Good afternoon, everyone, and welcome to PriceSmart, Inc.'s Earnings Release Conference Call for the Fourth Quarter of Fiscal Year 2023, which ended on August 31, 2023. After remarks from our Company's representatives, Robert Price, Interim Chief Executive Officer; and Michael McCleary, Chief Financial Officer, you will 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, Tuesday, October 31, 2023. A digital replay will be available following the conclusion of today's conference call through November 7, 2023, by dialing one (877) 674-7070 for domestic callers or one (416) 764-8692 for international callers and by entering the replay access code 496180#. For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Michael McCleary. Please proceed, Sir.

Thank you, operator, and welcome to PriceSmart Inc.'s earnings call for the fourth quarter of fiscal year 2023, which ended on August 31, 2023. We will be discussing the information that we provided in our earnings press release and our 10-K, which were both released yesterday afternoon, October 30, 2023. Also in these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our 10-K. These documents are available on our Investor Relations website at investors.pricesmart.com, where you can also sign up for e-mail alerts. As a reminder, all statements made on this conference call other than statements of historical fact are forward-looking statements concerning the Company's anticipated plans, revenues and related matters. Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate and some other expressions. All forward-looking statements are based on current expectations and assumptions as of today, October 31, 2023. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the Company's most recent annual report on Form 10-K and other filings with the SEC which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The Company undertakes no obligation to update forward-looking statements made during this call. Now, I will turn the call over to Robert Price, PriceSmart's Interim Chief Executive Officer.

Thank you, Michael. I would like to begin by expressing my sincere thanks and appreciation to our more than 11,000 employees, for their amazing dedication and hard work. Our Chief Financial Officer, Michael, will soon provide a detailed narrative for our fourth quarter and full year results. And I'm going to make a few comments in advance of his remarks. In spite of the two nonrecurring expense charges during the fourth quarter, the write-off of our investment in the Trinidad packaging plant and the settlement of a tax dispute, our Company had a very strong fourth quarter. The fundamentals of our business are sound, good growth in sales and improved expense ratio, a strong cash position and a much improved inventory and accounts payable compared to a year ago. For the full year FY 2023, our management team delivered a solid financial performance. PriceSmart has three really significant assets that provide an optimistic outlook for the future of our Company. One is our employee team, 11,000 dedicated and knowledgeable people who know the club business and know our markets. The second asset is our members, over 1.8 million accounts and over three million cardholders. The third asset is PriceSmart's good name in the region where we operate. We are determined to leverage these assets in order to strengthen the value of the PriceSmart membership, while continuing to improve our merchandise offering, we have added a strong representation of health services and online shop, which is increasingly important to our members. We continue to grow our business to business sales segment to fulfill an important opportunity in our markets. I would like to conclude my remarks with a thank you to our shareholders. Now, Michael will provide more detailed comments on our financial results.

Thank you, Robert. We finished the year with a strong fourth quarter, as both revenues and net merchandise sales exceeded $1 billion, net merchandise sales increased by 10% or 6.4% in constant currency. Comparable net merchandise sales increased by 8.8% or 5.2% in constant currency. For the fiscal year ended August 31, 2023, total net merchandise sales exceeded $4.3 billion and revenues exceeded $4.4 billion. Net merchandise sales increased by 9% or 8.3% in constant currency, and comparable net merchandise sales increased by 7.1% or 6.3% in constant currency for the 12-month period. By segment, in Central America, where we had 28 clubs at quarter end, net merchandise sales increased 13.6% or 7.1% in constant currency, with an 11.4% increase in comparable net merchandise sales or 5.2% in constant currency. All of our markets in Central America had positive comparable net merchandise sales growth. Our Central America segment contributed approximately 680 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the fourth quarter. The Costa Rica colon appreciated significantly against the dollar as compared to the same three-month and 12-month period a year ago, which was the primary contributor to the favorable currency fluctuations in this segment and consolidated net merchandise sales. In the Caribbean, where we had 14 clubs at quarter end, net merchandise sales increased 6% or 7.2% in constant currency, and comparable net merchandise sales increased 5.8% or 7.2% in constant currency. All of our markets in this segment had positive comparable net merchandise sales growth. Our Caribbean region contributed approximately 170 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. In Colombia, where we had nine clubs open at quarter end, net merchandise sales increased 2.1% or 0.1% in constant…

[Operator Instructions] Your first question is from Hector Maya from Scotiabank. Please ask your question.

Hi. Thank you very much for taking my questions. First, could you please give us some details on a couple of strategic points? What could you tell us about the potential succession plan and timing for its execution? And also, I don't know if M&A is something completely out of the question? I mean, is PriceSmart open to be a target for an acquisition? And what would it take for the Company to consider a significantly more ambitious store opening plan? I have a couple of follow-ups after this.

Next question, and then M&A.

This is Robert. We can't comment on anything like M&A. I mean, that's just not a new thing we're -- as far as succession planning, nothing specific, but you have to remember that really, this is a team. It's not one person. And we have a very strong team, and I feel very comfortable with the management team. So I don't think there's anything to comment on with the succession today. I don't know what your last question was.

Yes. I was asking, what would it take for the Company to have a significantly more ambitious store opening plan to accelerate those efforts?

