventory mix to grow sales. One key factor has been our expanded network of distribution centers, which has facilitated alternative shipping routes, increased throughput, and provided flexibility to mitigate our supply chain challenges and risks more effectively.

Previous wording

Currency fluctuation can be one of the largest variables affecting our overall sales and profit performance because many of our markets are susceptible to foreign currency exchange rate volatility. In the first quarter of fiscal year 2024, some markets, especially Colombia and Costa Rica, benefited from currency appreciation which helped offset currency devaluations we experienced in some of the other countries. During the first quarter of fiscal year 2024, approximately 79.5% of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 49.7% consisted of sales of products we purchased in U.S. dollars.

Current wording

Currency fluctuation can be one of the largest variables affecting our overall sales and profit performance because many of our markets are susceptible to foreign currency exchange rate volatility. In the second quarter of fiscal year 2024, some markets, especially Colombia and Costa Rica, benefited from currency appreciation, which helped offset currency devaluations we experienced in some of the other countries. During the first six months of fiscal year 2024 and 2023, approximately 79.6% and 78.8%, respectively, of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 49.4% and 48.9% consisted of sales of products we purchased in U.S. dollars for each period, respectively.

Previous wording

Changes in tax laws, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could have a material adverse effect on our financial condition and results of operations. In one of the countries where we operate, the government made changes several years ago in the method of computing minimum tax payments, under which the government sought to require retailers to pay taxes based on a percentage of sales if the resulting tax were greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). We, together with our tax and legal advisers, appealed these interpretations and litigated our cases in the country’s court system. Nevertheless, in the fourth quarter of fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute. To address the inherent risk of operating in a country in which tax legislation changes can significantly impact our low margin business model and limitations on our ability to successfully appeal these burdensome taxes, we have increased prices in this market to offset or partially offset the rise in costs to comply with the annual AMT payment.

Current wording

Changes in tax laws, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could have a material adverse effect on our financial condition and results of operations. In one of the countries where we operate, the government made changes several years ago in the method of computing minimum tax payments, under which the government sought to require retailers to pay taxes based on a percentage of sales if the resulting tax were greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). We, together with our tax and legal advisers, appealed these interpretations and litigated our cases in the country’s court system. Nevertheless, in the fourth quarter of fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute. To address the inherent risk of operating in a country in which tax legislation changes can significantly impact our low margin business model and in which our ability to successfully appeal the application of these taxes is limited, we have increased prices in this market to offset or partially offset the rise in costs to comply with the annual AMT payment.

Previous wording

Periodically, we experience a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This can and has impeded our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products and to otherwise redeploy these funds in our Company. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. For instance, during fiscal year 2021, we experienced significant limitations on our ability to convert Trinidad dollars to U.S. dollars or other tradable currencies. Our balance as of November 30, 2023 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $29.0 million, a decrease of $71.5 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency.

Current wording

Periodically, we experience a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This can and has impeded our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products and to otherwise redeploy these funds in our Company. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. For instance, during fiscal year 2021, we experienced significant limitations on our ability to convert Trinidad dollars to U.S. dollars or other tradable currencies. Our balance as of February 29, 2024 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $36.9 million, a decrease of $63.6 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency.

Previous wording

During the third quarter of fiscal year 2023, the Honduran Central Bank began limiting the availability and controlling the allocation of U.S. dollars for the conversion from Honduran lempiras to U.S. dollars. As of November 30, 2023, our Honduran subsidiary had approximately $22.8 million of cash and cash equivalents and short-term investments denominated in lempiras, which cannot be readily converted to U.S. dollars for general use within the Company. We are actively working with our banking partners and government authorities to address this situation.

Current wording

During the third quarter of fiscal year 2023, the Honduran Central Bank began limiting the availability and controlling the allocation of U.S. dollars for the conversion from Honduran lempiras to U.S. dollars. As of February 29, 2024, our Honduran subsidiary had approximately $26.9 million of cash and cash equivalents and short-term investments denominated in Honduran lempiras, which cannot be readily converted to U.S. dollars for general use within the Company. We are actively working with our banking partners and government authorities to address this situation.

