PriceSmart, Inc.

Good morning or good afternoon, everyone, and welcome to Price Smart, Inc.'s earnings release conference call for the third quarter of fiscal year 2026, which ended on May 31st, 2026. After remarks from our company's representative, David Price, Chief Executive Officer, and Gualberto 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, July 9, 2026. A digital replay will be available shortly following the conclusion of the call through Thursday, July 16, 2026. 362-9199 for international callers and entering replay access code 5898084 pound. For opening remarks, I would like to turn the call over to Price Mart's Chief Financial Officer, Gualberto Hernandez. Please proceed, sir.

Thank you, operator, and welcome to Pricemining's earnings call for the third quarter of fiscal year 2026, which ended on May 31st, 2026. We will be discussing the information that we provided in our earnings press release and our thank you, which were both released yesterday, on July 8th, 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 and our earnings press release and our thank you. These documents are available on our investor relations website at InvestorsTopPriceMoney.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 Two 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, July 9, 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks related to the company's most recent annual report on Form 10-K. Thank you, Gualberto, and good morning everyone. Thank you for joining us today.

We are happy with the strong results from the third quarter. These results reflect the strength of our offering, the loyalty of our members, and the dedication and passion of every employee across our 14 countries who show up every day to do right by our members and to live our values. I want to take a moment to sincerely thank each of them. Their hard work and creativity is the foundation of everything we do. We've delivered these results against the backdrop of continued global uncertainty. Thank you for joining us today. She brings more than 25 years of leadership experience across major global retailers and has a strong track record of improving operations, strengthening teams, and driving meaningful business impact. Her people-centered, collaborative approach aligns closely with our culture, and her expertise in retail operations, modernization, data, and AI will support our next phase of growth. We also want to thank Wayne Sadin for his leadership and meaningful contributions to PriceMark during his time with us. Wayne, we are grateful for everything you brought to this company. We're also excited to welcome Sherry White, who joined us in January, and as of June 1st, has made the transition to Chief Merchandising Officer. Sherry brings deep merchandising experience from Petco, Target, and Unilever. Since joining PriceWire, Sherry has made an immediate and meaningful impact on our merchandising organization, and this appointment reflects our confidence in her leadership and vision for the road ahead. Paul Kovaleski has assumed the role of Executive Vice President of the Businesses, with oversight of pharmacy, optical, audiology, food service, bakery, and tire center. Paul has been with PriceSmart for many years and has made significant contributions across both merchandising and operations. We are excited about what this expanded scope means for those categories going forward. With that, let's turn to the highlights from the quarter. During the third quarter, net merchandise sales and total revenue reached almost $1.5 billion. Net merchandise sales increased by 12.5% or 8.5%. Compatible net merchandise sales increased by 10.7% or 6.9% in constant currency. Three of our recent club openings, Cartago, Tetzeltenango, and La Romana, are not yet included in our comparable sales numbers. During the first nine months of our fiscal year, net merchandise sales reached almost $4.3 billion and total revenue was almost $4.4 billion. Net merchandise sales increased by 11% or 8.6% in constant currency. Comparable net merchandise sales increased by 8.8% or 6.4% in constant currency. During the third quarter, our average sales ticket grew by 5% and transactions grew 7.1% versus the same prior year period. The average price per item increased 6% year over year, while average items per basket decreased 1%. As we mentioned on the second quarter call, the timing of Semana Santa shifts each year. This year, it fell earlier than it did in the prior year. So for a cleaner apple-to-apple view, it's worth looking at the eight-week period that captures Semana Santa in both years. For the eight weeks ended April 26, 2026, comparable net merchandise sales