EX-99.1 2 prty-ex991_6.htm EX-99.1 prty-ex991_6.htm

 

Exhibit 99.1

 

PARTY CITY REPORTS FOURTH QUARTER AND

FULL YEAR 2020 RESULTS

 

Generated Higher Operating Cash Flow in 2020

Versus Prior-Year Period Despite COVID-19 Impacts

 

Fourth Quarter Results Driven by Strength in Core Categories and Strong

New Year’s Comparable Sales

 

With Completion of Recent Debt Financing, Company has Significant Runway

to Further Advance Strategic Priorities

 

 

ELMSFORD, N.Y.-- Party City Holdco Inc. (the “Company” or “PRTY”; NYSE:PRTY) today announced financial results for the quarter and year ended December 31, 2020.  

 

Brad Weston, Chief Executive Officer of Party City, stated, “We are very pleased with how our organization navigated 2020, swiftly pivoting to meet the evolving needs of our customers, all while prioritizing the health and safety of both our associates and our customers during this pandemic. Throughout the year, we made important strides on our five strategic initiatives, innovating and elevating our customer experience while also significantly improving our financial position and flexibility with our actions to reduce debt and extend maturities. I am extremely proud of all that has been accomplished thus far and the hard work and commitment demonstrated by the entire team as we continue to transform the business.”

 

Mr. Weston continued, “We enter 2021 in a substantially stronger position, armed with greater consumer insights and a solid foundation to build upon as we further our mission to deliver The Party Platform by advancing the building blocks that we put in place in 2020. We remain intensely focused on our customer and more effectively operating and leveraging our unique North American vertical model as we continue our transformation and further strengthen our industry leadership position.”

 

Fourth Quarter Summary:

 

 

•

Total revenues were $648.2 million, a decrease of 11.4% on a reported basis and 11.7% on a constant currency basis

 

•

Total Retail sales decreased 8.2% on a reported and 8.3% constant currency basis, impacted by closures related to our store optimization program and the impact of COVID-19, offset partially by the benefit from the 53rd week

 

•

The total number of corporate Party City stores was 746 as of December 31, 2020 compared to 777 a year ago.

 

•

Brand comparable sales for the 14 weeks ended January 2, 2021 versus 14 weeks ended January 4, 2020 decreased 5.9% due to the impact of COVID-19, especially on seasonal celebrations.  

 

•

The Company’s Retail segment included a 53rd week of operations in the fourth quarter and full year, which contributed approximately $40 million to revenue, approximately $12 million to Adjusted EBITDA and approximately $0.08 to adjusted diluted earnings per share (See "Non-GAAP Financial Information").

 

•

North American digitally enabled sales increased 27.1% including BOPIS, curbside pickup, and delivery.

 

•

Net third-party Wholesale revenues decreased 23.0% or a decrease of 24.0% in constant currency, driven by lower third-party sales including softer franchise store performance, and the impact of international COVID-related restrictions.  

 

•

Total gross profit margin decreased 1,454 basis points to 25.7% of net sales driven primarily by a year-end seasonal inventory disposal of $88.3 million, which aligned inventories to the Company’s new seasonal assortment strategy of targeting higher in-season sell-through of merchandise and reducing annual inventory carry-over. Excluding certain items not indicative of core operating performance, gross profit margin decreased 50 basis points to 39.7% of net sales mainly due to deleverage on occupancy costs.

 

•

Operating expenses totaled $281.1 million or $242.4 million lower than the fourth quarter of 2019. Excluding certain items not indicative of core operating performance, operating expenses totaled $200.5 million, or 31.1% of revenue, a reduction of $4.8 million compared to the fourth quarter of 2019, primarily driven by cost management to reflect lower revenues and reduced retail store count.  

 

•

Interest expense was $13.1 million during the fourth quarter of 2020, compared to $26.0 million during the fourth quarter of 2019 mainly due to lower amount of debt outstanding.  

 

•

Reported GAAP net loss was $96.4 million, or a loss of $(0.88) per diluted share.