Previous wording

PriceSmart exists to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. Our mission is to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We provide good jobs, fair wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we are increasing our tools to drive sales and operational efficiencies. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and services and, meanwhile, enhance Member experience and engagement.

Current wording

PriceSmart exists to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. We aim to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We provide good jobs, fair wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we are increasing our tools to drive sales and operational efficiencies. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and services and, meanwhile, enhance Member experience and engagement.

Previous wording

I. Invest in Remodeling Current PriceSmart Clubs, Adding New PriceSmart Locations and Opening More Distribution Centers. We believe that oneof the quickest and most effective ways to increase sales and profitability is to increase the size and efficiency of our existing warehouse clubs and the number of parking spaces at our high-volume locations. For instance, we are currently remodeling our clubs in San Pedro Sula, Honduras, Santiago, Dominican Republic, and Port of Spain, Trinidad and Tobago. We are also currently expanding one of our clubs in San Salvador, El Salvador. We've recently entered into a lease agreement to relocate and extend the lease term for our Miraflores club, which is our highest selling location in Guatemala. The new warehouse will have increased sales floor square footage and a greater number of parking spaces, along with covered parking for our Members. We have also entered into a promissory agreement to purchase our club in Via Brasil, Panama, which is the club with the highest sales volume in our Panama market. We expect to complete this purchase in the second quarter of fiscal year 2024. We continue to pursue opportunities to add new warehouse clubs in our existing markets and to assess opportunities in new markets. We have plans to open a new warehouse club in Santa Ana, El Salvador, in February 2024. Our distribution network currently consists of major distribution centers in Miami and Costa Rica, complemented by varying distribution facilities in other markets. Based on our experience with the Costa Rica distribution center, we believe that investing in similar distribution centers in other major markets will play a strategic role in a variety of ways. In October 2023, we relocated our distribution center in Panama, increasing the square footage which will allow us to drive more efficiencies within our distribution network. In addition to major distribution centers, PriceSmart has been investing in produce distribution centers, which enable us to purchase, process and package produce we purchase directly from farms in our markets as well as imported produce.

Current wording

I. Invest in Remodeling Current PriceSmart Clubs, Adding New PriceSmart Locations and Opening More Distribution Centers. We believe that oneof the quickest and most effective ways to increase sales and profitability is to increase the size and efficiency of our existing warehouse clubs and the number of parking spaces at our high-volume locations. For instance, we are currently remodeling our clubs in San Pedro Sula, Honduras; Santiago, Dominican Republic; and Port of Spain, Trinidad and Tobago. We are also currently expanding one of our clubs in San Salvador, El Salvador. We've recently entered into a lease agreement to relocate and extend the lease term for our Miraflores club, which is our highest selling location in Guatemala. The new warehouse will have increased sales floor square footage and a greater number of parking spaces, along with covered parking for our Members. We have also completed the purchase of our Via Brasil club in Panama, which is the club with the highest sales volume in our Panama market. We continue to pursue opportunities to add new warehouse clubs in our existing markets and to assess opportunities in new markets. We have plans to open a new warehouse club in Cartago, near the capital of San Jose, in Costa Rica, in early 2025. Our distribution network currently consists of major distribution centers in Miami and Costa Rica, complemented by varying distribution facilities in other markets. Based on our experience with the Costa Rica distribution center, we believe that investing in similar distribution centers in other major markets will play a strategic role in a variety of ways. In October 2023, we relocated our distribution center in Panama, increasing the square footage which will allow us to drive more efficiencies within our distribution network. We have also signed a lease agreement for a distribution center in Guatemala. In addition to major distribution centers, PriceSmart has been investing in produce distribution centers, which enable us to process and package produce we purchase directly from farms in our markets as well as imported produce.