increased 11.2% or 7.5% in constant currency. Now, let's take a look at our regions. First, in Central America, where we had 32 clubs at quarter end, net merchandise sales increased 10.6% or 7.7% in constant currency. Comparable net merchandise sales increased 7.9% or 5.2% in constant currency. Our Central America segment contributed approximately 480 basis points of positive impact. to the growth in total consolidated comparable net merchandise sales for the third quarter. Second, in the Caribbean, where we had 15 clubs at quarter end, net merchandise sales increased 6.8% or 6.2% in constant currency. Comparable net merchandise sales increased 6.2% or 5.6% in constant currency. Our Caribbean region contributed approximately 170 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the third quarter. Last, in Colombia, where we had 10 plus at quarter end, net merchandise sales increased 35.3% or 18.6% in constant currency. Comparable net merchandise sales increased 35.7% or 18.9% in constant currency. Columbia contributed approximately 420 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. The increase is driven in part by the appreciation of the Colombian peso when compared to the same period last year, among other operational and market-driven impacts. In terms of merchandise categories, when comparing our third quarter sales to the same period in the prior year, our foods category grew approximately 12.5%. and our non-foods category increased approximately 12.3%. On the non-foods side, we reconfigured our sales floor and our warehouse club layouts to enhance the visibility of our soft-line offerings. And since making these changes, we have continued to see the benefits with improved sales performance in these categories. New product innovation and seasonal events also continue to play a strong role in our sales growth. We saw notable momentum from a range of limited-time and seasonal offerings, Houseware, small appliances, and sporting goods, which reinforces the treasure hunt experience our members come to our clubs for. The 2026 People World Cup is also a major global moment, and we always like to share in that excitement in our warehouse clubs and online with special merchandise and savings for that event. It's an occasion that naturally brings members together, and we see it as a meaningful opportunity to drive engagement and showcase our value. We've built, out of broader assortment around it, food, beverage, electronics, and soccer-themed offerings. along with digital campaigns featuring match schedules, watch parties, and credit card promotions in select markets. We've also seen our members share content around these promotions organically, which is really just a modern version of word of mouth, and it reinforces the kind of community feel that's always been at the heart of Price Smart. Moving on to other merchandise categories, our food service and bakery category increased approximately 12.6%. Next, let's turn to membership. We continue to grow our membership base with accounts increasing 8.6% year-over-year to over 2.1 million accounts. We saw particularly strong account growth in Colombia, up 11.6%, driven in part by the Stronger Peso, and Colombia has been one of our market leaders in auto membership sign-ups as well. We also reintroduced an auto renewal program and are seeing strong adoption across most markets. As Latin America and Caribbean become increasingly digital, auto renewal is one of the ways we're actively reducing friction in the member experience. For the quarter, membership income increased 17.6% over the prior year period, and platinum upgrades have been a significant contributor to that growth. This year is built for our most engaged members. Annual cash back on eligible purchases that reinforces loyalty and encourages higher spending. As of May 31st, Platinum accounts represented 21.3% of our total membership base, up from 16.1% in the same period last year. Our Smart Platinum promotions, which we typically run in March and November, have resonated well with our members in that they've given them a clear moment to see and act on that value. Membership income as a percentage of revenue held steadily at 1.7%. Thank you for joining us today. We are excited to announce that in the third quarter, we executed a lease for our first warehouse club in Chile, which will be in Comuna Las Condes in Santiago. This club will be located within the Mall Plaza Los Dominicos Shopping Center and is anticipated to open in the spring of 2027. This will be our first warehouse club located within a mall setting and will offer excellent accessibility and a retail environment that will resonate with the quality