 

•

Adjusted net income was $27.5 million, or $0.25 per diluted share, compared to adjusted net income of $47.8 million, or $0.51 per share, in the fourth quarter of 2019. (See “Non-GAAP Financial Information”)

 

•

Adjusted EBITDA was $77.3 million, versus $119.5 million during the fourth quarter of 2019. (See “Non-GAAP Financial Information”)

 

Full Year Summary:

 

 

•

Total revenues were $1.851 billion, a decrease of 21.2% on a reported basis and a decrease of 21.3% on a constant currency basis

 

•

Total Retail sales decreased 21.1% on both a reported and constant currency basis, due to the COVID-19 pandemic, with a brand comparable sales decline of 16.5%

 

•

2nd half 2020 Brand comparable sales decreased 0.5%

 

•

North American digitally enabled sales increased 35.4% including BOPIS, curbside pickup, and delivery

 

•

Net third-party Wholesale revenues decreased 21.6% on a reported basis and 21.7% on a constant currency basis.  

 

•

Total gross profit margin decreased 1,017 basis points to 25.7% of net sales.  Excluding certain items not indicative of core operating performance, gross profit margin decreased 290 basis points to 34.2% of net sales mainly due to deleverage on occupancy costs.  

 

•

Operating expenses totaled $1.358 billion.  Excluding certain items not indicative of core operating performance, operating expenses totaled $616.4 million, or 33.4% of revenue, a reduction of $82.0 million compared to 2019, primarily due to lower retail operating expenses as a result of the lower store count, lower Wholesale selling expenses and the temporary benefits from cost cutting related to the pandemic.

 

•

Interest expense was $77.0 million during 2020, compared to $114.9 million during the 2019.

 

•

Reported GAAP net loss was $528.5 million, or $5.24 per share.

 

•

Adjusted net loss was $49.2 million, or a loss of $0.49 per diluted share compared to adjusted net income of $43.4 million, or $0.46 per share, in 2019. (See “Non-GAAP Financial Information”)

 

•

Adjusted EBITDA was $95.5 million, versus $269.2 million during 2019. (See “Non-GAAP Financial Information”)

 

Balance Sheet Highlights:

 

As of the end of 2020, the Company had $119.5 million in cash and approximately $176.5 million of availability under the ABL Facility, for total liquidity of $296.1 million.  

 

In addition, the principal balance of debt net of cash on December 31, 2020 was $1,253.6 million versus $1,684.8 million in the prior-year period.  The principal balance of debt is used for the

purpose of all leverage ratio calculations under our debt agreements. The following table shows the bridge from the balance sheet debt to the principal balance of debt:

 

 

 

 

 

 

Party City Credit Group

 

 

Anagram Holdings, LLC

 

 

PCHI Consolidated

 

 

December 31, 2020

 

 

Principal
Amount

 

 

Net Carrying
Amount

 

 

Net Carrying
Amount

 

 

Net Carrying
Amount

 

Term Loan Credit Agreement

$

694,220

 

 

$

690,165

 

 

$

-

 

 

$

690,165

 

6.125% Senior Notes – due 2023

 

22,924

 

 

 

22,779

 

 

 

-

 

 

 

22,779

 

6.625% Senior Notes – due 2026

 

107,254

 

 

 

106,315

 

 

 

-

 

 

 

106,315

 

First Lien Party City Notes

 

161,669

 

 

 

206,775

 

 

 

-

 

 

 

206,775

 

First Lien Anagram Notes

 

110,000

 

 

 

-

 

 

 

151,335

 

 

 

151,335

 

Second Lien Anagram Notes

 

84,687

 

 

 

-

 

 

 

152,032

 

 

 

152,032

 

Finance lease obligations

 

13,983

 

 

 

13,983

 

 

 

-

 

 

 

13,983

 

Total long-term obligations

 

1,194,737

 

 

 

1,040,017

 

 

 

303,367

 

 

 

1,343,384

 

Less: current portion

 

N/A

 

 

 

(13,576

)

 

 

-

 

 

 

(13,576

)

Long-term obligations, excluding current portion

$

1,194,737

 

 

$

1,026,441

 

 

$

303,367

 

 

$

1,329,808

 

Loans and notes payable

 

178,436

 

 

 

178,436

 

 

 

-

 

 

 

178,436

 

Less: Cash

 

(119,532

)

 

 

(95,201

)

 

 

(24,331

)

 

 

(119,532

)

Principal balance net of cash

$

1,253,641

 

 

$

1,109,676

 

 

$

279,036

 

 

$

1,388,712

 

 

Subsequent Events:

 

As previously announced, subsequent to year end, the Company completed an offering by its wholly-owned subsidiary Party City Holdings Inc. (“PCHI”) of $750 million aggregate principal amount of 8.75% senior secured notes due 2026 (the “Notes”).