Previous wording

II. Increase Membership Value. We are seeking to attract more Members and retain our current Members by expanding the benefits of being a Member of PriceSmart. As benefits grow and the value of being a PriceSmart Member increases, adjustments to the membership fee may be warranted. We expect to increase this fee by $5 on a staggered basis in most countries during fiscal year 2024. A larger membership base and higher membership fee contribute to the bottom line of the business and can be reinvested in providing better pricing to our Members. We focus on growth of our membership base, Member renewal rates and spend per Member as part of determining how Members see our value. By adding more benefits that Members can only obtain with us, we believe we can achieve growth in the number of Members, which drives Membership income and Net merchandise sales. Recent examples of enhancements we have made to the value of membership include: additional services, such as the ability for all of our Members to transact on PriceSmart.com; pickup and delivery service in our clubs; and the implementation and expansion of our Well-being initiative, which offers optical services with free eye exams for our Members and additional members of their families and lower prices on discounted eyeglass frames, audiology services with free hearing exams and deeply discounted hearing aids, and, in some of our markets, pharmacies. Another way we enhance Membership value is by offering private label merchandise under the “Member’s Selection®” brand, which is available only to PriceSmart Members. We believe the “Member’s Selection®” brand carries goodwill and is recognized in our markets for value. Private label products also provide the opportunity to source quality items locally. Select local sourcing has multiple benefits, including support of local communities in which we operate by enhancing business activity and creating direct and indirect jobs, mitigation of foreign currency exchange risk, and reduced supply chain exposure. These initiatives offer additional benefits and services for our Members, whether they choose to shop on-line, in-club, or both. During the first quarter of fiscal year 2024, our private label sales represented 27.2% of total merchandise sales, up from 25.9% in the same period of fiscal year 2023, and we plan to continue to invest in the development of additional private label products under the “Member’s Selection®” brand.

Current wording

II. Increase Membership Value. We are seeking to attract more Members and retain our current Members by expanding the benefits of being a Member of PriceSmart. As benefits grow and the value of being a PriceSmart Member increases, adjustments to the membership fee may be warranted. We have increased this fee by $5 in most countries during the first six months of fiscal year 2024. A larger membership base and higher membership fee contribute to the bottom line of the business and can be reinvested in providing better pricing to our Members. We focus on growth of our membership base, Member renewal rates and spend per Member as part of determining how Members see our value. By adding more benefits that Members can only obtain with us, we believe we can achieve growth in the number of Members, which drives Membership income and Net merchandise sales. Recent examples of enhancements we have made to the value of membership include: additional services, such as the ability for all of our Members to transact on PriceSmart.com; pickup and delivery service in our clubs; and the implementation and expansion of our Well-being initiative, which offers optical services with free eye exams for our Members and additional members of their families and lower prices on discounted eyeglass frames, audiology services with free hearing exams and deeply discounted hearing aids, and, in some of our markets, pharmacies. Another way we enhance Membership value is by offering private label merchandise under the “Member’s Selection®” brand, which is available only to PriceSmart Members. We believe the “Member’s Selection®” brand carries goodwill and is recognized in our markets for value. Private label products also provide the opportunity to source quality items locally. Select local sourcing has multiple benefits, including support of local communities in which we operate by enhancing business activity and creating direct and indirect jobs, mitigation of foreign currency exchange risk, and reduced supply chain exposure. These initiatives offer additional benefits and services for our Members, whether they choose to shop on-line, in-club, or both. During the first six months of fiscal year 2024, our private label sales represented 27.1% of total merchandise sales, up from 25.9% in the same period of fiscal year 2023, and we plan to continue to invest in the development of additional private label products under the “Member’s Selection®” brand.

Previous wording

Financial highlights for the first quarter of fiscal year 2024 included:

Current wording

Financial highlights for the second quarter of fiscal year 2024 included:

Previous wording

•Net merchandise sales increased 10.7% over the comparable prior year period. We ended the quarter with 53 warehouse clubs compared to 50 warehouse clubs at the end of the first quarter of fiscal year 2023. Net merchandise sales - constant currency increased 6.8% over the comparable prior year period.

Current wording

•Net merchandise sales increased 13.0% over the comparable prior year period. We ended the quarter with 54 warehouse clubs compared to 50 warehouse clubs at the end of the second quarter of fiscal year 2023. Net merchandise sales - constant currency increased 9.0% over the comparable prior year period.

Previous wording

•Comparable net merchandise sales (that is, sales in the 50 warehouse clubs that have been open for greater than 13 ½ calendar months) for the 13 weeks ended December 3, 2023 increased 8.0%. Comparable net merchandise sales - constant currency for the 13 weeks ended December 3, 2023 increased 4.3%.

