PriceSmart, Inc. (PSMT) Q3 2018 Earnings Report, Transcript and Summary

Good day, and welcome to PriceSmart, Inc.’s Earnings Release Conference Call for the Third Quarter of Fiscal Year 2018, ending on May 31, 2018. All participants are currently in a listen-only mode. After remarks from Jose Luis Laparte, PriceSmart’s President and Chief Executive Officer; and Maarten Jager, 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, July 06, 2018. A digital replay will be available through July 13, 2018, following the conclusion of the call by dialing 877-344-7529 for domestic callers or 412-317-0088 for international callers, and entering replay access code 10120109. I would now like to turn the conference over to Maarten Jager. Please go ahead, sir.

Thank you, and welcome to our earnings call for the third quarter of fiscal year 2018. We will be discussing the information that we provided in our earnings press release and our 10-Q, both of which we released yesterday, July 05, 2018. This morning, we also released our report on June warehouse sales. You can find both press releases 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, 2017, filed with the Securities and Exchange Commission on October 26, 2017. 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, and thank you for joining us today. A lot of activity – activities took place during our third quarter at PriceSmart, and we will spend the next minutes providing more details on our results. This is Maarten Jager’s first conference call with PriceSmart as our Chief Financial Officer, and we’re happy to have him as part of our team. Let me start with our net merchandise sales that were $750.5 million, an increase of 5.6% compared to the third quarter last year. This quarter, we have 41 warehouse clubs compared to 39 clubs a year ago. In terms of comparable sales for the 13-week period ended June 3, we saw an increase of 12 – of 2.7%. Net income for the third quarter of fiscal year 2018 was $18.7 million, or $0.61 per share, compared to $18.8 million, or $0.62 per share in the comparable period last year. I would like to add though that the Aeropost acquisition negatively impacted earnings by $0.08 per share. In addition, during this quarter, we had higher operating expenses from the addition of two warehouse clubs and the ongoing investments that we recorded in SG&A associated with specific initiatives that adds near-term costs, but as mentioned previously, we believe these will help drive additional growth in the future. Let me now provide you more detail on our sales growth. The 5.6% growth on merchandise sales resulted from a 4.6% increase in transactions and a 0.9% increase in average ticket. When we look at the different regions, we have Central America with a 2.9% increase on total merchandise sales, but a decrease in comparable sales for the – of 1% for the third quarter. We estimate that the transfer of sales related to the opening of the Santa Ana club in Costa Rica negatively impacted our comparable sales for this segment of Central America by approximately 110 basis points for the quarter. In addition, we saw decrease of sales in two markets in this segment, one being Panama, whereas reported on the last earning calls, we have seen general slowdown in their economy after several years of robust growth. The other market with a slight decrease in comparable sales versus last quarter was Nicaragua, which finished with a decrease of 1.2% and negatively impacted the comp sales for Central America by 90 basis points. I will provide greater detail later about this country and our expectations going forward, given the political challenges it is currently facing. Honduras, El Salvador and Guatemala, all had positive comparable sales. The Caribbean region had a total merchandise sales growth of 6.7% and comparable sales of 4.5%. Trinidad, Aruba, and Jamaica, all reported single-digit comparable growth. Dominican Republic had negative comparable sales and USVI had a double-digit growth due to the incremental business we’re capturing as a result of other competitors on the Island, still recovering from the hurricane in September 2017. Barbados is the only market in this segment having challenges in their economy and it ended the quarter with a decrease in sales compared to last quarter. In Colombia, we finished with a double-digit growth of 17.4% in comparable sales. The currency remains relatively stable only moving within a small band just below 3,000 pesos to the dollar level. It is good to see this market showing improvement, not only in sales, but also on margin, increased membership accounts and 1.6 million in additional operating income compared to the same period a year ago. This morning, we also released our June sales. We finished the month with sales of $243.7 million, representing a growth of 5.9% versus the same month a year ago. In terms of comparable sales for the four-week period ended July 1, 2018, our increase was 0.6%. The comparable sales figure was impacted by different events. Nicaragua sales were down almost 24%, which affected our comparable sales growth by 92 basis points. The addition of the San Isidro warehouse in Dominican Republic, which is transferring a portion of our sales from two of our existing warehouses and Panama and Costa Rica comp sales. While