and value-focused members we will serve in Chile. This club establishes the foundation for what we believe can become a meaningful multi-club market over time. In addition to our planned warehouse at Mall Plaza Los Dominicos, we have entered into executory agreements to acquire land for two additional potential warehouse club sites in Chile. I would like to provide additional color on the scope of our investment in this market. We expect to spend approximately $100 million in capital expenditures on our first three warehouse clubs and our central offices in Chile over the next several fiscal years. This represents our first phase of investment, and we see potential for future phases given the opportunity that we see in the market. We have also begun building a strong team in Chile, including an experienced country general manager and a local buying team that we're really excited about. To date, we have approximately 20 employees operating out of leased office space as we plan for a larger, permanent central office. Consistent with our approach in other markets, we intend to offer a mix of local and imported goods. We also see an opportunity to meaningfully grow exports out of Chile. We already import a variety of products from Chile into our existing markets, and we believe we can grow that business further. In terms of growth in our existing markets, in the fourth quarter of fiscal year 2026, we purchased land for our 11th club in Costa Rica in Santo Tomas de Santo Domingo in the Heredia Falls. This club is approximately four miles east from our nearest club in Heredia and will be built on a six-acre property with an anticipated opening in the spring of 2027. While the new location is geographically close, the reality is that traffic congestion in Heredia is significant and meaningfully reduces mobility in the city. Consumer demand in this market continues to exceed expectations and supports the need for an additional warehouse club in this part of the city. We see a clear need for both clubs to effectively serve members, reduce travel time, and capture the full growth potential of the region. In addition to these two new clubs, we have also previously announced four other warehouse clubs currently in a pipeline. Our new club in Ciudad Quesada, Costa Rica, which is scheduled to open next month, two clubs in Jamaica, one in Montego Bay and the other on South Camp Road in Kingston, and a new club in Villanueva, Guatemala. Once these six new clubs are opened, We will operate 63 warehouse clubs in total. We also recently opened our sixth warehouse club in the Dominican Republic in La Romana in May 2026. We are proud to have incorporated sustainable design practices into that build and are encouraged by its initial performance since opening. In addition to new club growth, we plan to initiate warehouse and parking lot expansions as well as remodeling projects in fiscal 2026 and 2027 for our Via Brazil, Panama, and Barbados clubs. On the supply chain front, a central part of our transformation strategy is optimizing distribution to support our value proposition on price. Currently, we operate major distribution centers in Miami, Costa Rica, Panama, Trinidad, and Guatemala. During the third quarter, we began operations at a new distribution center in Colombia. This facility is especially important for us. It is in Bogota, a prime and highly strategic location from a logistics standpoint. Establishing our DC there allows us to take advantage of the strong concentration of local production in that region, and it underscores how significant Columbia has become within our long-term strategy and how much room for growth we still see in that market. In addition, we plan to open a distribution center in Jamaica during fiscal year 2026 and the Dominican Republic during fiscal year 2027. We also expect to relocate and consolidate our Miami cold regional distribution center into our existing Miami regional drive facility during fiscal year 2027, which will help us better leverage space, reduce redundancy, and improve efficiency across both operations. Alongside these new distribution centers, in the second quarter, we completed our implementation of our third-party distribution centers in China to consolidate merchandise source in the country. These VCs have already helped reduce landed costs and lead times through direct shipments from Asia to our local markets, which is exactly what we were looking for. Our vision for our global distribution center network is to help improve product availability, reduce lead times, and lower landed costs, among other efficiency gains. Alongside our fiscal footprint, we are continuing to make progress on the rollout of the VLX forecasting and replenishment platform and expect to complete the full implementation in the second quarter of fiscal year 2027. We completed onboarding our U.S.