Current wording

•Comparable net merchandise sales (that is, sales in the 50 warehouse clubs that have been open for greater than 13 ½ calendar months) for the 13 weeks ended March 3, 2024 increased 8.8%. Comparable net merchandise sales - constant currency for the 13 weeks ended March 3, 2024 increased 5.2%.

Previous wording

•Membership income for the first quarter of fiscal year 2024 increased 11.7% to $17.7 million over the comparable prior year period.

Current wording

•Membership income for the second quarter of fiscal year 2024 increased 14.6% to $18.5 million over the comparable prior year period.

Previous wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 9.6% over the prior-year period, and merchandise gross profits as a percent of net merchandise sales were 16.1%, a decrease of 10 basis points or 0.1% from the same period in the prior year.

Current wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 11.0% over the prior-year period, and merchandise gross profits as a percent of net merchandise sales were 15.7%, a decrease of 30 basis points or 0.3% from the same period in the prior year.

Previous wording

•Operating income for the first quarter of fiscal year 2024 was $58.2 million, an increase of 4.8%, or $2.7 million, compared to the first quarter of fiscal year 2023.

Current wording

•Operating income for the second quarter of fiscal year 2024 was $63.6 million, an increase of 18.2%, or $9.8 million, compared to the second quarter of fiscal year 2023.

Previous wording

•We recorded a $2.1 million net loss in total other expense, net in the first quarter of fiscal year 2024 compared to a $6.2 million net loss in total other expense, net in the same period last year, primarily due to a decrease in other expense of $2.4 million, driven by a decrease in total overall foreign currency losses, as well as higher interest income of $1.7 million, comparatively, because of significantly more investments of surplus cash at higher yields.

Current wording

•We recorded a $7.1 million net loss in total other expense in the second quarter of fiscal year 2024 compared to a $6.2 million net loss in total other expense in the same period last year. This increase in total other expense was primarily due to an increase in other expense, net of $1.7 million, driven by an increase in total overall foreign currency losses, partially offset by higher interest income of $1.3 million, comparatively, because of significantly more investments of surplus cash at higher yields.

Previous wording

•Adjusted net income for the first quarter of fiscal year 2024 was $38.0 million, or an adjusted $1.24 per diluted share, compared to adjusted net income of $35.0 million, or $1.12 per diluted share, in the comparable prior year period.

Current wording

•Adjusted net income for the second quarter of fiscal year 2024 was $39.3 million, or an adjusted $1.31 per diluted share, compared to adjusted net income of $38.5 million, or $1.25 per diluted share, in the comparable prior year period.

Previous wording

•Selling, general and administrative expenses increased 12.1% compared to the first quarter of fiscal year 2023, primarily due to higher compensation, professional fees and depreciation expense.

Current wording

•Selling, general and administrative expenses increased 10.5% compared to the first six months of fiscal year 2023, primarily due to higher compensation, professional fees and depreciation expense.

Previous wording

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with U.S. GAAP (Generally Accepted Accounting Principles). In addition to relevant GAAP measures, we also provide non-GAAP measures including adjusted net income, adjusted net income per diluted share, adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency because management believes these metrics are useful to investors and analysts by excluding items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

Current wording

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with U.S. GAAP (Generally Accepted Accounting Principles). In addition to relevant GAAP measures, we also provide non-GAAP measures, including adjusted net income, adjusted net income per diluted share, adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency because management believes these metrics are useful to investors and analysts because they exclude items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. However, these non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

Previous wording

The adjusted net income and adjusted net income per diluted share metrics are important measures used by management to compare the performance of core operating results between periods. We define adjusted net income as net income, as reported, adjusted for the write-off of certain Aeropost receivables. We define adjusted net income per diluted share as adjusted net income divided by the weighted-average diluted shares outstanding.

Current wording

Adjusted net income and adjusted net income per diluted share are important measures used by management to compare the performance of our core operations between periods. We define adjusted net income as net income, as reported, adjusted for: separation costs associated with the departure of our former Chief Executive Officer, the write-off of certain Aeropost receivables, and the tax impact of the foregoing adjustments on net income. We define adjusted net income per diluted share as adjusted net income divided by the weighted-average diluted shares outstanding.

