PriceSmart, Inc. (PSMT) Earnings Call Transcript & Summary

Welcome, everyone. My name is Robert Price, Chairman of the Board of PriceSmart. It is my pleasure to welcome you to the 2021 Annual Meeting of the Company's Stockholders. As a result of the public health and travel risks associated with the COVID-19 pandemic, we are hosting our meeting virtually this year. We have stockholders attending via the web portal and the 800 number that we have provided. I'd like to now formally call to order the annual meeting. The meeting is being held to elect directors, to hold an advisory vote on executive compensation, to approve an amendment to the company's 2013 Equity Incentive Award Plan, to ratify the selection of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending August 31, 2021, and to transact such other business as may properly come before the meeting. We will -- we first will formally address the 3 proposals that are before this meeting. Upon adjournment of that formal portion of the meeting, I will make a few comments, followed by a brief presentation by Sherry Bahrambeygui, PriceSmart's CEO. At this time, I would like to introduce the individuals who are nominees for election to the Board of Directors. Jeffrey Fisher; Gordon Hanson; Beatriz Infante; Leon Janks; Mitchell Lynn; Patricia Márquez; David Snyder; Edgar Zurcher; Sherry Bahrambeygui, Chief Executive Officer of PriceSmart; and myself, Robert Price. We are also joined here today by Ernst & Young, our independent auditors. Additionally, I'd like to introduce Francisco Velasco, General Counsel and Secretary of PriceSmart, who will now make a preliminary comment.

Thank you, Robert, and thank you, everybody, for joining our call. Please note that the statements made during this meeting may contain forward-looking statements concerning the company's anticipated future plans, revenues and related matters. These forward-looking statements include, but are not limited to statements containing the words expect, believe, will, may, should, estimate and similar expressions. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's current report on Form 10-K filed with the Securities and Exchange Commission on October 30, 2020. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect the current set of events or circumstances that may arise after the day of this meeting. I would now report on the mailing of the Notice of Annual Meeting and proxy materials and advise if there is a quorum preset so that we may begin. The Notice of Meeting, proxy statement, form of proxy and the company's annual report were all distributed on or about December 18, 2020, to all stockholders of record as of December 7, 2020. As of the record date of this meeting, there were 30,738,334 shares. I have the official stockholder list showing the name, address and the number of shares held by each stockholder of record as well as an affidavit certifying the mailings. The list of stockholders and the affidavit of mailing will be available for stockholders desiring to review them. Patricia Klassen, Vice President and Associate General Counsel of PriceSmart, has been appointed inspector of elections for this meeting. Ms. Klassen is with us today and took the oath of inspector of elections earlier today. She has reported that there are represented at this meeting, in person or by proxy, at least 96% of shares of common stock outstanding. That total is more than a majority of voting power of all shares, and the meeting may proceed.

Thank you, Francisco. A quorum is present and the meeting is, therefore, properly constituted to transact business. The polls for the matters to be voted on at this meeting are now open. Any stockholders who haven't yet voted or wish to change their votes may do so by clicking on the Voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or voted via telephone or internet and do not want to change their votes do not need to take any further action. Now we will address the proposals. The first proposal for this meeting is the election of directors. The slate of nominees for the Board of Directors consists of 10 nominees for Director. Information about the 10 nominees is set forth on Pages 5 through 10 of the proxy statement. The second proposal for this meeting is to approve or disapprove on an advisory basis the compensation of the named executive officers as disclosed in the company's proxy statement for this annual meeting. The Board of Directors is recommending a vote for the approval on an advisory basis of the compensation of the named executive officers. The third proposal for this meeting is to approve an amendment to increase the number of shares of common stock available for the grant of awards under the 2013 Equity Incentive Award Plan. Our Board of Directors approved the proposed amendment to the 2013 Plan in November 2020, subject to stockholder approval. If approved by our stockholders, the amended 2013 Plan will become effective as of February 4, 2021. The Board of Directors is recommending a vote for the approval of the proposed amendment to the 2013 Plan. The fourth proposal for this meeting relates to the ratification of the selection of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending August 31, 2021. The Board of Directors is recommending a vote for the ratification of the selection of Ernst & Young as the company's independent registered public accounting firm. The polls will be closing shortly. If you plan to vote at the meeting, please do so now using the Voting button on the web portal. I will now ask the named proxies to cast their ballot. And once they have done so, the polls will be closed. [Voting]

Now that everyone has had the opportunity to vote, I declare the polls for the 2021 PriceSmart Annual Meeting of Stockholders closed. Mr. Velasco, are the specific results of the balloting available?