we did have some impact – positive impact in June in some departments like electronics, TVs in some countries, in general, the traffic and transactions in the clubs got impacted by some of the activities related to (indiscernible). I would like to spend a few minutes talking about some of the merchandise categories and the highlights from this quarter of 2018. We continue to see good results with even double-digit growth in gourmet deli, fashion apparel, and toys. Other departments with high-single-digit comparable growth includes candy and nuts, produce, poultry and sporting goods. Electronics, as I mentioned, had single-digit growth, driven especially by incremental business on TVs during the last month of the quarter May, which is the effect of World Cup Russia 2018. TV sales, as I mentioned, remained also strong in June before the beginning of the game. Our foodservice and bakery business also reported growth during this quarter. Challenges or slight decreases were seen in areas of foods like soda and juices and in non-foods, we saw decreases in small appliances, housewares, computers, and furniture. I would also like to comment on some other initiatives that we have in place within the company that keep creating excitement in all our clubs and intend to make the membership a bigger part of our members life. As I mentioned before, we’ve started the optical business last September 2017 in Costa Rica. And so far, we only have two locations with that service, but we are looking at adding that to the rest of our Costa Rica locations in the next few months. Our Regional Distribution Center, which we’ll open in Costa Rica at the end of August or early September, we’ve also been keen to improve the flow of goods throughout the Central American region and reduce our landed costs. While working on two product distribution centers, one in Costa Rica and one in Panama, that will help improve our sourcing of produce, both for imports and local by sourcing directly from local and regional farmers ensuring quality and freshness and passing more savings to our mix. Merchandise margins for the period came in at 14.6%, compared to 14.0% a year ago as a result of additional marketing money during this quarter. For the nine months ended May 31, 2018, margins remained consistent with last year at 14.5% as our intention remains to transfer any savings back to our members, expecting to see results in incremental sales. Moving on to membership, we finished the quarter with approximately 1.6 million accounts, up 3.2% from a year ago. Membership income was up by 6.8%. The 12-month renewal rate at the end of May was 85%. Excluding Colombia, the renewal rate was even higher at 87%. We also saw improvements in the renewal rate in Colombia that at the end of May finished at 78% compared to 76% a year ago. Platinum membership is now in place in Costa Rica, Dominican Republic, and Panama, and we’re planning to add Trinidad and USVI before the end of this fiscal year 2018. During the third quarter, we completed the expansion of our Pradera club in Guatemala, holding a special events with members and government representatives. This expansion provided more sales floor space and additional parking space for our team some club in Jamaica, we’re doing a similar expansion that should be completed during these four quarters of 2018. In terms of new clubs on May 3 we successfully opened our fourth warehouse club in the San Isidro area of the Dominican Republic East of Santa Domingo. Although we transferred some sales from the other two clubs in the city, we keep seeing new sign ups and even some members coming back to renew and shop in these locations that is more convenient from more than in this area of Brazil. In these same markets, we’re making progress with the construction of our fifth club in this country with an opening expected for spring 2019. We also started construction during the third quarter on another new club located in the country of Panama. We acquired a site of approximately 223,000 square feet in the city of Santiago, the capital City of the Province of Veraguas. . : We may see a slight transfer of sales from some members who make the long trip to the David. But we’re hopeful that with a PriceSmart location in closer vicinity, we will see increased shopping frequency from current members, as well as attract new members from the neighboring communities in that area. The distance to Panama City is about 160 miles. This will be our sixth club in the country of Panama. We are aware of the way retail business has been involving, especially in the United States, given the fact that technology and online are becoming more relevant for all the retailers in this country. We do believe that even though in our country, it is not as developed, it will continue to become more important, too. .: This is driven in some cases to the availability of land, which is the case for the Money Center [indiscernible], but also by our new initiative to work on that integration of the brick-and-mortar and the technology online. In fact with that hope, we – with that, we hope to maximize our sales floor space and reduce the investment into our construction and potentially land. Some of the new items – some of the items on categories may not be represented with the same amount of item