PriceSmart, Inc.

Good afternoon, everyone, and welcome to PriceSmart Inc.' 's earnings release conference call for the second quarter of fiscal year 2026, which ended on February 28, 2026. After remarks from our company's representatives, David Price, Chief Executive Officer, and Wilberto Hernandez, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Thursday, April 9, 2026. A digital replay will be available shortly following the conclusion of the call through April 16, 2026 by dialing 1-800-770-2030 for domestic callers or 1-647-362-9199 for international callers and entering replay access code 589-8084. For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Roberto Hernandez. Please proceed, sir.

Thank you, operator, and welcome to Pricemark Inc's earnings call for the second quarter of fiscal year 2026, which ended on February 28, 2026. We will be discussing the information that we provided in our earnings press release and our thank you, which were both released yesterday, April 8, 2026. Also, in these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our thank you. These documents are available on our investor relations website at investors.pricemark.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the company's anticipated plans, revenues, and related matters. Forward-looking statements include, but are not limited to, Statements containing the words expect, believe, plan, will, may, should, estimate, and some other expressions. All forward-looking statements are based on current expectations and assumptions as of today, April 9, 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10-K, the quarterly report on 410Q filed yesterday, and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update forward-looking statements made during this time. Now I will turn the call over to David Price, Price Marks Chief Executive Officer.

Thank you, Gualberto, and good morning, everyone. Thank you for joining us today. We delivered a strong second quarter. Growth was broad-based across our regions, and our membership renewal rate reached an all-time high. I want to take a moment to express my sincere gratitude to every one of our employees across our 13 countries in Chile. Their dedication, hard work, and passion for doing right by our members is the foundation of our success. We delivered these results against the backdrop of continued global uncertainty, including currency volatility, evolving trade policy, and macroeconomic pressures that are a dynamic all multinationals face today. That being the case, our business delivers value to our members in good times and bad, and I am excited about the momentum we are carrying into the second half of this fiscal year. With that, let me walk you through highlights from the quarter. During the second quarter, net merchandise sales and total revenue reached almost $1.5 billion. Net merchandise sales increased by 9.9% or 7.8% in constant currency. Comparable net merchandise sales increased by 7.6% or 5.5% in constant currency. Two of our recent club openings, Cartago and Quetzaltenango, are not yet included in our comparable sales numbers. During the first half of our fiscal year, net merchandise sales reached over $2.8 billion, and total revenue was almost $2.9 billion. Net merchandise sales increased by 10.2% or 8.6% in constant currency. Comparable net merchandise sales increased by 7.8% or 6.2% in constant currency. During the second quarter, our average sales ticket grew by 2.2%, and transactions grew 7.5% versus the same prior year period. The average price per item increased 3.3% year over year, while average items per basket decreased 1%. First, in Central America, where we had 32 clubs at quarter end, net merchandise sales increased 8.6% or 7.8% in constant currency. Comparable net merchandise sales increased 4.7% or 4% in constant currency. Our Central America segment contributed approximately 280 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the second quarter. Second, in the Caribbean, where we had 14 clubs at quarter end. Net merchandise sales increased 4.3% or 5.3% in constant currency. Comparable net merchandise sales increased 4.2% or 5.1% in constant currency. Our Caribbean region contributed approximately 120 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the second quarter. Last, in Colombia, where we had 10 clubs open at the end of our second quarter, Net merchandise sales increased 30.5% or 13.8% in constant currency. Comparable net merchandise sales increased 31.3% or 14.7% in constant currency. Colombia contributed approximately 360 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. The increase is a result of several factors, including the appreciation of the Colombian peso, increases in member traffic, and continued strengthening of our merchandise offering, which I will share more on later in my remarks. In terms of merchandise categories, when comparing our second quarter sales to the same period in the prior year, our foods category grew approximately 9.2%. Within foods, fresh protein for a standout. Seafood, poultry, and meat each exceeded 15% growth as we continued to elevate quality and value in those departments. Our non-foods category increased approximately 12.4%, Alongside cost efficiencies from our Asia consolidation initiatives, we drove growth with strong performance in casual apparel, especially in our activewear categories and in small appliances. One of several notable programs included a mix of Shark Ninja items that were especially exciting for our members and contributed to our focus of creating the treasure hunt experience within our clubs and online. Soft lines also had a strong quarter, highlighted by our domestics white sale promotion in January, which more than doubled sales compared to the prior year. Our food service and bakery category increased approximately 12.2%, and our health services, including optical, audiology, and pharmacy, increased approximately 13%. Membership accounts grew 7.9% year over year to almost 2.1 million accounts, with a strong 12-month renewal rate of 90.2% as of February 28th. It is especially exciting to see our membership renewal rate at an all-time high this past quarter. a clear indication that our members see the value we deliver and remain engaged with our offering. The key focus