 

The Company intends to use the net proceeds from the offering to repay all outstanding borrowings under its term loan facility maturing 2022, to pay related fees and expenses and for general corporate purposes, which may include debt repurchases.  As a result, the Company’s next material debt maturities are in July 2025.  

 

In January 2021, the Company closed the previously disclosed sale of a substantial portion of its international operations.

 

Outlook:

 

Due to the continued uncertainty regarding the ongoing impacts of the COVID-19 pandemic and the associated complexity of forecasting, the Company is providing select annual 2021 guidance for financial measures that it believes it can reasonably forecast including interest expense, capital expenditures and store openings and closures.

 

 

•

FY 2021 Interest expense of approximately $90 to $100 million

 

•

FY 2021 Capital expenditures of approximately $70 to $80 million

 

•

FY 2021 10 Net new stores (15 new openings and 5 closures)

 

The Company is providing the following fiscal first quarter 2021 outlook. This outlook is subject to potential consumer and marketplace volatility due to the COVID-19 pandemic:

 

 

•

Total revenue of $397 to $410 million

 

•

Brand comparable sales increase of 26% to 31% compared to first quarter 2020*

 

•

GAAP net loss of $24 to $16 million with an assumed Q1 tax rate of 25%

 

•

Adjusted EBITDA of $10 to $17 million

 

* Represents comparable sales for the 13 weeks ended April 3, 2021 compared to the 13 weeks ended April 4, 2020.  On a fiscal or unshifted basis, brand comparable sales for the 13 weeks ended April 3, 2021 compared to last year’s fiscal quarter ended March 28th is expected to increase in the range of 9 – 14%.  

 

Conference Call Information

 

A conference call to discuss the fourth quarter 2020 financial results is scheduled for today, March 11, 2021, at 8:00 a.m. Eastern Time, and the Company has posted certain supplemental presentation materials to its investor relations website. Investors and analysts interested in participating in the call are invited to dial 844-757-5731 (U.S. domestic) or 412-542-4126 (international) approximately 10 minutes prior to the start of the call. The conference call will also be webcast at http://investor.partycity.com/. To listen to the live call, please go to the website at least 15 minutes early to register and download any necessary audio software. The webcast will be accessible for one year after the call.

 

Website Information

 

We routinely post important information for investors on the Investor Relations section of our website, http://investor.partycity.com/. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

 

Non-GAAP Information

This press release includes non-GAAP measures including Adjusted EBITDA and Adjusted Net Income/Loss. We present these non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by eliminating items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA: (i) as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our credit facilities use Adjusted EBITDA to measure compliance with certain covenants. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release. We also evaluate our results of operations on both an as

reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. We also provide net debt leverage, which is calculated by adding Loans and Notes Payable, Current Portion of Long Term Obligations and Long Term Obligations, Excluding Current Portion, subtracting Cash and Cash Equivalents and dividing by Adjusted EBITDA for the trailing twelve month period. We believe providing these non-GAAP measures provides valuable supplemental information regarding our results of operations and leverage, consistent with how we evaluate our performance. In evaluating these non-GAAP financial measures, investors should be aware that in the future the Company may incur expenses or be involved in transactions that are the same as or similar to some of the adjustments in this presentation. The Company's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. The Company has provided this information as a means to evaluate the results of its core operations. Other companies in the Company's industry may calculate these items differently than it does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

 

