Good day and welcome to PriceSmart, Inc.’s Earnings Release Conference Call for the First Quarter of Fiscal Year 2016, the period ending on November 30, 2015. All participants are currently in a listen-only mode. After remarks from Jose Luis Laparte, PriceSmart’s President and Chief Executive Officer; and John Heffner, PriceSmart’s Executive Vice President and Chief Financial Officer, you will be given an opportunity to ask questions as time permits. [Operator Instructions] As a reminder, this conference call is being recorded on Friday, January 8, 2016. A digital replay of this call will be available through January 31, 2016, by dialing 888-203-1112 for domestic callers or 719-457-0820 for international callers. The passcode is 6532245. I would now like to turn the conference over to John Heffner. Please go ahead, sir.

Thank you and welcome to our earnings call for the first quarter of fiscal year 2016. We’ll be discussing the information that we provided in our earnings press release which we released yesterday, January 7, 2016 along with our 10-Q. The earnings release also included information about our net warehouse and comp sales for December. You can find both the press release and the 10-Q filing on our website www.pricesmart.com Please note that statements made during this call 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 annual report on Form 10-K for the fiscal year ended August 31, 2015 filed with the Securities and Exchange Commission on October 29, 2015. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect the occurrence of events or circumstances which may arise after the date of this call. Now, I will turn this over to Jose Luis Laparte, PriceSmart’s President and Chief Executive Officer.

Good morning, everyone. Happy New Year and thank you for joining us today. I am pleased with the Company’s performance in the first quarter with good sales growth in all markets. Positive overall comps, earnings per share of $0.78 compared to $0.68 a year ago and a good preparation by everyone for holiday shopping in December. It was not without its challenges however as the Colombian peso continued to decline against the U.S. dollar, creating a headwind for our growing business in that new and important markets and affecting our overall consolidated financial results when translated back to U.S. dollars. I will speak to these items and I will also talk about our December sales results which we released yesterday. Let me begin first with sales for the first quarter. Net warehouse sales in the quarter were $690.8 million, an increase of 8.6% when compared to the first quarter of last fiscal year with the opening of our second Nicaragua club in November, we ended the quarter with 38 warehouse clubs compared to 37 at the beginning of the quarter and 36 a year ago. Central America had sales growth of 10.5% in the quarter which included the effect of two additional warehouses, one in Panama opened back in June 2015 and one in Nicaragua opened in early November 2015 compared to the same period a year ago. In addition to good sales growth in those two countries where we had the new clubs, we saw very good sales growth in Honduras in the period in excess of 10%. While the Caribbean segment had somewhat lower growth at 6.7%, it did so without adding any new warehouse clubs essentially all comp growth. Trinidad and the Dominican Republic, our two largest markets in that segment of the Caribbean performed well while…

Thank you, Jose Luis. Let me highlight a few brief additional items with respect to our financial results for the first quarter. The currency situation in Colombia continues to have a measurable negative impact on the overall consolidated results of the Company when translated to U.S. dollars as Jose Luis alluded to. We are providing more information in our 10-Qs and 10-K by way of segment reporting and more recently in our monthly sales release to allow greater visibility to that affect relative to the operating performance of our other 11 countries and 33 warehouse clubs. Net income in the quarter of $23.7 million resulted in earnings per share of $0.78 compared to $0.68 a year-ago. The non-Colombia segments when added together improved about $0.02 from the equivalent of $0.79 per share last year to $0.81 per share this year. The Colombia segment contributed the equivalent of a $0.03 loss per share in the quarter but this was an improvement of about $0.08 per share from the year-ago period. While sales and membership income in Colombia grew from the year-ago period, the planned lower margins that we’ve been operating to for the past few quarters in response to the currency situation more than offset those items when compared to last year. The improved results from the year-ago quarter in Colombia were primarily from no pre-opening expense, we opened three clubs in Colombia in Q1 last year and much lower currency related losses as a result of efforts that we’ve put in place to minimize our exposure despite continued very high currency volatility. Total consolidated warehouse gross profit margins in the first quarter were 14.6% of net warehouse sales, a reduction of 73 basis points from the same period last year. The impact of the Colombia margin reduction on the consolidated…

Yes, sir. [Operator Instructions] We’ll go first to Dave King with ROTH Capital Partners.

I guess first off, in terms of the three stores in Colombia that were opened a little over a year ago. Can you talk about what the -- or do you have handy what the renewal rate was at those stores, in particular I think you said what it was excluding the stores, I think it was 87% but do you have for those stores in particular?