in these new clubs. But with our e-commerce platform now in development, we believe we will be able to offer our members most of the selection of items available in the other warehouse club. This initiative is important, because again, it will allow us to find more opportunities for land in the future, especially in proven series at a reduced investment, not only in construction, but also on Santa Ana with utilities, et cetera. In conclusion, we keep looking at ways to enhance the value proposition to our members and the Aeropost acquisition to help us combine it with our warehouse club formula that has been successful for many years. During this third quarter, we finalized acquisition of Aeropost in – on March 15. As a reminder, Aeropost is a cross-border logistics and e-commerce provider in Latin America and the Caribbean. The Aeropost service is an exciting high-value addition to the products and services we offered to our members. The combination of our two companies brings PriceSmart brick-and-mortar excellence, buying power and distribution and operational expertise together with Aeropost exceptional cross-border logistics delivery option and e-commerce know-how. ’s: Let me remind everyone that one of our goals with acquisition of Aeropost was to benefit from their expertise in technology and use that to find better ways to serve our members. With that said, one of the tasks already initiated by the Aeropost setting is a development of our – the development of our new e-commerce platform, which will be launched in some countries at some point during our next fiscal year 2019. Much activity took place in the third quarter related to the integration of Aeropost within our company. The integration includes additional cybersecurity measures, consolidation of the financials within PriceSmart, Inc.’s financial results and getting to know more about the Aeropost team. During his remarks, Maarten will spend sometime – some more time describing how the integration of Aeropost is impacting our financial results. Now returning to my comments about sales. In Nicaragua, we experienced a slight decrease in sales during the third quarter, driven by political challenges that the country is facing under the government of Daniel Ortega. In the past few weeks, Nicaragua protesters have voiced their strong opposition to the president. Negotiations between protesters and the governments have broken down and the violence shows no signs of abating. At the point, Nicaragua is experiencing its largest crisis since the end of the Civil War in 1979, and as a result, security in the country is deteriorating. We have been operating our warehouse clubs with limited hours of operation as most of the retailers are doing to allow employees to commute back to their homes before nightfall, while it is safer to move around the city. We have also seen our sales in some categories affected, especially in the non-food areas since most of the people shopping in the clubs are just by make basic consumables and food items. We then reduce the amount of non-shipments – non-food shipments we’re bringing to this country. The situation may also had an impact in the flow of merchandise along the Central America region, as some of our merchandise out of Panama and Costa Rica needs to cross Nicaragua to make it to the North and Central America locations. Likewise, some shipments coming south and from the north have to cross the country of Nicaragua as well. In conclusion, participants on protests have caused major disruptions to all businesses in Nicaragua, as well to supply chain that pass through it. In the month of June, as I mentioned a few minutes ago, our sales in the country experienced a decrease of almost 24% versus last year. Our priority in this country has been the security and wellbeing of all our employees and our members. It is still uncertain how fast the country will find a solution to these problems, but we’re sure hope it comes soon and provide the relief that such a great country we set. Last but not least, I would like to comment on our recent management change within our merchandising team. Starting August 1, 2018, we welcome Ana Luisa Bianchi, as the new EVP and Chief Financial Merchandising Officer for PriceSmart, Inc. Originating in Guatemala, Ana Luisa currently live in Columbia, where she has been for the last seven years helping us with all the merchandising efforts as we enter into that country. She has been with PriceSmart since 1998, working in different merchandising positions. Ana Luisa and her family will relocate to our Miami office in the next year, a strategic location for our new CMO to be able to travel to all our locations, interact with the U.S. buying team, operations team and with our Miami D.C. Congratulations to Ana for her new role. Jesus Von Chong, who was running our merchandising team for almost two years and has been with the company for almost 22 years, will assume a new role, focusing solely on the local regional volume of the Central America, the Caribbean and the Columbia region, representing nearly 50% of our global sales volume. I want to thank Jesus for his contribution in his role, as our Chief Merchandising Officer for the past two years. Thanks, again, for joining us today. After Maarten’s remarks, we will take your questions.