Forward-Looking Statements

This press release and the commentary in the conference call to be held today each contains forward-looking statements. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance and include Party City’s expectations regarding its ability to maximize the potential of its vertical model, the ability to drive long-term growth, revenues, brand comparable sales, net income, Adjusted EBITDA, and Adjusted net income. The forward-looking statements contained in this press release are based on management’s good-faith belief and reasonable judgment based on current information, and these statements are qualified by important risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those forecasted or indicated by such forward-looking statements. These risks and uncertainties include: our ability to compete effectively in a competitive industry; fluctuations in commodity prices; our ability to appropriately respond to changing merchandise trends and consumer preferences; successful implementation of our store growth strategy; decreases in our Halloween sales; the impact of COVID-19 on our financial performance; disruption to the transportation system or increases in transportation costs; product recalls or product liability; economic slowdown affecting consumer spending and general economic conditions; loss or actions of third party vendors and loss of the right to use licensed material; disruptions at our manufacturing facilities; and the additional risks and uncertainties set forth in “Risk Factors” in Party City’s Annual Report on Form 10-K for the year ended December 31, 2020 and in subsequent reports filed with or furnished to the Securities and Exchange

Commission. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward looking statements. Except as may be required by any applicable laws, Party City assumes no obligation to publicly update or revise such forward-looking statements, which are made as of the date hereof or the earlier date specified herein, whether as a result of new information, future developments or otherwise.

 

About Party City

 

Party City Holdco Inc. is the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is the leading player in its category, vertically integrated and unique in its breadth and depth. The Company designs, manufactures, sources and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery throughout the world. The Company’s retail operations include approximately 830 specialty retail party supply stores (including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites, principally through the domain name PartyCity.com.

 

Contact:

ICR

Farah Soi and Rachel Schacter

203-682-8200

InvestorRelations@partycity.com

 

Source: Party City Holdco Inc.

PARTY CITY HOLDCO INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data, unaudited)

 

 

 

December 31, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

119,532

 

 

$

34,917

 

Accounts receivable, net

 

 

90,879

 

 

 

149,109

 

Inventories, net

 

 

412,285

 

 

 

658,419

 

Prepaid expenses and other current assets

 

 

45,905

 

 

 

51,685

 

Income tax receivable

 

 

57,549

 

 

 

—

 

Assets held for sale, net

 

 

83,110

 

 

 

—

 

Total current assets

 

 

809,260

 

 

 

894,130

 

Property, plant and equipment, net

 

 

209,412

 

 

 

243,572

 

Operating lease asset

 

 

700,087

 

 

 

802,634

 

Goodwill

 

 

661,251

 

 

 

1,072,330

 

Trade names

 

 

384,428

 

 

 

530,320

 

Other intangible assets, net

 

 

32,134

 

 

 

45,060

 

Other assets, net

 

 

9,883

 

 

 

7,273

 

Total assets

 

$

2,806,455

 

 

$

3,595,319

 

LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Loans and notes payable

 

$

175,707

 

 

$

128,806

 

Accounts payable

 

 

118,928

 

 

 

152,300

 

Accrued expenses

 

 

160,605

 

 

 

150,921

 

Liabilities held for sale

 

 

68,492

 

 

 

—

 

Current portion of operating lease liability

 

 

176,045

 

 

 

155,471

 

Income taxes payable

 

 

524

 

 

 

35,905

 

Current portion of long-term obligations

 

 

13,576

 

 

 

71,524

 

Total current liabilities

 

 

713,877

 

 

 

694,927

 

Long-term obligations, excluding current portion

 

 

1,329,808

 

 

 

1,503,987

 

Long-term portion of operating lease liability

 

 

654,729

 

 

 

720,735

 

Deferred income tax liabilities

 

 

34,705

 

 

 

126,081

 

Other long-term liabilities

 

 

22,815

 

 

 

16,517

 

Total liabilities

 

 

2,755,934

 

 

 

3,062,247

 

Redeemable securities

 

 

—

 

 

 

3,351

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock (110,781,613 and 94,461,576 shares outstanding and

   122,061,711 and 121,662,540 shares issued at December 31, 2020 and

   December 31, 2019, respectively)

 

 

1,373

 

 

 

1,211

 

Additional paid-in capital

 

 

971,972

 

 

 

928,573

 

Retained (deficit) earnings

 

 

(565,457

)

 

 

(37,219

)

Accumulated other comprehensive loss

 

 

(29,916

)