Previous wording

Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including interest income; other income (expense), net; and Aeropost-related write-offs. The following is a reconciliation of our Net income to Adjusted EBITDA for the periods presented:

Current wording

Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including interest income; other income (expense), net; separation costs associated with Chief Executive Officer departure; and Aeropost-related write-offs. The following is a reconciliation of our Net income to Adjusted EBITDA for the periods presented:

Previous wording

(1)Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues for the three months ended November 30, 2023. Primarily consists of foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily U.S. dollars) for the three months ended November 30, 2022.

Current wording

(1)Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues and foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily U.S. dollars) for the three and six months ended February 29, 2024. Primarily consists of foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily U.S. dollars) for the three and six months ended February 28, 2023.

Previous wording

(1)Reflects $2.1 million of Aeropost-related write-offs in the first quarter of fiscal year 2023.

Current wording

(3)Reflects $2.1 million of Aeropost-related write-offs in the first quarter of fiscal year 2023.

Previous wording

COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 2023 AND 2022

Current wording

COMPARISON OF THE THREE AND SIX MONTHS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023

Previous wording

The following discussion and analysis compares the results of operations for the three-month period ended on November 30, 2023 with the three month-period ended on November 30, 2022 and should be read in conjunction with the consolidated financial statements and the accompanying notes included elsewhere in this report. Unless otherwise noted, all tables present U.S. dollar amounts in thousands. Certain percentages presented are calculated using actual results prior to rounding.

Current wording

The following discussion and analysis compares the results of operations for the three-month and six-month periods ended on February 29, 2024 with the three-month and six-month periods ended on February 28, 2023 and should be read in conjunction with the consolidated financial statements and the accompanying notes included elsewhere in this report. Unless otherwise noted, all tables present U.S. dollar amounts in thousands. Certain percentages presented are calculated using actual results prior to rounding.

Previous wording

The following tables indicate the net merchandise club sales in the reportable segments in which we operate and the percentage growth in net merchandise sales by segment during the three months ended November 30, 2023 and November 30, 2022:

Current wording

The following tables indicate the net merchandise club sales in the reportable segments in which we operate and the percentage growth in net merchandise sales by segment during the three and six months ended February 29, 2024 and February 28, 2023:

Previous wording

Overall, net merchandise sales grew by 10.7% for the first quarter of fiscal year 2024 compared to the first quarter of fiscal year 2023, driven by a 8.2% increase in transactions and a 2.3% increase in average ticket. Transactions represent the total number of visits our Members make to our warehouse clubs resulting in a sale and the total number of PriceSmart.com curbside pickup and delivery service transactions. Average ticket represents the amount our Members spend on each visit or PriceSmart.com order. We had 53 clubs in operation as of November 30, 2023 compared to 50 clubs as of November 30, 2022.

Current wording

Overall, total net merchandise sales grew by 13.0% for the second quarter and 11.9% for the six-month period ended February 29, 2024 respectively. The second quarter increase resulted from a 10.0% increase in transactions and a 2.7% increase in average ticket. For the six-month period, the increase resulted from a 9.1% increase in transactions and a 2.5% increase in average ticket. The extra day from the leap year on February 29, 2024 favorably impacted transactions by 1.1% and 0.5% for the second quarter and six-months ended February 29, 2024, respectively. Transactions represent the total number of visits our Members make to our warehouse clubs resulting in a sale and the total number of PriceSmart.com curbside pickup and delivery service transactions. Average ticket represents the amount our Members spend on each visit or PriceSmart.com order. We had 54 clubs in operation as of February 29, 2024 compared to 50 clubs as of February 28, 2023.

Previous wording

Net merchandise sales in our Central America segment increased 11.3% during the first quarter of fiscal year 2024. This increase had a 680 basis point (6.8%) positive impact on total net merchandise sales growth. All markets within this segment had positive net merchandise sales growth. We added two new clubs to the segment when compared to the comparable prior-year period. We opened our third warehouse club in El Salvador in May 2023 and our sixth warehouse club in Guatemala in November 2023. Our club in Escuintla, Guatemala opened on November 30, 2023, having a minimal impact on sales growth for the quarter.