of our membership strategy is growing the Platinum membership base. Platinum is our premium tier designed for our most engaged members. These members receive an annual cashback reward on eligible purchases, which drives loyalty, increases purchasing frequency, and rewards their continued business with us. By focusing on Platinum growth, we're investing in our highest value member relationships. As of February 28th, Platinum accounts represented 19.5% of our total membership base, up from 14.5% in the same period last year. We are happy with the results of our targeted promotional campaigns, and the strong renewal rate we are seeing reflects that our members believe in the value of that upgrade. We believe that a Platinum membership combined with our strong co-granted credit card, which comes with an additional cash back on points earned, ensures that participating members get the very most out of their membership with PriceMind. Membership income as a percentage of revenue increased to 1.6% in the second quarter, compared to 1.5% in the prior year period, driven in part by the shift toward platinum membership. These strong results reflect our team's execution and the strategic initiatives we have underway. Now, let me walk you through the progress we're making across real estate expansion, supply chain transformation, and technology investments that are enhancing our ability to serve members and position the companies for our next phase of growth. We are opening our sixth warehouse club in the Dominican Republic in the La Romana municipality early next month. We are excited to bring Price Mart to a new trade area, and we are particularly proud of the sustainable design practices incorporated in its build, including solar panels, a heat reclamation water system that eliminates the need for a water heater, recycled steel in the infrastructure, a modern CO2 refrigeration system, high-efficiency plumbing fixtures, and an intelligent energy management system. These features reflect our commitment to doing right by both our members and the planet, and importantly, they also reduce operating costs, making our club more efficient. We look forward to serving members in this new trade area as we continue to deepen our presence in the Dominican Republic. In Jamaica, we have two clubs under construction, one in Montego Bay and the other on South Camp Road in Kingston, which we expect to open in summer and winter of 2026, respectively. Construction is progressing well for both. Recovery efforts have been strong in the aftermath of Hurricane Melissa, and market indicators suggest a robust 2025-2026 tourism season. That, combined with international relief efforts supporting the island's recovery, give us confidence in the consumer demand environment as both clubs prepare to open. Additionally, in the second quarter of fiscal year 2026, we purchased land for our 10th warehouse club in Costa Rica in Ciudad Quesada. That's approximately 47 miles northwest from our nearest club in San Jose. The club will be built on a six-acre property and is anticipated to open this summer. Lastly, in the third quarter of fiscal year 2026, we leased land for our eighth warehouse in Guatemala in the municipality of Villanueva, approximately 13 miles south from the nearest club in Guatemala City. The club will be built on a five-acre property and is anticipated to open in the spring of 2027. Although we are still waiting to obtain all permits, we are confident we will receive them and have begun with the initial earthworks for the club. Should we not receive the remaining permits, we can cancel the lease. Once these five new clubs are open, we will operate 61 warehouse clubs in total. We believe that there is opportunity to expand our footprint in our existing markets and plan to continue to diligently approach our sites we think will strengthen our existing network of locations and meet our expected returns. Chile remains a top priority, and we are encouraged by the progress we are seeing there. We have signed executive agreements for two prospective cliff sites and are actively pursuing additional locations. In parallel, we are laying the foundation for a successful market entry. We have hired a country general manager and local team members, established our central office, and are building out the procurement and logistical infrastructure needed to operate effectively. We look forward to sharing more specific milestones as they develop. Beyond new growth, We also will begin warehouse club and parking lot expansions and remodels in fiscal year 2026 in Portmore, Jamaica, and Barbados. Now, turning to our supply chain transformation strategy. One of the key drivers in keeping prices low is improving how we move and distribute merchandise to our clubs. Today, we operate major distribution centers in Miami, Costa Rica, Panama, and Guatemala. During the second quarter, we began operations at our new distribution center in Trinidad, In addition, we plan to open distribution centers in Colombia and Jamaica during fiscal year 2026, and in the Dominican Republic during fiscal year 2027. Our goals with these distribution centers are to improve product availability, reduce lead times, and lower landed costs, among other efficiency gains. Alongside these new distribution centers, we completed implementing third-party distribution centers in China to consolidate merchandise sourced in the country, which we believe will drive greater efficiency and lower costs. We continue to advance our migration to the RELAX forecasting and replenishment platform and remain on track to complete full implementation in fiscal year 2026. We completed onboarding our U.S. source inventory procurement process, and now we are focused on our local goods procurement process. While the implementation of a new system brings with it an initial learning curve, we are starting to realize its capabilities and expect to see the benefits of improved forecasting, product availability, and operational efficiency long-term. During the second quarter, we advanced our multi-phase implementation of the E2Open Global Trade Management Platform, designed to enhance automation, compliance, and controls across global import and export operations. We believe this platform will strengthen trade compliance, improve