-sourced inventory procurement process, and now we are focused on our local goods procurement process. We are taking the time to ensure we implement relapse correctly and set up our teams for long-term success. This thoughtful approach has extended the timeline slightly, but it reflects our commitment to getting the transition right. During the third quarter of fiscal year 2026, we progressed further in our multi-page implementation of the EDA open-level trade management platform. which is designed to improve automation, trade compliance, and controls across global import and export operations. Over time, we expect it to improve data visibility and support the scalability of our international business. Moving on to other ways we're enhancing membership. Private label penetration on a comparable basis, excluding a reclassification of the produce category, increased 40 basis points in the first nine months of FY2026. Thank you for joining us. In addition, we are in the process of developing a new membership platform that internally we are calling the Membership Omni-Channel Transformation, MOT. We plan to use this unified platform to manage the full membership lifecycle across all channels and serve as our central system of record for member identity, transactions, and interactions. We expect MOT to replace several legacy processes with one consistent, auditable framework and ensure that activities like enrollment, Renewal, upgrades, and both in-club and digital transactions are low friction and provide consistent and clean member data across our markets. Down the road, we believe MOT will enable personalized communications, targeted promotions, and a frictionless sign-up and renewal experience for our members. Now let's turn to our digital and technology growth pillar. In the third quarter, digital channel sales reached $99.6 million, our highest dollar volume to date. up 26.2% year-over-year and representing 6.9% of total net merchandise sales. Orders placed directly through our website or app grew 20.3% with average transaction value up 4.4%. As of May 31, 75.8% of our members had created an online profile and 27.1% of members had made a purchase through PriceBuy.com or our app. We are encouraged by the continued momentum in digital engagement and will keep investing in this channel. On the club technology front, we completed implementation of our new point of sale system, Alera, across all English-speaking Caribbean markets in one of our Spanish-speaking countries, and we are continuing the rollout across our remaining Spanish-speaking markets. Early indicators show Alera is delivering faster checkout times, improved productivity, and expanded payment options for our members, tangible improvements to the in-club experience. On the back office side, we made meaningful progress on our implementation of Workday's human capital management system, rolling out phase one of the project this past quarter. This is part of our broader effort to modernize our HR infrastructure, improving usability for employees, driving greater efficiency and compliance, and supporting scalable growth through a more integrated data environment. Before I turn it over to Gualberto, I want to address a few geopolitical topics. Across our region, We are seeing several political transitions, including Colombia's recent presidential elections, with a new administration set state office in August. Along with recent leadership changes in Chile, Costa Rica, and Honduras, these developments are being accompanied by early signs of a more market-oriented and business-friendly approach in these markets. While it is still too early to assess the full direction and pace of policy changes, we are closely monitoring potential implications for the operating environment and overall business climate. At the same time, the global geopolitical environment remains complex and fluid. Trade policy uncertainty and the ongoing tensions in the Middle East continue to affect key cost drivers, including fuel, freight, and energy. These pressures have contributed to inflation across many of our markets, which in turn is impacting consumer purchasing power and increasing price sensitivity. Lastly, I want to provide a brief preview of our June sales. Looking forward into our current fourth quarter, our comparable net merchandise sales for the four weeks into June 28, 2026 were up 11.2% or 6.5% in constant currency. With that, I'll turn it over to Gualberto to walk you through the financial details.