Thank you, Jose Luis. It has been a very good first two months, and I’m excited to be here on my first conference call, representing PriceSmart, a company with such a terrific history and a bright future. PriceSmart is well-positioned with a strong value proposition for its members, a unique competitive position in our markets and a strong balance sheet that enables future growth. It is also exciting to see Aeropost, now an integral part of our team and energized to bring even more value to our existing members as well as draw new ones. Financially, our focus is threefold: One, to continue to deliver profitable growth; second, to deliver operating efficiencies; and third, to deliver good shareholder returns, while making continued strategic investments that drive growth. As Jose Luis mentioned, Q3 net merchandise sales increased 5.6%, with comparable net merchandise sales increasing 2.7%. As such on a nine-month basis, net merchandise sales increased 5.2%, with comparable net merchandise sales increasing 3.0%. Our membership income posted good results with renewal rates ending steady versus a year ago and our gross margins expanded by 60 basis points. This leads us to SG&A, which increased to 12.9% from a 11.6%, driven in large part by the Aeropost acquisition and the opening of the new clubs this year. Our reported financials include $8 million of Aeropost SG&A, which in turn includes the effects of amortization, operating expenses and general and administrative expenses. Foreign exchange transactions and the revaluation of monetary assets and liabilities resulted this year – this quarter in a $575,000 currency loss, which compares to $1.1 million gain in the third quarter of last year. Our effective tax rate, excuse me, declined to 30.3% versus 31.0% a year ago. This quarter – quarter’s 30.3% includes a beneficial impact from the tax reform of 4%, or $0.03 per share. Recall, last quarter, the impact of the tax reform resulted in a $12.8 million reduction of earnings, or $0.42 per share. As such, on a nine-month basis, the effective tax rate is 42.5% versus 31.0% for the same period last year. Going forward, we expect our tax rate to stabilize roughly at the level reported for Q3 after adjusting for this quarter’s 4.0% beneficial impact from tax reform. As Jose Luis mentioned, Aeropost brings us several strategic benefits, not the least of which is technology. For the third quarter, we have consolidated the Aeropost acquisition into our finance – financials. And as part of that consolidation, we completed the purchase price allocation process. Goodwill and intangibles were quantified and broken out as follows. Technology was $11.0 million, trademark was $5.1 million and goodwill was $16.0 million. And as you know, while goodwill is not amortized, technology and trademark will be amortized by five years and 25 years, respectively, and while non-cash will impact our income statement going forward. Another non-cash charge that will be affecting our income statement through the fourth quarter of fiscal year 2019 is the amortization of $3.8 million in escrow for payment to the sellers of Aeropost, which is considered contingent compensation from an accounting perspective. As it relates to our cash flow, our operations generate strong cash flow and have historically provided us with a significant source of liquidity. Net cash provided by operations for the nine months ending May 31, 2018 improved by $3.9 million to $90.8 million versus $86.9 million a year ago. Net cash used in investing activities was essentially the same as the year ago, while finance activities used in net of $20.4 million primarily due to debt refinancing and loan payoff actions in 2018 versus additional net debt financing in 2017. We ended the quarter with $144.8 million in cash and $106.2 million in total debt, underscoring our low debt ratio. Trinidad exposure continues to be there, but has reduced somewhat with recent Trinidad to U.S. dollar convergence, and we have plans to further convert TT dollars into U.S. Our strong balance sheet and strong cash flow from operations enable us to continue to make the investments that are strategic importance to the business. Such as in real estate, we will continue to look for the opportunities to expand our business judiciously, as was the case this quarter with our land acquisitions in Panama and Dominican Republic. Secondly, in supply chain, we are continuing to invest in it and expect to soon open a regional distribution center in Costa Rica, along with the Panama Domestic Distribution Center reopened in September 2017, as well as the Miami Distribution Center to which we transferred during the third quarter of 2017. These are all examples of where we invest in order to improve our merchandise flow and our costs. Thirdly, investments in IT, we continue to evaluate where the best investments in IT are that both enabled future growth of our business, while delivering efficiency in our day-to-day operations. And as we have covered already, fourthly, the investments in the Aeropost integration. In closing, we had a solid financial quarter with growth in spite of challenges in several of our markets and earnings per share of $0.61, which includes a $0.03 beneficial impact from tax reform, offset by the $0.08 impact from Aeropost as Jose Luis mentioned in his remarks. Thank you. And I will now turn it back to the operator to take any questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Ronald Bookbinder of IFS Securities.

