Investor Relations February 2015

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Iris Vivien Lewis
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1 Investor Relations February 2015

2 Forward Looking Statements This presentation may contain forward- looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward- looking statements include, but are not limited to, statements containing the words expect, believe, will, may, should, project, estimate, anticipated, scheduled, and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: the Company's financial performance is dependent on international operations, which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect its business; the Company faces significant competition; future sales growth depends, in part, on the Company's ability to successfully open new warehouse clubs; the Company might not identify in a timely manner or effectively respond to changes in consumer trends and changes in consumer preferences for merchandise and shopping modalities, which could adversely affect its relationship with members, demand for its products and market share; the Company faces difficulties in the shipment of, and risks inherent in the importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business and/or from which the Company acquires merchandise; the Company relies extensively on computer systems to process transactions, summarize results and manage its business and a failure to adequately maintain the Company's systems and disruptions in its systems could harm its business and adversely affect its results of operations; the Company could be subject to additional tax liabilities; a few of the Company's stockholders own approximately 28.3% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; potential future impairments of long lived assets could adversely affect the Company's future results of operations and financial position; write- offs of goodwill and other intangible assets could adversely affect the Company's future results of operations and financial position; the Company faces increased public company compliance risks and compliance risks related to the Company's international operations; the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes- Oxley Act of 2002; if remediation costs or hazardous substance contamination levels at certain properties for which the Company maintains financial responsibility exceed management's current expectations, the Company's financial condition and results of operations could be adversely impacted. The risks described above as well as the other risks detailed in the Company's U.S. Securities and Exchange Commission ( SEC ) reports, including the Company's Annual Report on Form 10- K filed for the fiscal year ended August 31, 2013 filed on October 30, 2013 pursuant to the Securities Exchange Act of We assume no obligation and expressly disclaim any duty to update any forward- looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events. The statements and information in the presentation are current only as of its date, and we do not undertake to subsequently update them. This presentation may include certain non GAAP financial measures such as Adjusted EBITDA intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non GAAP financial measures to GAAP financial measures are provided at the end of the presentation. Investors are urged to consider carefully the comparable GAAP measures and the reconciliations to those measures provided. For further information, please contact John M. Heffner, Principal Financial Officer and Principal Accounting Officer (858)

3 Table of Contents 1 Introduction 2 Company Overview / Strategic Proposition 3 Growth Potential 4 Financial Performance 3

4 Introduction

5 Today s Presenters Jose Luis Laparte CEO and President 10 Years with Company Former experience: Sam s International / Walmart John M. Heffner EVP and CFO 10 Years with Company Former experience: Kyocera Wireless Corp., Qualcomm and Digital Equipment Corp. 5

6 Investment Highlights 1 Well Positioned Pan-Regional Warehouse Club Concept 2 Unique Platform in High Growth Markets with U.S. Headquarters 3 Successful Strategic Proposition 4 Good Growth Potential 5 Consistent Financial Performance 6 Experienced Management Team 6

7 Company Overview / Strategic Proposition

A Leading and Unique Pan-Regional Warehouse Club Concept Business Overview (1) Pioneered by Sol and Robert Price, founders of the Price Club (acquired by Costco in 1993) First club

5Bn Average sales per club of $69MM ~80K transactions per day 36 warehouse clubs across 13 countries 2.5MM+ sq ft (48,000 to 98,000 per club) 79% of clubs real estate is owned 1.