Yes. Thank you. The inspector of elections has provided her report on the results. With regard to proposal 1, the election of directors, a plurality of the shares present and voting in person or by proxy at this meeting is required to elect directors. Each of the 10 nominees on the slate of nominees for the Board of Directors has received affirmative vote of a plurality of the shares present and voting in person or by proxy at this meeting, with each nominee having received an excess of 95% of affirmative votes, considerably more than required for their election. With regard to proposal 2, the advisory vote on executive compensation; proposal 3, the approval of the amendment of the 2013 Equity Incentive Award Plan; and proposal 4, the ratification of the selection of Ernst & Young LLP as the company's independent registered public accounting firm, a majority of the aggregate shares present and voting in person or by proxy at this meeting is required for approval. The compensation of the named executive officers as disclosed in the proxy statement for this meeting was approved by no less than 89% of the shares present and voting in person or proxy at this meeting. The approval of the amendment to the 2013 Equity Incentive Award Plan, as disclosed in the proxy statement for this meeting, was also approved by no less than 95% of the shares present and voting in person or by proxy at this meeting. The ratification of the selection of EY, as disclosed in the proxy statement for this meeting, was approved by no less than 98% of the shares present and voting in person or by proxy at this meeting, which is considerably more than required.

Thank you, Mr. Velasco. I declare the formal meeting to be adjourned. I would like now to make a few comments, and then we'll turn the meeting over to Sherry Bahrambeygui, who will follow with her own comments. I would like to begin by thanking our stockholders for their faith in our company and their continued confidence in the direction our company is going. We have made a lot of progress in this past year amidst a very difficult operating environment. And in that regard, I want to make special mention and give credit to Sherry Bahrambeygui, our executive team, the management group and our entire core of 10,000 employees, most of whom are not in the United States and who have been so dedicated during these very difficult times. And I think it's just a wonderful statement of what we could accomplish together as to what's happened in what has been such a tough environment. So having said that, I'd like to go ahead now and turn the microphone over to Sherry Bahrambeygui.

Thank you, Robert. Good morning or good afternoon, shareholders and everyone that's listening in on this call. Welcome, and thank you for taking the time to be with us here today. This is the first time we're doing this virtually. So I'm sorry I can't see your faces but, hopefully, it will be close to as effective as before. I'm very, very proud of what our team has accomplished in this last year. We all know what the challenges have been. It's affected every one of us, no matter what industry, what line of work or what our personal circumstances are. But I can say that with the team that we've had here, the accomplishments have been remarkable given the challenges that we faced in our 13 markets. But just to share with you a few of the highlights. In this last year since the pandemic really became a major challenge and sort of a black swan event for us, we relaunched our e-commerce platform, which enables us to transact online and enables us get closer to our members virtually at a time when we were forced to be physically distanced from them. We launched our Click&Go delivery and pickup -- curbside pickup service, to keep our member safe and to be able to get essential goods to them in a matter of weeks and have only expanded that and made it a more robust program now with opportunities to more conveniently pick up their merchandise and have it delivered. We opened 2 new clubs virtually, relying entirely on our local teams and the expertise of our local teams in country, specifically in Liberia, Costa Rica and in Bogota, Colombia. They have the full support and commitment of the leadership and management team in the United States, but we did this all virtually, and they were the ones that made it happen. And the talent that we saw in country and the ability to execute on our plans to continue to grow with new clubs was really remarkable. And it taught us a lot in terms of what the potential is with regard to the talent that exists in our countries. We also recently announced that we will have, I believe, up to -- we will be having 50 clubs in operation by the spring of 2022. So the path towards growth continues. Most importantly, during this last year, we kept our employees and our members as safe as possible. I believe that we led by way of example in our market. And in particular, I would like to thank our Board and Robert Price, who were always prioritizing the safety, the well-being and the stability of our employee base throughout these really challenging times. There was nothing spared in terms of making sure that we were taking care of our employees, and I always have the full support of the Board and our Founder on every decision we made to benefit our employee base. And so I'd like to particularly thank them for that. Importantly, we've also evolved the way we work together in a manner that, I believe, is going to be very effective and bodes well for the aspirations of our company as we continue to innovate and create value for our members. So thank you to our Board, who's gone above and beyond. They've spent tremendous time being there for everything that we needed and truly has become part of the team in many ways and the protection that we've been able to afford our employees and our members as a result. Thank you to the dedication of all of our employees. You've excelled in every way imaginable. And thank you to our shareholders who continue to support us, support management and support the Board and who share in our excitement about the future for PriceSmart. Stay safe.

Thank you, Sherry. I think now we might have time for just a few questions, and I would -- I don't know whether there are any questions in the queue or what's going on. So I will kind of leave that up to Sherry to check out.