Yes, good afternoon. And seems like it was a nice quarter continued revenue growth, but on the $0.08 charge of Aeropost, how much of that was one-time related to the acquisition, and how much was ongoing operations?

Right, the – I’ll take that question. This is Maarten. The $8 million breaks out into $1.2 million of amortization, which I talked about of the intangibles as well as the contingent compensation as well as $4.2 million of operating expenditures and $2.6 million of general and administrative expenses. So I would say, there is not a one-time charge, but part of that to your question is non-cash, that’s the amortization portion and the other part were operating expenses and G&A.

So should we expect charges like this to continue going forward as you digest the acquisition?

Well, I’ll speak only to the amortization aspect of that. The amortization aspect, obviously as I laid out will continue into the next quarter and fiscal 2019. To give you a sense of what the magnitude of that might be, in Q4, the amortization impact which was $1.2 million this quarter will be $1.4 million next quarter. And for the entire year of fiscal 2019, it is expected to be approximately $4.8 million.

Okay. Thank you very much and Maarten, welcome aboard. Glad to have you.

Thank you.

Our next question will come from Rodrigo Echagaray of Scotiabank.

Thank you, and looking forward to meeting you in person, Maarten, and welcome. My question was related to Aeropost, and if you could maybe explain a little bit of what you expect in terms of growth optionality going forward. On the one hand, they had a set of customers that they bring with them, and that probably grows at a particular rate, and now you can also add to that platform all your clients in PriceSmart. So can you give us a sense of how, when, or where could these go in the mid-term? And if you can maybe also explain what could that mean for the profitability of that business, and if you are going to look at that separately or not?

Okay, Rodrigo, good to hear from you. Let me start, I guess, obviously, we’re excited about the opportunity of having all that Aeropost customers that obviously have access and do a lot of transactions in all these different countries, and obviously, we’re looking at this from a different perspective. First of all, there is an opportunity for us to capture some of those Aeropost customers that may not be PriceSmart members, and obviously, we’re working on our way to start doing some of that, so that not only we can add signups or new members to our membership base, but at the same time, obviously, be there to offer products for these – some of our products and membership to these customers now. On the other hand, we do realize we share some of those customers. We know that our PriceSmart members that already do Aeropost. And for that, obviously, we will keep adding benefits, while looking at adding benefits for some of those members, so that they do get more value for their membership and they have, let’s say, a reduced fee for whatever services they do with Aeropost or any shipments they do of merchandise through Aeropost. In addition to that, we’re looking at improving obviously the marketplace. Aeropost has a section of marketplace and we’re looking at improving that with our know-how of buying with our prices, with a lot of the things we do on relations we have with vendors in a way that we can expand that and obviously be there to offer more of those items to the members, getting them to the countries with the expertise that Aeropost has obviously in terms of speed, obviously clearing customs, all that things that obviously when you live in all these countries and you want to buy, obviously, you want to get. You want to know what is it that you are paying for your merchandise and get it right away to – in your hands. And also those are some of the benefits that, again, the combination of Aeropost with our PriceSmart’s expertise should be able to give us. And like – and obviously, as you mentioned, they are – Aeropost is developing also our platform, which is a key component. At this point, our platform won’t probably be launched until next year. They’re working – a portion of that maybe launched with some membership component probably by September, October, but the facility for the members to actually access the pricesmart.com platform will be in place during the spring 2019. So a lot of activities combined with the – with the Aeropost acquisition, Rodrigo. I hope that pretty much answers your questions.

Yes. No, that’s actually really clear. Thank you. And so if I understand correctly, you expect to have a PriceSmart website. And separately from that, you expect to also work on strengthening of the marketplace that Aeropost already operates, is that correct?

That is correct, yes. Eventually, I mean, one of these Aeropost website will continue existing. Our PriceSmart website will be new. It would be somewhere connected. And definitely, one of the key things that we’re looking at doing is improving the marketplace and just take advantage of that again with good opportunity we have of our buying power and Aeropost expertise.

Okay, that make sense. I mean, definitely, marketplace is very important, I think, in some countries like Brazil had – pretty much every other retailer has been doing that. So I think, you guys are still in a good position to that early in the race. And then just finally on the Nicaragua distribution issues, how important are – is all the inventory that goes through Nicaragua that may impact sales from other countries?