Current wording

Net merchandise sales in our Central America segment increased 12.4% and 11.9% for the second quarter and six-months ended February 29, 2024, respectively. These increases had a 760 basis points (7.6%) and 720 basis points (7.2%) positive impact on total net merchandise sales growth for the second quarter and six-months ended February 29, 2024. We opened our third and fourth warehouse club in El Salvador in May 2023 and February 2024, respectively. We also opened our sixth warehouse club in Guatemala in November 2023. Our club in Santa Ana, El Salvador opened on February 15, 2024, having a minimal impact on sales growth for the quarter.

Previous wording

Net merchandise sales in our Colombia segment increased 19.3% during the first quarter of fiscal year 2024. This increase had a 200 basis point (2.0%) positive impact on total net merchandise sales growth. The primary driver of the increased sales for the quarter was due to the significant appreciation of the Colombian peso, which has positively impacted reported sales in the first quarter of fiscal year 2024, when compared to first quarter of fiscal year 2023. We added one new club to the segment when compared to the comparable prior-year period. We opened our tenth warehouse club in Colombia in September 2023.

Current wording

Net merchandise sales in our Colombia segment increased 34.5% and 26.9% for the second quarter and the six-months ended February 29, 2024, respectively. This increase had a 330 basis points (3.3%) and 270 basis points (2.7%) positive impact on total net merchandise sales growth. The primary driver of the increased sales for the quarter and six-months ended was due to the significant appreciation of the Colombian peso, which has positively impacted reported sales in the three and six-months ended February 29, 2024, when compared to the comparable prior year period. We added one new club to the segment when compared to the comparable prior-year period. We opened our tenth warehouse club in Colombia in September 2023.

Previous wording

The following table indicates the impact that currency exchange rates had on our net merchandise sales in dollars and the percentage change from the three-month period ended November 30, 2023. When we use the term "net merchandise sales - constant currency," it means that we have translated current year net merchandise sales at prior year monthly average exchanges rates. Net merchandise sales - constant currency results exclude the effects of foreign currency translation. Impact of foreign currency is the effect of currency fluctuations on our net merchandise sales.

Current wording

The following table indicates the impact that currency exchange rates had on our net merchandise sales in dollars and the percentage change from the three and six-month periods ended February 29, 2024. When we use the term "net merchandise sales - constant currency," it means that we have translated current year net merchandise sales at prior year monthly average exchanges rates. Net merchandise sales - constant currency results exclude the effects of foreign currency translation. Impact of foreign currency is the effect of currency fluctuations on our net merchandise sales.

Previous wording

Overall, the effects of currency fluctuations within our markets had approximately $40.0 million, or 390 basis points (3.9%), of positive impact on net merchandise sales for the three-months ended November 30, 2023.

Current wording

Overall, the effects of currency fluctuations within our markets had approximately $44.2 million and $84.1 million, or 400 basis points (4.0%) of positive impact and 390 basis points (3.9%) of positive impact on net merchandise sales for the quarter and six-months ended February 29, 2024, respectively.

Previous wording

Currency fluctuations had a $30.5 million, or 490 basis points (4.9%), positive impact on net merchandise sales in our Central America segment for the three-months ended November 30, 2023. These currency fluctuations contributed approximately 300 basis points (3.0%) of positive impact on net merchandise sales for the quarter ended November 30, 2023. The Costa Rica colón appreciated significantly against the dollar as compared to the three-month period a year ago, and was a significant factor in the contribution to the favorable currency fluctuations in this segment.

Current wording

Currency fluctuations had a $24.8 million and $55.3 million, or 360 basis points (3.6%) and 430 basis points (4.3%), positive impact on net merchandise sales in our Central America segment for the quarter and six-months ended February 29, 2024. These currency fluctuations contributed approximately 220 basis points (2.2%) and 260 basis points (2.6%) of the positive impact on net merchandise sales for the quarter and six-months ended February 29, 2024. The Costa Rica colón appreciated significantly against the dollar as compared to the same three-month and six-month period a year ago, and was a significant factor in the contribution to the favorable currency fluctuations in this segment.