5MM card holders 84% renewal rate 18% of employees in unions Pan-Regional Presence Los Angeles Distribution Center San Diego Headquarters Mexico Distribution Center Guatemala (3) El

8 A Leading and Unique Pan-Regional Warehouse Club Concept Business Overview (1) Pioneered by Sol and Robert Price, founders of the Price Club (acquired by Costco in 1993) First club opened in 1996 in Panama Company went public in 1997 Headquarters and primary DC in the U.S. $3.0Bn+ market cap LTM Sales of $2.5Bn Average sales per club of $69MM ~80K transactions per day 36 warehouse clubs across 13 countries 2.5MM+ sq ft (48,000 to 98,000 per club) 79% of clubs real estate is owned 1.3MM membership accounts Over 2.5MM card holders 84% renewal rate 18% of employees in unions Pan-Regional Presence Los Angeles Distribution Center San Diego Headquarters Mexico Distribution Center Guatemala (3) El Salvador (2) Nicaragua (1) Costa Rica (6) Net Warehouse Sales Breakdown Business 20% Jamaica (1) Honduras (2) Miami Primary Distribution Center Panama (4) Dominican Republic (3) Colombia (3) Caribbean 31% Aruba (1) USVI (1) Barbados (1) Trinidad (4) Retail 80% Latin America 69% Note: (1) Data as of QE 11/30/13 except for number of warehouse clubs, which is current Source: Company estimates Source: 10-K FY2013 8

9 A Remarkable Journey of Growth and Value Creation Future Rapid Unit Expansion Transition / Inward Focus Back to Organic Growth Good Cash Flow / New Markets Continue Investments Market Cap ($MM) 4,000 Established presence in Caribbean and CEAM markets Closed nonperforming clubs Exited markets (Philippines, Guam, Mexico) Focused on merchandising, operations and membership Added clubs in larger markets SSS growth of 20.1%, 8.7%, and 8.2% in 2008, 2009, and 2010, respectively Entered Colombia LTM Revenue ($MM) 3,000 Additional capacity Operational improvements New warehouse clubs Established markets Colombia 3,500 3,000 2,500 2,000 Recapitalization of Company with rights offering 2,500 2,000 1,500 Market Cap has increased approximately 30x since ,500 1,000 1, Market Cap LTM Revenue 9

10 Leading Platform in High Growth Markets Large Addressable Market 2013 GDP $Bn Caribbean & Central America Source: World Bank Caribbean Colombia Total Market Size and Low Warehouse Club Penetration 6 Central America 36 # of warehouse clubs With High Historical Growth Dynamics GDP CAGR Source: World Bank Providing a Unique Proposition Caribbean El Salvador US Nicaragua Honduras Guatemala Colombia Costa Rica Panama (1) Warehouse Clubs (2) / 2013 Population in MM US Canada Mexico Caribbean Central (3) Colombia America Source: Company data and World Bank Current PSMT Markets Notes: 0.8 (3) Category Killers Mass Retailers Supermarkets Mom & Pop (1) Includes Jamaica, Barbados, Dominican Republic and Trinidad; excludes US Virgin Islands and Aruba (2) US includes Costco, Sam s Club and BJs; Canada includes only Costco; Mexico includes Sam s Club, Costco and City Club; Caribbean includes PSMT and Cost-U-Less; CEAM and Colombia only include PSMT (3) Includes countries with PSMT presence only 10

11 Simple, Yet Powerful Customer Proposition Differentiated Merchandising Strategy Low Price Focus Valuable Membership Program Well Developed Logistics Network Rewarding / Loyal Membership Program 11

12 Differentiated Merchandising Strategy Multi-Sourcing / Multi-Category Consistent Brand Management Sales Breakdown 52% 48% Locally Sourced Softlines Other Average of 2,200 SKUs per club 40-50% imported brands 6% 2% Food Hardlines 13% 53% 26% US and Internationally Sourced Sundries Brand 4 Successful Private Label Business Treasure Hunt Concept Drives Avg. Ticket ~10% of sales Picture 1 Picture 2 Picture 3 12

13 Attractive Warehouse Club Facilities Exteriors Interiors 13

14 Quality Image and Service U.S. Standard Quality, Merchandising, and Cleanliness Additional Services Increase Membership Attractiveness Bakery Fresh Products Drive More Frequent Visits Tire Center Food Service 14