It does affect more than anything. We have a big portion of our – some of our region as products are produced in Costa Rica or some of them in Panama or shipped through Panama. So we’re looking at alternatives that was reopened. In the past month, even though you can still cross merchandise, obviously, it is not completely stopped, it is a little bit more of a hassle or obviously freight companies to go through Nicaragua. There’s been – it’s just becoming very slow. So it has some impact definitely for the North American region, especially North and Central America region. We’re trying to reduce that by going through different alternatives. Instead of land, we’re going oversea to try to reduce the impact. But definitely, I mentioned it, because it can be, if things continue to deteriorate in Nicaragua, you can have more of an impact unfortunately for us, not only on Nicaragua itself, but a little bit to some degree in the rest of the region. Hopefully, this is affecting actually the whole flow of goods, not only for us, but for the whole region and obviously, Central America has a lot of dependency between the countries. So I know that there’s a lot of pressure to try to fix these and obviously to try to get things back to normal because of how relevant that can be for all the countries and all the vendors and everyone in that region.

Great. And obviously, just given the location probably Salvador, Honduras and Costa Rica would be the ones that would be the most effective?

That’s correct. Yes, those are the ones that actually we receive the goods from especially from Costa Rica and Panama and obviously, we have to pass through Nicaragua. But there are – those are exactly the three countries that can get a little bit more of this impact, and we already saw some of that with a couple of hardest stocks in the last month. And again, we’re working hard on trying to resolve them sourcing different ways, but still it’s a relevant thing going on right now.

Great. Thank you very much, guys. I appreciate it.

Thank you. Talk to you soon, Rodrigo.

The next question comes from [Nick Daly of CME]. [ph]

Hi, good morning. Stock is down rather sharply down 11% acting like they’re lowering guidance for the year and should investors assume that you’re going to be lowering guidance for the year?

We don’t give guidance on our earnings. I think that I have been pretty transparent in terms of what the impacts are this quarter, both the two big factors are obviously tax reform, which this quarter was relatively small on EPS, $0.03, and Aeropost, and within that are the non-cash elements that I discussed earlier, which will continue to impact and I laid out in an answer to a prior question.

Okay. But you feel pretty good about the business as a whole?

I feel very good about the strategic direction that we’re heading in the fundamentals of over bricks-and-mortar business and our future, yes.

.:

And where do you stand in terms of stock repurchase, is there one currently authorized?

No.

No, we don’t do anything on the stock repurchase.

Okay.

Okay, all right. Thanks very much.

You’re welcome.

[Operator Instructions] Our next question will come from Jon Braatz of Kansas City Capital.

Good morning, Jose and Maarten.

Good morning, Jon.

A couple of questions. Number one, I appreciate the break out, Maarten, in terms of the operating expenses from Aeropost. I guess, my question is for both you. First question is, do you think that Aeropost has the necessary infrastructure to take it – take your e-commerce to the necessary level, or are you going to have to ramp-up spending, ramp-up investment? I’m trying to get an idea of what it might take to get it, where you want it to be?

I will say that, yes, Jon, we’ll require some investments, there are no questions. We definitely have a great team with the Aeropost – on the Aeropost team. But we do have our plans and then we started already investing in different initiatives to create, to improve the marketplace, to improve the overall Aeropost just to build our platform there. Different initiatives that will not happen just without investing, it will require investing on our site and we’re prepared to do that and obviously, it maybe short-term. It may have some impact, but over the long-term, we do believe that is the right thing to do.

Any sense – and idea you could give us on what that level of investment might be?

Not at this point, obviously, we’re putting together our plans, Jon, but we wouldn’t provide any direct guidance or any direct – we wouldn’t say any direct expectation. I guess, we put out the things that are clear. They were going to be up, I guess, having next year or next quarter in terms of all this amortization and other pieces. But in terms of additional investment, we don’t provide anything right now.

Okay. My second question is you broke out the impact Nicaragua was having on your comp store sales.

Right.

And I know the Virgin – U.S. Virgin Islands is a small market, but the comps have been very, very good there because of the hurricane. And as we lapse that, I guess, my question is, does that market really have much of an impact on your comps for that region?

USVI, I guess, in terms of our quarter, it does have some impact in a quarter, we’re probably be about 80 basis points to our comps. So it does have definitely – it had a good comps with the fact that, that we were one of the ones that recovery very fast. We know because you less one competitor is not in the Island again yet. They might come back. And – but so far, definitely our club over there in USVI is growing very fast pace and it’s having definitely impact of about 80 basis points.

Okay, all right. Thank you, Jose.

Thank you, Jon.

And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you very much for all of you on the call, and have a nice weekend. Thank you, Laura.

Thank you.

Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.