data visibility, support scalable international growth once fully implemented. Turning now to other ways we are enhancing membership. On a comparable basis, excluding a reclassification of the produce category, Private label penetration increased 50 basis points in the first six months of FY2026, reflecting continued progress towards our long-term goal of growing this part of our business. Using our updated methodology, penetration of private label was 26.6% of total merchandise sales. Private label serves multiple strategic purposes. It allows us to offer high-quality products at lower prices than national brands, It improves our margins, and it gives us leverage with national brand suppliers by providing a trusted alternative that keeps them competitive. Recent additions like avocado oil, fresh chicken, and purified drinking water demonstrate our focus on delivering exceptional value across key everyday categories. And we have been able to pass meaningful savings to our members as reduction in commodity costs allow, including price reductions on extra virgin olive oil of 31.5%, frozen french fries of 8.9%, and mozzarella cheese of 5.8%. Our private label water program is a good example of how private label can deliver simultaneously for members, for the business, and for the planet. By shifting supply for our 10 Columbia clubs to a local bottler, we reduce prices by approximately 23%, roughly $2 per pack, while also lowering our carbon footprint to reduce transportation and packaging made with 50% recycled content. We continue to invest in omnichannel capabilities to meet our members where they are. In the second quarter, digital channel sales reached $94.1 million, our highest dollar volume to date, up 23.4% year-over-year and representing 6.4% of total net merchandise sales. Orders placed directly through our website or app grew 10.9%, with average transaction value up 10.8%. As of February 28th, 74.7% of our members had created an online profile. And more than one in four members have made a purchase through Pricemart.com or our app, an indicator of the digital engagement we are building across our membership base. We see continued opportunity in this space, and we will keep investing to enhance the digital experience we offer our members. During the second quarter, we began migrating our mobile application to fully native iOS and Android architectures to enhance speed, reliability, and accessibility. This foundation will allow faster deployment of new features and help us deliver an outstanding member experience in our digital channels, turning to technology investments that enhance both member and employee experience and operational efficiency. In the first quarter, we completed implementation of our new point of sale system, Valera, across all English-speaking Caribbean markets. We have since begun testing in Central America and are making good progress on our rollout plans for Spanish-speaking markets. Early indicators show that Alera is delivering faster checkout times, improved productivity, and expanded payment options for our members, tangible improvements to the in-club experience as we roll out the platform across our network. Also in the second quarter, we furthered implementation of Workday's human capital management system to replace legacy HR applications and expect to go live by end of the third quarter. This upgrade is designed to enhance the employee experience with modern user-friendly tools while improving processes and strengthening compliance. It will also provide scalable, integrated data layer to support our future growth. Before I turn it over to Gualberto, I want to address a few additional topics. First, regarding U.S. tariffs, approximately half the merchandise we sell is sourced locally and regionally within Latin America. The other half is sourced from the U.S., Europe, China, and globally. In addition, on February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act. While the landscape of tariffs continues to evolve, it is important to note that we consolidate many of these international products through our Miami distribution center. They are shipped in bond and are not nationalized in the United States. We also take advantage of free trade agreements where we can. Additionally, we've been leveraging our expanding distribution center network and China consolidation capabilities to shift direct to market where feasible. In short, U.S. import tariffs do not apply to most of our merchandise, and as a result, We are not owed a refund from the U.S. government due to the most recent Supreme Court ruling. We continue to monitor the evolving trade policy environment, but to date, current U.S. tariff policy has not directly impacted our cost structure or business operations. We are also monitoring developments with respect to the ongoing military conflicts with Iran. We anticipate potential impacts to transportation costs or delays in the shipment or delivery of our products. The cost of fuel is a significant component of transportation costs. If our vendors or any raw material suppliers on which our vendors rely suffer prolonged manufacturing or transportation disruptions, our ability to source product could be adversely impacted, which would adversely affect our business. Also, fuel prices in some of our markets have increased significantly, which may reduce consumer demand, impacting frequency and purchasing power. However, we are monitoring and will do what we can to ensure we continue to provide the value we are known for in our communities. Lastly, I want to provide a brief preview of our March sales and some insight into our Semana Santa results. Note that Semana Santa this year started late March, early April versus mid to late April last year, so the comparability and growth for March will be skewed higher. However, our comparable net merchandise sales for the four weeks ended March 29, 2026 grew 12.3% in U.S. dollars and 9.2% in constant currency. I'm incredibly proud of the exciting assortment we offered. in the outstanding preparation and execution by our merchandising, supply chain, and operation teams, and also all who were involved at the company to make this year's Semana Santa a success. With that, I'll turn it over to Gualberto to walk you through the financial results.