Well-Developed Distribution Network Five DC s in North America, Costa Rica, Colombia, and Panama for imported merchandise Key Facts Totaling approximately 338,000 square feet One DC located Mexico

expertise Managed sourcing logistics from over 20 countries Executes over 15,000 ocean-container shipments annually Staff of 195 dedicated logistics associates in 13 countries Distribution Network

15 Well-Developed Distribution Network Five DC s in North America, Costa Rica, Colombia, and Panama for imported merchandise Key Facts Totaling approximately 338,000 square feet One DC located Mexico City to reduce crossborder tariffs for certain items Costa Rica, Colombia, and Panama DC s enable direct shipments from suppliers Core competency of international shipping and local import logistics expertise Managed sourcing logistics from over 20 countries Executes over 15,000 ocean-container shipments annually Staff of 195 dedicated logistics associates in 13 countries Distribution Network Guatemala (3) EL Salvador (2) Primary DC Costa Rica (6) Panama (4) Dominican Republic (3) Jamaica (1) Honduras (2) Aruba (1) Nicaragua (1) Colombia (3) USVI (1) Other / Regional DCs Barbados (1) Trinidad (4) 15

16 Generating Membership Value and Loyalty Facts Targets higher income and upper-middle class families Over [2.5MM] total cardholders 1.3MM total membership accounts 84% annual renewal rate Offers co-branded credit card in nearly all of the Company s markets at reduced or zero annual fee Uninterrupted Membership Growth Increase from Membership Growth (%) Renewal Rate (%) $30 to $ Total Membership Growth Renewal Rate Membership Type Diamond [93% of Accounts] Business [7% of Accounts] Platinum (Costa Rica) Description [2.3MM cards] [1.2MM membership accounts] Annual fee of $35 [0.2MM cards] [0.1MM membership accounts] Annual fee of $30 plus $10 for add-on memberships Introduced in Oct Currently available only in Costa Rica Annual fee of $75 with 2% rebate up to $500 16

17 Proven Leaders Throughout the Organization Robert E. Price John M. Heffner Title: Executive Vice President and Chief Financial Officer Experience: 10 Years with PriceSmart / 35 Years Total Biography: William J. Naylon Title: Chairman, former CEO and President Biography: Former Chairman and CEO of PEI Former Chairman of Price/Costco Former Chairman, CEO and Founder of The Price Company 25 Years Title: Executive Vice President and Chief Operating Officer Experience: 17 Years with PriceSmart / 29 Years Total Biography: PEI Price/Costco 12 Years Jose Luis Laparte Robert M. Gans Thomas D. Martin Title: Chief Executive Officer and President Experience: 10 Years with PriceSmart / 25 Years Total Biography: 15 Years Title: Executive Vice President and General Counsel Experience: 17 Years with PriceSmart / 39 Years Total Biography: PEI Gans, Blackmar & Stevens, A.P.C. 9 Years Title: Executive Vice President and Chief Merchandising Officer Experience: 17 Years with PriceSmart / 37 Years Total Biography: PEI Price/Costco 20 Years Brud E. Drachman John D. Hildebrandt Title: Executive Vice President - Construction Management Experience: 17 Years with PriceSmart / 36 Years Total Title: Executive Vice President Operations Experience: 17 Years with PriceSmart / 35 Years Total Biography: PEI Price/Costco Biography: PEI Price/Costco 19 Years 18 Years Senior Management Experience in Industry: 189 Years (1) Senior Management Experience at PriceSmart: 105 Years (1) Notes: (1) Includes all management on this page excluding Robert Price 17

18 Growth Potential

19 Multiple Layers of Growth Revenue Productivity Membership Program Cost Initiatives Unit Expansion 19

20 Revenue Productivity Leads to Expansion Cycle of Success More Members Cycle of Investment Invest in Additional Clubs Lower Prices Higher Sales Leverage Expenses/ Better Buying Power Positive Cash Flow Generation Margin Reduction Execute the Model 20