We don’t disclosed updates the numbers for those three -- I mean for those three specific clubs separately. We just highlighted what the result would have been in the total Company taking out those but unfortunately we don’t disclose separately each of the country. No.

And then, as I think about that, if I look at the sales trends at those -- what it looks like the sales trends were at those three stores since the anniversary of those openings, it seems like the sales dropped off a fair bit, right after those would have anniversaried or right after people would have been approaching their or hitting their one year of membership, is that indeed the case? I guess what I’m wondering is it seems to me like, maybe some of the membership drop off was people who actually were still buying which could theoretically still be a good thing then once Chia opens up but at the same time it’s sort of weighing on the new productivity as we see it. Is that a fair assessment?

Yes, the impact on some of the prices going up affected definitely the sales in those markets. I guess the only one that’s celebrated I guess that 13-month anniversary is Salitre and actually the one in Bogota and in the month of December actually had a good performance when measured in local currency. So, that’s the way we’re actually tracking right now our sales for the most part in those -- in that market because it’s the only way to really get a real comparison of our performance. And we feel -- think obviously Medellín and Pereira the other two still have the effect of the grand opening. So it’s a little bit hard to compare them until we really pass the 13 months and we get them to a level of comparison that will be fair and takes out the excitement of grand opening and all that. So we’re tracking those numbers and obviously hopefully we will be able to be reporting growth, at least in local currency which is our ultimate goal, not to start growing in that market when it comes to local currency sales.

But in terms of the membership renewals, just to make sure I understand it correctly. So, when they go to renew, is that after 12 months, how long is the membership, is it 12 months or is it 13 months?

It is 12 months; the membership expires. And actually some members do early renewals, they can renew at the rates [ph] first when they visit the club a month earlier, whenever they are there, they have the option. And some members obviously don’t [ph] visit probably before the membership expires and we get their renewal a month later. So, that’s why we saw a drop. And as I mentioned on my notes, in December, we actually saw a better renewal rate in Colombia because members probably didn’t visit us before December and the membership expired. We picked it up again in the month of December as they visit the warehouse or also we do that through our call center that we have in place to call members and give them the ability to renew online without -- over the phone, without having to visit the club. So, we do different -- we have different efforts in place to get those renewals done, especially in this particular market where we know we have a lot of main accounts expiring.

If I’m understanding correctly, you think that at least on the stores that those three stores, if there’s been any sales drop off, it’s been more related to price increases as opposed to members more buying dropping off in terms of no longer being members, is that correct? Am I understanding that correctly?

I would say that’s probably fair Dave. As we look at the information of members who did not renew in those clubs, their frequency of shops and their -- amounts that they purchased during their year of membership was substantially below those that did renew on average. So, we’ve done that analysis and it’s clear that ones who were not renewing were not taking advantage of either shopping with us in terms of either frequency or the amount of purchases.

Then maybe switching gears then to the price increases. So, I think you guys said that product margin at stores ex-Colombia was down, I want to say 43 basis points I think you said John, if I heard you correctly. Do you have what that is in Colombia, or is there a sense of how we should be thinking about price increases and when did those really go into effect where you started sort of passing along the price increases in Colombia?

Well I think the difference in the first quarter in Colombia was I think we indicated 300 and some basis points, 363 basis points difference from a year ago in terms of our margins in Colombia because it’s really in the second quarter when we really started reducing the margins. So, I think this comparison, if you look on a sequential basis was probably not overly significant from what we did in Q3 and Q4 of last year. But since we are comparing to a Q1 of year ago, that’s where we see again probably one this last quarter of a big year-over-year difference.

And then did you guys raise, start raising prices more in this quarter or post this quarter at all, more or so than you had been in the past in terms of passing along the currency related price increases to the consumer?

I mean to some degree, whenever we see spikes obviously on the currency, we have to reflect some of those -- obviously we are also at the same time trying to be more aggressive in our pricing. So, this it’s everyday change the state and we have to -- try to be reasonable as possible with price increases but at the same time with the currency of 3,200 doesn’t help sometimes.

And then lastly from me, switching gears, in terms of the stores in Barranquilla and El Salvador that you alluded to Jose Luis where you’re going to be doing the square footage expansions, do you have -- how should we be thinking about those in terms of how much square footage at least to the selling space you will be adding as a percentage of the sizeable box or just in terms of absolute numbers of square feet? Do you have anything that can help us there?