 

 

(35,734

)

Total Party City Holdco Inc. stockholders’ equity before common stock

   held in treasury

 

 

377,972

 

 

 

856,831

 

Less: Common stock held in treasury, at cost (11,280,098 and 27,200,964

   shares at December 31, 2020 and December 31, 2019, respectively)

 

 

(327,182

)

 

 

(327,086

)

Total Party City Holdco Inc. stockholders’ equity

 

 

50,790

 

 

 

529,745

 

Noncontrolling interests

 

 

(269

)

 

 

(24

)

Total stockholders’ equity

 

 

50,521

 

 

 

529,721

 

Total liabilities, redeemable securities and stockholders’ equity

 

$

2,806,455

 

 

$

3,595,319

 

 

PARTY CITY HOLDCO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data, unaudited)

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

645,284

 

 

$

728,361

 

 

$

1,843,444

 

 

$

2,339,510

 

Royalties and franchise fees

 

 

2,897

 

 

 

3,190

 

 

 

7,246

 

 

 

9,279

 

Total revenues

 

 

648,181

 

 

 

731,551

 

 

 

1,850,690

 

 

 

2,348,789

 

Cost of sales

 

 

479,348

 

 

 

435,122

 

 

 

1,369,935

 

 

 

1,500,633

 

Wholesale selling expenses

 

 

13,006

 

 

 

16,174

 

 

 

50,121

 

 

 

67,103

 

Retail operating expenses

 

 

136,896

 

 

 

137,639

 

 

 

387,398

 

 

 

440,395

 

Franchise expenses

 

 

2,921

 

 

 

3,339

 

 

 

12,146

 

 

 

13,152

 

General and administrative expenses

 

 

48,126

 

 

 

51,175

 

 

 

210,244

 

 

 

177,672

 

Art and development costs

 

 

4,543

 

 

 

5,635

 

 

 

17,638

 

 

 

23,203

 

Development stage expenses

 

 

—

 

 

 

2,770

 

 

 

2,932

 

 

 

10,736

 

Gain on sale/leaseback transaction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(58,381

)

Store impairment and restructuring charges

 

 

1,631

 

 

 

3,221

 

 

 

22,449

 

 

 

29,038

 

Loss on assets held for sale

 

 

73,948

 

 

 

—

 

 

 

73,948

 

 

 

—

 

Goodwill, intangibles and long-lived assets impairment

 

 

—

 

 

 

303,531

 

 

 

581,380

 

 

 

562,631

 

Total expenses

 

 

760,419

 

 

 

958,606

 

 

 

2,728,191

 

 

 

2,766,182

 

Loss from operations

 

 

(112,238

)

 

 

(227,055

)

 

 

(877,501

)

 

 

(417,393

)

Interest expense, net

 

 

13,089

 

 

 

26,042

 

 

 

77,043

 

 

 

114,899

 

Other (income) expense, net

 

 

(572

)

 

 

(4,772

)

 

 

3,715

 

 

 

1,871

 

(Gain) on debt refinancing

 

 

—

 

 

 

—

 

 

 

(273,149

)

 

 

—

 

Loss before income taxes

 

 

(124,755

)

 

 

(248,325

)

 

 

(685,110

)

 

 

(534,163

)

Income tax (benefit) expense

 

 

(28,360

)

 

 

20,504

 

 

 

(156,653

)

 

 

(1,305

)

Net (loss)

 

 

(96,395

)

 

 

(268,829

)

 

 

(528,457

)

 

 

(532,858

)

Less: Net income (loss) attributable to noncontrolling interests

 

 

22

 

 

 

(11

)

 

 

(219

)

 

 

(363

)

Net (loss) attributable to common
   shareholders of Party City Holdco Inc.