Thank you, David. Continuing with the income statements. Total growth margin for the quarter was a percentage of net merchandise sales increased 20 basis points to 16% versus Q3 last year. This increase is primarily due to improved margins in our non-foods category. Margins may fluctuate up and down, but our strategy remains the same, and our philosophy continues to be identifying cost savings and operational efficiencies and packing on those savings to the networks to ensure the lowest possible price. Total revenue margins improved 30 basis points to 17.7% of total revenue from 17.4% in the same period last year. It was mainly driven by the increase in our total gross margin, as I just mentioned, and good results in membership renewals and platinum growth, as called out by David. On overhead costs, total FG&A expenses increased slightly to 13.3% of total revenues for the third quarter of fiscal year 2026. compared to 13.2% for the third quarter of fiscal year 2025. It was primarily due to higher warehouse class and other operation costs. In particular, warehouse class and other operation costs increased from 9.7% of total revenue from 9.6% in the same period last year, primarily due to expenses related to supporting our launch in Chile. General and administrative expenses decreased to 3.5% of total revenue from 3.6% in the same period last year, primarily due to the absence of one-time expenses we had in the third quarter of fiscal year 2025 related to the relocation of the San Diego corporate headquarters. SG&A is an important metric that we monitor closely. The expenses can fluctuate from quarter to quarter based on the timing of necessary investments to support the crisis. Our focus remains on making thoughtful, disciplined decisions that position the company for long-term growth and operational strength. Operating income for the third quarter of fiscal year 2026 increased 16.7% from the same period of last year to 65.6 million, or 4.4% as a percentage of revenue, versus 4.3% in the prior year period. Operating income for the first nine months of fiscal year 2026 increased 13.5% from the same period last year to $204 million or 4.7% as a percentage of revenue versus 4.6% in the prior year period. Below the operating income line, in the third quarter of fiscal year 2026, we recorded a $10.5 million net loss in total average expense and increased from a $7.2 million net loss in total average expense in the same period last year. The primary cost is the result of additional foreign currency construction costs. In terms of income tax, our effective tax rate for the third quarter of fiscal year 2026 decreased slightly to 28% compared to 28.4% for the third quarter of fiscal year 2025. For the nine months ended May 31, 2026, our effective tax rate is almost online at 37.4% compared to 27.3% for the comparable prior year period. Finally, net income for the third quarter of fiscal year 2026 was $39.7 million, or $1.28 per diluted share, an increase of 12.3%, up from $35.2 million, or $1.14 per diluted share, in the third quarter of fiscal year 2025. Adjusted EBITDA for the third quarter of fiscal year 2026 was $90.4 million, compared to $79 million in the same period last year. A growth of 14.5%. Medi-income for the first nine months of fiscal year 2026 was $128.9 million, or $4.18 per diluted share, an increase of 10%, up from $116.3 million, or $3.80 per diluted share in the first nine months of fiscal year 2025. Adjusted EBITDA for the first nine months of fiscal year 2026 was $277 million, compared to 245.1 million in the same period last year, a growth of 13%. Moving on to our balance sheet, we ended the quarter with cash, cash equivalents and restricted cash totaling 254.6 million, plus approximately 113.7 million of short-term investments, typically held in certificates of deposit. When reviewing our cash balances, it is important to note that as of May 31st, 2026, We had 44.1 million of cash, cash equivalents, and short and long-term investments denominated in local currency in Trinidad, which we could not readily convert into U.S. dollars. Turning to cash flow, net cash provided by operating activities reached 192.2 million for the first nine months of this period 2016, an increase of 15.1 million for the prior year period. The increase is primarily driven by the $17.5 million increase in net income without non-cash items and $4.6 million of overall net positive changes in other various operating assets and activities. It is partially offset by shifts in working capital, mainly due to higher overall inventory balances, which consumed $9 million of cash using operating activities. Inventory levels are trending higher than they have been in the past, as well as taking a more deliberate approach to ensure we're in a stronger in-stock position, particularly in non-foods, so we can better meet member demand and support sales momentum. Additionally, in the third quarter, the company entered into non-delivered forward foreign exchange contracts to mitigate foreign currency exchange rate risk associated with forecasted U.S. dollar-denominated inventory expenditures in our Palombian subsidiary. These contracts are designated as cash flow hedges, and are intended to reduce exposure to currency frustrations while providing greater predictability around expected inventory costs in Colombia and support more stable pricing. Net cash used in investing activities increased by $93.3 million for the first nine months of fiscal year 2026 compared to the prior year. Primarily due to a net increase in purchases, less proceeds of short-term investments of $46.2 million A 42.5 million increase in property and equipment expenditures and an 11.9 million increase in pool changes of non-term investments. It was partially offset by a 6.2 million increase in proceeds from disposals of property and equipment, mainly due to the sale of our project distribution center in Guatemala, and 1.1 million of cash received due to the proceeds from the dissolution of our joint venture. Net cash used in financial activities increased by $4.9 million for the first nine months of fiscal year 2036, compared to the prior year. Primarily due to a $19.8 million increase in repayments of short-term bank borrowings made of proceeds, a $3.1 million increase in the purchases of treasury stock upon vesting of a strict stock award to cover interest tax withholding obligations, and a $2.3 million increase in cash dividend payments. because partial offset by the $20.3 million increase in proceeds from non-term bank borrowings net of repayments. Looking ahead, we remain focused on sustainable growth, operational excellence, and delivering exceptional value to our members. While macroeconomic conditions across our region remain dynamic, our diversified geographic footprint and discipline operating model position as well for the remainder of the fiscal year. We appreciate the continued support of our members Thank you for joining our call today. I will now turn the call over to the operator to take your questions. Operator, you may now start taking our caller's questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again, press star 1. We do ask that you limit yourself to one question in one follow-up. For any additional questions, please re-cue. And your first question comes from John Bratt with Kansas City Capital. Please go ahead.