It varies by buildings obviously because each market and each building we have to analyze how much of space we can really add. We’re trying to add enough space to be able to expand obviously the sales floor in a way that we can improve our fresh business, at least where we are adding some of the space also some of our -- on our non-foods area. So, there are different variations. I will say that we’re probably adding 10% to 15% of sales floor space in each of those buildings. So that’s the goal. And more than anything also we’re trying to replace parking because we still have parking deck because as we expand we will be taking some of the parking spaces and we’re compensating the parking and both our buildings that can really use the additional parking because that has been one of the things we have learned through the years especially over the weekends and busy times it gets more difficult to find the parking space, those particular buildings. So it’s a new exercise that we’re doing and we’re going to evaluate the first two but we feel that’s a good approach. We have done some of the expansions in the past as far as sales force spaces. These two are the first ones that we do compensating with our parking deck in those particular buildings. So, we’re really looking forward as that can be a good way to keep growing some of those markets where you just improve the facility and you make it a better member experience when they shop there.

So, it sounds like that you see potential for this in other markets and these will sort of be -- two stores kind of tested, do we hold this that…

That’s kind of yes. Yes, definitely these are the first two but we really think we’re obviously working on other plans because we think it’s going to fill in a way that can be both the extra sales and obviously do better presentations in the club, more productivity inside the club, improve obviously the way we manage our merchandise. There are a lot of benefits to this, even at the registers. Most of this cases, we have refrigeration space, we have storage space, we have the space for the fresh areas, we have registers. So, it’s a win-win in a lot of areas for this warehouse.

[Operator Instructions] And we’ll go next to Rodrigo Echagaray with Scotiabank.

I want to revisit same store sales in Colombia for a moment, if I may. If you can talk about what sort of same store sales in local currencies; I know you don’t disclose that but I mean can we talk a little bit about what range are we probably seeing, how that has evolved in last couple of months? And I am just trying to gauge what the impact will be now that we are going to have three more stores from Colombia playing in the same store sales numbers starting June.

I guess just to start and maybe I’ll turn it over to Jose Luis, in December I think we had about 300 basis points difference and in that case only has three clubs in our comps. So, while I can’t predict what the currency is going to do going forward in terms of how we translate it back, we’re certainly operating -- we’re currently operating about 3,200 pesos to the dollar. When we add three -- what will be one more club into the comps in January and the other two in February, so we’ll end up with six clubs, it will certainly have I would guess a bigger impact, if the currency difference is similar to what we’ve seen in the last November and December.

But I guess before talking about I guess forward-looking, can we talk about same store sales trends in local currencies in the past couple of months in Colombia?

Yes that’s the way we are actually Rodrigo measuring or trying to measure our performance because it’s a better reflection of our business and it’s been impacted. We don’t disclose it separately; it’s been impacted. As I mentioned we have obviously Salitre or Bogota really performing at a better level in the month of December. And going forward that’s our goal to keep track of those.

And Rodrigo, I think even though we don’t specifically disclose that I think probably we get a pretty close estimation, given the growth in our sales in total and devaluation we are talking about I think probably estimate what that would like roughly in local currency.

Now I guess I mean we can probably take this offline but not my -- my calculations tell me that they may be negative in local currencies given that you have a 5% increase in same store sales in -- without Colombia and 1.7% increase consolidated given that there is only three stores from Colombia in the same store sales count. I mean from what you tell me and from what I hear, even though there is a lot of challenges in Colombia, things for the most part are going okay. And I don’t know if I can understand that negative same store sales number in local currencies in that context.

Well I think when you take a look at once we get all the clubs in the comp base, we are always dealing with the -- so that we have mentioned the excitement of a new opening when we opened in October and November which is why we wait 13.5 months before we add a new club into the comp base.

And one other question on Colombia. Now that currency has devalued, do you see more opportunities on the real estate front, are you accelerating the lookout for new stores there, do you see better prices of real estate or opportunities?

We definitely did in a slowdown especially in city like Bogota we are still continuing; we are really putting more efforts in our efforts of finding sites. I don’t know if there has been more opportunities necessarily that came up in the last few months. But we believe that we are not going to slowdown in that respect. Obviously the opening of Chia will give us a better indication; it’s going to serve the north of Bogota. And we are still really optimistic with city, the size of Bogota where obviously given the number of accounts that we have in the crew and club in Bogota, we know that there is opportunity to open more locations in that city. So that’s definitely an area of opportunity that we don’t want to lose obviously focus, Rodrigo, and we will continue focusing on that area.

[Operator Instructions] As we have no further questions, I would like to turn the conference back over to John Heffner for additional or closing remarks.

I want to close things off. Thank you, Kim. This ends our call. Thank you all for participating with us today.