I think we have to be comfortable that we could enter. It would probably require going to another country or because, obviously, within the countries we're in now in terms of store openings, there's opportunity, but it's not huge. So I think as far as being more aggressive about growth in that area, we would have to consider another country probably.

I understand. I also want to know, the buyback program has been completed. And I understand it has been noted in the Company's filings that there are no further repurchase plans for the moment. So I just wanted to see if you could share more details on your reasoning to not continue this program? And why would it take for the board to change its mind on this issue?

About what?

About the buybacks. I think.

Not sure. I'm having trouble understanding what you're saying.

Yes, what would it take -- we said in the press release that we didn't have any additional approved plans for buybacks at this point. I mean, that's a point in time reference I think, and we just finished up our current plan.

What is your question?

Yes. Just wanted to understand why are you stopping or not considering any further buyback program? So what could change for you to start doing this again?

Well, we will consider all alternatives. It's not like we're not considering this, but we look at everything.

Okay. And also on taxes, how much of a risk are you seeing that the impact you saw this quarter could become a recurring issue? And why do you believe that we should consider as a new level of effective tax rate from now on?

So Hector, I think we tried to carve out the difference. So the $7 million, $7.2 million related to prior years and $2 million is included in the warehouse expense related to fiscal '23. So from an order of magnitude, I think the $2 million would be at a better reference. Now maybe somewhat counter-intuitively, since this is a sales -- tax based on sales, we are required to include that in operating income as an expense, as opposed to in the tax line. So it does impact the effective tax rate by lowering the denominator a little bit. But as I said in my remarks, at this point for fiscal '24, even including the impacts of this minimum tax on fiscal '24, we're still looking to get to around 32% effective tax rate for '24.

Your next question is from Jon Braatz from Kansas City Capital. Please ask your question.

Good morning, Michael, Robert. Michael, you've taken some pricing actions in Colombia and other countries because of the inflationary pressures. And I guess my question is, we saw some sequential improvement in the gross margin in the fourth quarter. Is there any change in that -- in your pricing strategy? Or was it just sort of a seasonal improvement in the gross margin?

Yes. I guess, John, there's a lot of moving pieces at any point in time. I think quarter-on-quarter, you saw probably about 30 basis points improvement in the quarter. So yes, there's a lot of moving pieces and a lot of different countries that we operate in at any point in time. So obviously, Colombia is still a big focus area for us, and we're still making sure we're offering. We're working hard to offer the best value to our members there and increase that average purchase level for our members. But as I said, kind of at any point in time. And 25 basis points probably isn't necessarily a directional indicator just kind of...

Okay. Is there a point where in Colombia specifically, if the currency stabilizes, let's say, around 4,000 or something like that, is there a point where you might begin to increase prices a little bit?

Well, the idea of this business is to keep giving people better value all the time. So the idea of increasing prices isn't part of our DNA. I think the -- what we're trying to do is to build a long-term business where our members are going to be confident that when they walk in the building, they're getting the best price we...

Okay. In the 10-K, there was a couple of comments about some issues in Guatemala and Panama in terms of road blocks that might some -- create some issues to some of your stores in those markets. Can you give us a little update on that situation there? And in fact, did it have much impact on your revenues in October in those markets?

As we understand now, the situation in Guatemala has calmed down. I'm not sure today what's going on in Panama. It's had some effect. I don't think it's significant in terms of what the overall October numbers will be. I think we probably lost some sales, but you won't notice it as far as our reporting.

Yes. Okay. Okay. And then lastly, you're increasing membership fees from $35 to $40, about 14%. Any thoughts? And you haven't increased membership fees for a while. And maybe if you look back and maybe there have been some prior increases, but any thoughts on what impact that might have on the membership roles. Do you see a little bit of -- you see somewhat of a decline in memberships because of the higher price increases -- higher fee increase?

No, at this point, we haven't seen any decline. I think the $5 is fairly nominal. I think the issue is -- more important is, how the members perceive the value they're getting for that $5 increase in the overall membership fee. And it's up to us to continue to improve that value, I think we have the capacity to far outweigh the $5 membership increase with better values to our members. I don't think the $5 is going to be what makes them decide to be a member or not. I think it's going to be -- are they feeling that by being a member at all, it really is something that bothers them. And we really believe that based on shopping patterns that people appreciate and value that membership. I would just add one thing about -- and I should have said it in my opening remarks. From what I can tell about this business in the region we operate, we are probably -- and I would feel very comfortable saying this that we are the most respected and trusted brand of any business operating in this region. And I think that's not appreciated enough by our investors. Maybe we don't tell the story very well. But not only are we respected and trusted, but that gives us a foundation to continue to build additional services and opportunities for our members that we think will take advantage of in the future. And the idea of growth, I hear the idea of going into other countries and growing, but you have to have healthy growth. You can't just have growth because it looks good that you have more clubs, we will have more clubs. But what's really important is leveraging on what we already have. And we have almost two million accounts and three million cardholders who represent the very best in terms of member clientele in this region. And I think we have not taken full advantage of what we have.

There are no further questions at this time. I will now hand the call back to Mr. Michael McCleary for the closing remarks.

Okay. Thank you, everybody, and we hope you all have a great day. Take care. Bye-bye.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.