 

$

(96,417

)

 

$

(268,818

)

 

$

(528,238

)

 

$

(532,495

)

Net (loss) per share attributable to common
   shareholders of Party City Holdco Inc.–Basic

 

$

(0.88

)

 

$

(2.88

)

 

$

(5.24

)

 

$

(5.71

)

Net (loss) per share attributable to common
   shareholders of Party City Holdco Inc.–Diluted

 

$

(0.88

)

 

$

(2.88

)

 

$

(5.24

)

 

$

(5.71

)

Weighted-average number of common shares-Basic

 

 

109,603,253

 

 

 

93,372,232

 

 

 

100,804,944

 

 

 

93,295,692

 

Weighted-average number of common shares-Diluted

 

 

109,603,253

 

 

 

93,372,232

 

 

 

100,804,944

 

 

 

93,295,692

 

 

 

 

 

PARTY CITY HOLDCO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

Fiscal Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(528,457

)

 

$

(532,858

)

 

$

122,819

 

Adjustments to reconcile net (loss) income to net cash provided by operating

       activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

76,506

 

 

 

81,116

 

 

 

78,575

 

Amortization of deferred financing costs and original issuance discounts

 

 

4,198

 

 

 

4,722

 

 

 

10,989

 

Provision for doubtful accounts

 

 

6,321

 

 

 

2,323

 

 

 

1,213

 

Deferred income tax (benefit) expense

 

 

(95,085

)

 

 

(47,366

)

 

 

4,573

 

Deferred rent

 

 

—

 

 

 

—

 

 

 

5,351

 

Undistributed income in equity method investments

 

 

333

 

 

 

(472

)

 

 

(369

)

Change in operating lease liability/asset

 

 

30,981

 

 

 

(9,942

)

 

 

—

 

Loss (gain) on disposal of assets

 

 

70

 

 

 

(59,786

)

 

 

3

 

Loss on assets held for sale

 

 

73,948

 

 

 

—

 

 

 

—

 

Non-cash adjustment for store impairment and restructuring

 

 

17,585

 

 

 

20,236

 

 

 

—

 

Goodwill, intangibles and long-lived assets impairment

 

 

581,380

 

 

 

562,631

 

 

 

—

 

Non-employee equity based compensation (see Note 25 – Kazzam, LLC)

 

 

1,033

 

 

 

515

 

 

 

81

 

Stock option expense – time – based

 

 

796

 

 

 

1,319

 

 

 

1,744

 

Stock option expense – performance – based

 

 

7,847

 

 

 

—

 

 

 

—

 

Restricted stock unit and restricted cash awards expense – performance-based

 

 

1,329

 

 

 

—

 

 

 

—

 

Restricted stock units expense—time-based

 

 

2,071

 

 

 

2,033

 

 

 

1,174

 

Directors—non-cash compensation

 

 

337

 

 

 

313

 

 

 

196

 

(Gain) on debt refinancing

 

 

(273,149

)

 

 

—

 

 

 

—

 

Changes in operating assets and liabilities, net of effects of acquired

       businesses:

 

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in accounts receivable

 

 

22,396

 

 

 

(2,600

)

 

 

(10,431

)

Decrease (increase) in inventories

 

 

184,924

 

 

 

72,385

 

 

 

(142,866

)

(Increase) decrease in prepaid expenses and other current assets, net

 

 

(66,166

)

 

 

14,741

 

 

 

16,666

 

(Increase) decrease in accounts payable, accrued expenses and income

       taxes payable

 

 

28,002

 

 

 

(65,617

)

 

 

12,138

 

Net cash provided by operating activities

 

 

77,200

 

 

 

43,693

 

 

 

101,856

 

Cash flows (used in) provided by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid in connection with acquisitions, net of cash acquired

 

 

(3,305

)

 

 

(20,878

)

 

 

(65,301

)

Capital expenditures

 

 

(51,128

)

 

 

(61,733

)

 

 

(85,661

)

Proceeds from disposal of property and equipment

 

 

162

 

 

 

246,286

 

 

 

55

 

Net cash (used in) provided by investing activities

 

 

(54,271

)

 

 

163,675

 

 

 

(150,907

)

Cash flows provided by (used in) financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of loans, notes payable and long-term obligations

 

 

(254,438

)

 

 

(441,632

)

 

 

(547,695

)

Proceeds from loans, notes payable and long-term obligations

 

 

368,439

 

 

 

203,344

 

 

 

652,087

 

Exercise of stock options

 

 

147

 

 

 

1,148

 

 

 

2,269

 

Treasury stock purchases

 

 

(96

)

 

 