Previous wording

Currency fluctuations had a $6.7 million, or 220 basis point (2.2%), negative impact on net merchandise sales in our Caribbean segment for the three-months ended November 30, 2023. These currency fluctuations contributed approximately 70 basis points (0.7%) of negative impact on total net merchandise sales growth for the period. This negative impact was primarily driven by the devaluation of the Dominican peso as compared to the same three-month period a year ago.

Current wording

Currency fluctuations had a $5.6 million and $12.3 million, or 170 basis points (1.7%) and 200 basis points (2.0%), negative impact on net merchandise sales in our Caribbean segment for the quarter and six-months ended February 29, 2024. These currency fluctuations contributed approximately 50 basis points (0.5%) and 60 basis points (0.6%) of negative impact on total net merchandise sales growth for the quarter and six-months ended February 29, 2024. This negative impact was primarily driven by the devaluation of the Dominican Peso as compared to the same three and six-month periods a year ago.

Previous wording

We report comparable net merchandise sales on a “same week” basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close of a match as possible to the calendar month and quarter that is used for financial reporting purposes. This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as we experience higher merchandise club sales on the weekends. Each of the warehouse clubs used in the calculations was open for at least 13 ½ calendar months before its results for the current period were compared with its results for the prior period. As a result, sales related to one of our warehouse clubs opened during fiscal year 2023 and two of our clubs opened during fiscal year 2024 will not be used in the calculation of comparable sales until they have been open for at least 13 ½ months. Therefore, comparable net merchandise sales includes 50 warehouse clubs for the thirteen-week period ended December 3, 2023.

Current wording

We report comparable net merchandise sales on a “same week” basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close of a match as possible to the calendar month and quarter that is used for financial reporting purposes. This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as we experience higher merchandise club sales on the weekends. Each of the warehouse clubs used in the calculations was open for at least 13 ½ calendar months before its results for the current period were compared with its results for the prior period. As a result, sales related to one of our warehouse clubs opened during fiscal year 2023 and three of our clubs opened during fiscal year 2024 will not be used in the calculation of comparable sales until they have been open for at least 13 ½ months. Therefore, comparable net merchandise sales includes 50 warehouse clubs for the thirteen and twenty-six-week periods ended March 3, 2024.

Previous wording

The following tables indicate the comparable net merchandise sales in the reportable segments in which we operate and the percentage changes in net merchandise sales by segment during the thirteen-week period ended December 3, 2023 and December 4, 2022 compared to the prior year:

Current wording

The following tables indicate the comparable net merchandise sales in the reportable segments in which we operate and the percentage changes in net merchandise sales by segment during the thirteen and twenty-six-week periods ended March 3, 2024 and March 5, 2023 compared to the prior year:

Previous wording

Comparable net merchandise sales for those warehouse clubs that were open for at least 13 ½ months for some or all of the thirteen-week period ended December 3, 2023 increased 8.0%.

Current wording

Comparable net merchandise sales for those warehouse clubs that were open for at least 13 ½ months for some or all of the thirteen-week period ended March 3, 2024 increased 8.8%. Comparable net merchandise sales for those warehouse clubs that were open for at least 13 ½ months for some or all of the twenty-six week period ended March 3, 2024 increased 8.4%.

Previous wording

Comparable net merchandise sales in our Central America segment increased 9.1% for the thirteen-week period ended December 3, 2023. All of our markets in Central America had positive comparable net merchandise sales growth and this increase contributed approximately 550 basis points (5.5%) of positive impact in total comparable merchandise sales for the period.

Current wording

Comparable net merchandise sales in our Central America segment increased 8.1% and 8.6% for the thirteen-week and twenty-six period ended March 3, 2024, respectively. All of our markets in Central America had positive comparable net merchandise sales growth for the thirteen-week and twenty-six week periods ended March 3, 2024. The positive comparable net merchandise sales growth for our Central America segment contributed approximately 500 basis points (5.0%) and 520 basis points (5.2%) of positive impact in total comparable merchandise sales for the thirteen-week and twenty-six week periods ended March 3, 2024, respectively.