Morning, everyone.

Morning, John.

David, I just want to start with your Chile expansion. Obviously, this is your first new market since Colombia, I think, in 2011. And Chile is obviously a different market. It's smaller, but the GDP per capita is maybe 2x of that of Colombia. And I guess my question is, how are you approaching Chile maybe versus Colombia? It took a while. to scale up in Colombia and achieve a decent level of profitability. Can you compare the two markets and how you're approaching it? Now, I don't think you were necessarily with the company at the time when the Chile expansion began, but obviously you had people there that were. But can you talk a little bit about Chile versus Colombia?

Yeah, I'd be happy to talk about that, John. I think it's a good question. You know, it's something we've thought about and looked at really closely internally. You know, we, of course, always want to learn from experiences that we've had. And there's a lot of things that are different, I guess, objectively between the two markets. Like you referenced, they're dramatically different in size. They're quite dramatically different in GDP per capita, while the GDPs in the aggregate are actually quite similar. Columbia is kind of multi-nucleic from a city standpoint. While Chile does have multiple cities, a vast majority of the population, you know, over around 50% let's say, of the population is in Santiago with a major port around an hour and a half away versus, you know, multiple ports in Columbia. So there's some, on the other hand, it's not in the Caribbean Basin and it's on the Pacific and several thousand more miles away than Columbia. But, you know, there's There's some factors back in the mid-2000s that impacted Columbia significantly, and you'll probably recall that when we opened Barranquilla, the peso was 1,800 to 1, and I would describe that first location as a smashing success. We went back and looked at the data, and we had Big sign-ups with memberships, and people were flying from Bogota to the shop and sending those goods back home. And what happened was that there was a significant devaluation in the peso, where it got well over 4,000 to one, and that was a big hit to us, but also a big hit to all consumers in Colombia and multinationals. And since that time, you know, casino exited, macro has exited now, and most of the multinationals have really exited Colombia, and we've, you know, taken our licks you could say and have approved and for sure we don't want too late to take that long. But I'd say there's some factors that are separate. Now looking at the things for sure that we've learned and that we're aiming to ensure that we get right, I mean one is we're building up our local team and really taking the time to make sure we have the right team locally from a management standpoint, the right buyers. We know that that's critical. We know that it's going to be a mix of local and imported goods You have to give before you get in this business. So, you know, it's going to be really important for us to focus on pricing and ensure a great value proposition for the member. And so that, you know, will take time to get that scale and volume and having multiple locations will help. But really we've got to give before we get in the market. And that's critical because, you know, this is a business based on doing right by the member and being good to the share in their interest. And we aim to do that in Chile.

Thank you, David. When you think about Chile, when would you first begin? Two things. Number one, are the locals familiar with membership clubs? And then secondly, when might you first begin accepting, taking new membership in the Santiago store?

Sure. So, There is not a membership warehouse club today, but there's a couple things I'll note. One is, you know, for many Latinos around the region, especially those that are middle-upper income, it's not uncommon for people to travel to the United States to visit family at the shop. And certainly, Costco is a place where people tend to stop. That being said, there is a number of membership-like, I guess what you call... recurring revenue tech programs for other retailers and services. For example, there's Uber One, which is a monthly rate. There's Jumbo Prime, which is a monthly rate, and others. So people are not unfamiliar with paying a membership fee for a subscription service. That was the word I was looking for, a subscription service. Now, we have an annual fee versus a monthly fee, and we like to think about our fee being saved and earned for the member by the value that they get on their purchases Right? So that's going to be somewhat new, but I think, you know, I'm not concerned about reception of the idea of paying a membership because it's something that is happening for sure in the market already that we've seen. Raffi Prime is another one. I mean, all the lost milers and some of the retailers have it. Now, in terms of the membership, we haven't announced, we have not announced when we're going to start selling memberships. We certainly will start selling memberships several months at least before the opening. We always do that, actually. And when we open a new club, even in the new region of a country or a new part of a city, we'll start selling memberships at least three months before, if not more. And it really depends. We look at how much cannibalization there would be from other clubs. And in this case, since it's the first club, we'll probably start a little earlier just because it's going to be a brand-new concept.