(156

)

 

 

(40,197

)

Debt issuance and modification costs

 

 

(20,348

)

 

 

(414

)

 

 

(10,294

)

Net cash provided by (used in) financing activities

 

 

93,704

 

 

 

(237,710

)

 

 

56,170

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(500

)

 

 

6,299

 

 

 

(2,308

)

Net increase(decrease) in cash and cash equivalents and

       restricted cash

 

 

116,133

 

 

 

(24,043

)

 

 

4,811

 

Less: net (decrease) in cash classified within current assets held for sale

 

 

(31,628

)

 

 

—

 

 

 

—

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

35,176

 

 

 

59,219

 

 

 

54,408

 

Cash and cash equivalents and restricted cash at end of period*

 

$

119,681

 

 

$

35,176

 

 

$

59,219

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

68,396

 

 

$

108,561

 

 

$

94,472

 

Income taxes, net of refunds

 

$

26,867

 

 

$

36,093

 

 

$

59,156

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued

(In thousands, unaudited)

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss)

 

$

(96,395

)

 

$

(268,829

)

 

$

(528,457

)

 

$

(532,858

)

Interest expense, net

 

$

13,089

 

 

 

26,042

 

 

 

77,043

 

 

 

114,899

 

Income tax (benefit) expense

 

$

(28,360

)

 

 

20,504

 

 

 

(156,653

)

 

 

(1,305

)

Depreciation and amortization

 

 

18,710

 

 

 

18,736

 

 

 

76,506

 

 

 

81,116

 

EBITDA

 

 

(92,956

)

 

 

(203,547

)

 

 

(531,561

)

 

 

(338,148

)

Non-cash purchase accounting adjustments

 

 

—

 

 

 

243

 

 

 

—

 

 

 

3,000

 

Store impairment and restructuring charges (c)

 

 

3,038

 

 

 

3,818

 

 

 

39,323

 

 

 

58,778

 

Other restructuring, retention and severance (b)

 

 

403

 

 

 

1,212

 

 

 

12,104

 

 

 

6,460

 

Goodwill, intangibles and long-lived assets impairment (c)

 

 

—

 

 

 

303,531

 

 

 

581,380

 

 

 

562,631

 

Deferred rent (d)

 

 

(529

)

 

 

(754

)

 

 

(3,147

)

 

 

(1,796

)

Closed store expense (e)

 

 

976

 

 

 

1,021

 

 

 

3,858

 

 

 

4,445

 

Foreign currency (gains) losses, net

 

 

(2,013

)

 

 

(65

)

 

 

(1,058

)

 

 

421

 

Stock option expense – time – based (f)

 

 

125

 

 

 

169

 

 

 

796

 

 

 

1,319

 

Stock option expense – performance – based (n)

 

 

—

 

 

 

—

 

 

 

7,847

 

 

 

—

 

Non-employee equity-based compensation (g)

 

 

—

 

 

 

129

 

 

 

1,033

 

 

 

515

 

Undistributed (loss) in equity method investments

 

 

(356

)

 

 

(277

)

 

 

—

 

 

 

(472

)

Corporate development expenses (h)

 

 

1,004

 

 

 

2,426

 

 

 

7,197

 

 

 

14,208

 

Refinancing charges (j)

 

 

—

 

 

 

36

 

 

 

—

 

 

 

36

 

Restricted stock units – time-based (i)

 

 

503

 

 

 

490

 

 

 

2,071

 

 

 

2,033

 

Restricted stock unit and restricted cash awards expense – performance-based

 

 

950

 

 

 

(1,036

)

 

 

1,460

 

 

 

—

 

Non-recurring legal settlements/costs

 

 

673

 

 

 

6,753

 

 

 

7,843

 

 

 

8,548

 

(Gain) on debt refinancing (j)

 

 

—

 

 

 

—

 

 

 

(273,149

)

 

 

—

 

Gain on sale/leaseback transaction (o)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(58,381

)

(Gain) loss on sale of assets (o)

 

 

—

 

 

 

5,074

 

 

 

—

 

 

 

5,074

 

Inventory disposal (c)

 

 

88,358

 

 

 

—

 

 

 

88,358

 

 