21 Central America Still Offers Growth Potential Historical Warehouse Club Growth # Warehouse Clubs (1) 25 Central America GDP Growth Projections GDP CAGR E 0 Panama Costa Rica Guatemala Nicaragua El Salvador Honduras Source: International Monetary Fund PriceSmart has steadily grown the number of warehouse clubs in Central America The Company plans to benefit from the economic growth in the region Notes: (1) Fiscal year data 21

The Colombia Opportunity Country Facts 3 rd largest country in Latin America in population (1) Approximately as large as all other

Fairly fragmented market with four largest cities accounting for just 25% of the population Social mobility driving consumption PriceSmart

top 5 performing warehouse clubs after less than 2 ½ years Bogota club opened with record number of pre-opening membership accounts Medellin

6 sq. ft. / pop. (US has 28.0 sq. ft. / pop., Brazil has 8.3 and Mexico has 9.

22 The Colombia Opportunity Country Facts 3 rd largest country in Latin America in population (1) Approximately as large as all other PriceSmart markets combined (1) 4 th largest country in Latin America in GDP (1) ~25% larger than all other PriceSmart markets combined (1) Fairly fragmented market with four largest cities accounting for just 25% of the population Social mobility driving consumption PriceSmart Experience Recently opened 3 new warehouse clubs, bringing total to 6 warehouse clubs in Colombia Strong initial performance Baranquilla in top 5 performing warehouse clubs after less than 2 ½ years Bogota club opened with record number of pre-opening membership accounts Medellin and Pereira clubs exceeded opening sales and membership accounts Actively pursuing sites in other cities Low formal retail penetration 7.6 sq. ft. / pop. (US has 28.0 sq. ft. / pop., Brazil has 8.3 and Mexico has 9.2) (2) Store-based retailing has grown 48% over the last five years (2) Although Colombia has a competitive retail market, there is no other warehouse club concept Notes: (1) Source: World Bank (2) Source: Euromonitor 22

23 Financial Performance

24 Compelling Investment Proposition Attractive Business Model Long-Term Growth Strategy Expand Sales in Existing Clubs Growth through traffic High renewal rates; expanding membership initiatives Continuing focus on quality and investments in pricing Efficient Cost Structure Constant investments of distribution and operating efficiencies and leverage into pricing to drive volume New Club Openings Flexible business model adaptable to all our markets Distribution centers that support multiple warehouses Growing markets Tax efficient use of offshore cash to fund growth Steady, Reliable Earnings Growth Potential Quality of earnings and cash flow 24

25 Steady, Reliable Growth Performance Net Warehouse Club Sales (1) Same Store Sales Growth (1) $Bn % % Average Total Units (1) Total Membership Income & Accounts (1) # Warehouse Clubs $MM MM Membership Fee Income Membership Accounts Notes: (1) Fiscal years 25

26 Translating into High Quality Earnings EBITDA Margin (1)(2) EBIT Margin (1)(2) % % Diluted EPS (1) ROIC (1)(3) $ % Notes: (1) Fiscal years (2) Excludes asset impairment and closure costs and provisions for pending litigation (3) ROIC = EBIT * (1 - Effective Tax Rate) / (Net PPE + Net Working Capital + Goodwill) 26

27 Investment Highlights 1 Well Positioned Pan-Regional Warehouse Club Concept 2 Unique Platform in High Growth Markets with U.S. Headquarters 3 Successful Strategic Proposition 4 Good Growth Potential 5 Consistent Financial Performance 6 Experienced Management Team 27

28 Appendix

29 Adjusted EBITDA Reconciliation Fiscal Year Ended ($MM) Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Net income, as reported Discontinued ops 0 0 (0) Net income attributable to NCI Losses of unconsolidated affiliates (0) Total other income (expense) (1) 3 1 (1) Provision (benefit) for income taxes Depreciation & amortization Asset impairment and closure costs 1 (0) Provision for pending litigation Adj. EBITDA

PriceSmart, Inc. February 2018

PriceSmart, Inc. February 2018 Forward Looking Statements This presentation may contain forward- looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future