Okay, thank you. One last question. In the quarter... You were able to reduce your turn-it-to-add balances quite sharply, and the currency transaction costs were $8.5 million versus $3.7 a quarter ago. Was there just an opportunity that arose to take advantage of it, or is this something that we might see more of?

Hi John, this is Gualberto. Thank you for the question. Yes, you're totally right. We sourced more U.S. dollars in Trinidad in this quarter. If you compare, for instance, versus last quarter, that would allow us to go down to 44 for one million of crap cash and non-competitive cash in Trinidad today. If you remember in Q2, we had lower transactional costs versus the same worth of the prior year, and that's exactly for the reason you just mentioned. We want to be very strategic and very opportunistic in sourcing our dollars, and we only buy when we believe we can get a good, fairly good transaction cost to access BPO's dollars. There are no changes in the policy or the strategy. Okay, thank you. Thank you, John.

Your next question comes from the line of Hector Mayo with Scotiabank. Please go ahead.

Thank you for taking my questions. President Colombia, could you please share a few details on why your operating income declined despite the compete? And then have a follow-up, if I may, or I can also rejoin the queue as instructor. No problem. Thank you.

The question is about Colombia's profitability?

Yeah, on why the operating income declined despite the compete, yeah.

Okay. Colombia had a little bit, as you know, we had a higher running operating cost in Colombia in general compared to our other markets. In the quarter, it's a little bit of a mix of warehouse expenses that have been going up. This is something that, again, we don't see this as a trend. We are watching closely the evolution of every line in the chain, and in particular Colombia being such a strategic and key market for us. But we are tracking closely. and we're working hard to get back in line.

Yeah, one factor I think I'll note, Hector, which you may be aware of, but, you know, there's been a lot of policy changes in Colombia and, you know, and we talked about earlier calls around the minimum wage change, which, you know, we were well above there, but we always like to, you know, make sure that not only are we above, but that we pay a premium versus other retailers and it's part of our value as a company that we want to ensure that we're paying an ethical wage even at the lowest levels, but You know, the other thing that happened in Columbia that's happening is that the work week has actually gone down in terms of the hours that are allowable for work without overtime. So we've gone from 44 to actually 42 hours. So that's a component of what's going on there as well.

In particular, the latest comment that David Price sent today was that he's not getting the warehouse time.

Yeah, exactly. Okay, I'll shed a little light there.

Yeah, perfect, perfect. And also, if I may, sorry, are you seeing better $3,000 to U.S. dollars conversion conditions, and would that reduce the need to charge opinion on goods in the country looking ahead?

No, we're not seeing any material change in the conditions in the market, like I mentioned a bit earlier. to continue the same level of illiquidity. I mean, we're following closely every macroeconomic announcement and evolution in Trinidad. I mean, I'm not in a position to say that that would change. So we continue with our premium in our costs to cover for this. As I said before, I think the most important thing is that all other things that we are evaluating internally to either reduce our need for U.S. dollars in Trinidad or get more creative ways or with, of course, compliance with all the regulations to get access to those dollars. But the market is difficult for me to anticipate. We don't see any reason to believe it could change. It's a tough situation.

Never.

It's a supported quarter, but we don't see any change in the underlying long-term trend. Yeah.

Got it, got it. And that one, could you quantify the impact that Chile is having on warehouse drops as well, the G&A line, and how should we think about this impact over the coming quarters?

In this quarter, so we are starting already, as you already saw in the thank you, investing in a previous frame in pre-opening expenses. So in G&A, it's about 10 basis points, the heat that we have this quarter for the pre-opening expenses in Chile.

Got it. And that concludes our question and answer session. I would now like to turn the conference back over to Gualberto Hernandez for closing comments.

Okay. Thank you, Operator. And thank you, everybody, for joining this call. It's very important we continue this communication and enjoy our interaction. So thank you very much. Have a good day. Thanks, everyone.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.