 

—

 

Loss on held for sale (p)

 

 

73,948

 

 

 

—

 

 

 

73,948

 

 

 

 

 

COVID - 19 (l)

 

 

2,784

 

 

 

—

 

 

 

73,843

 

 

 

—

 

Other

 

 

354

 

 

 

301

 

 

 

3,388

 

 

 

518

 

Adjusted EBITDA

 

$

77,262

 

 

$

119,524

 

 

$

95,534

 

 

$

269,189

 

Adjusted EBITDA margin

 

 

45.8

%

 

 

40.3

%

 

 

19.9

%

 

 

31.7

%

 

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued

(In thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended December 31, 2020 EBITDA Adjustments

 

 

 

 

 

 

 

December 31, 2020

GAAP

Basis (as

reported)

 

 

Store

impairment

and

restructuring

charges (c)

 

 

Corporate

development

expenses (h)

 

 

Legal

 

 

Stock Option

Expense/Non-

Employee Equity

Compensation/

Restricted

stock units –

time-based

(f)(g)(i)(n)

 

 

Deferred

Rent (d)

 

 

Other

restructuring,

retention and

severance (b)

 

 

Closed

store

expense (e)

 

 

COVID-

19 (l)

 

 

Foreign

currency

losses

 

 

Other (p)

 

 

December 31,

2020

Non-GAAP

basis

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

645,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

645,284

 

Royalties and franchise fees

 

 

2,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,897

 

Total revenues

 

 

648,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

648,181

 

Cost of sales

 

 

479,348

 

 

 

(89,765

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(506

)

 

 

 

 

 

 

 

 

 

 

389,077

 

Wholesale selling expenses

 

 

13,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,006

 

Retail operating expenses

 

 

136,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

480

 

 

 

 

 

 

 

(823

)

 

 

(1,956

)

 

 

 

 

 

 

 

 

 

 

134,597

 

Franchise expenses

 

 

2,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,921

 

General and administrative expenses

 

 

48,126

 

 

 

 

 

 

 

360

 

 

 

(673

)

 

 

(1,578

)

 

 

49

 

 

 

(403

)

 

 

(153

)

 

 

(322

)

 

 

 

 

 

 

 

 

 

 

45,406

 

Art and development costs

 

 

4,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,543

 

Store impairment and restructuring charges

 

 

1,631

 

 

 

(1,631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Loss on assets held for sale

 

 

73,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(73,948

)

 

 

—

 

Total expenses

 

 

760,419

 

 

 

(91,396

)

 

 

360

 

 

 

(673

)

 

 

(1,578

)

 

 

529

 

 

 

(403

)

 

 

(976

)

 

 

(2,784

)

 

 

—

 

 

 

(73,948

)

 

 

589,550

 

(Loss) from operations

 

 

(112,238

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,631

 

Interest expense, net

 

 

13,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,089

 

Other (income) expense, net

 

 

(572

)

 

 

 

 

 

 

(1,364

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,013

 

 

 

2

 

 

 

79

 

(Gain) on debt refinancing

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Income (loss) before income taxes

 

 

(124,755

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,463

 

Interest expense, net

 

 

13,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,089

 

Depreciation and amortization

 

 

18,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,710

 

EBITDA

 

 

(92,956

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77,262

 

Adjustments to EBITDA

 

 

170,218

 

 

 

(91,396

)

 

 

(1,004

)

 

 

(673

)

 

 

(1,578

)

 

 

529

 

 

 

(403

)

 

 

(976

)

 

 

(2,784

)

 

 

2,013

 

 

 

(73,946

)

 

 

—

 

Adjusted EBITDA

 

$

77,262

 

 

$

(91,396

)

 

$

(1,004

)

 

$

(673

)

 

$

(1,578

)

 

$

529

 

 

$

(403

)

 

$

(976

)

 

$

(2,784

)

 

$

2,013

 

 

$

(73,946

)

 

$

77,262

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued

(In thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended December 31, 2019 EBITDA Adjustments

 

 

 

 

 

 

 

December 31, 2019

GAAP

Basis (as

reported)

 

 

Goodwill, intangibles and long-lived assets impairment (c)

 

 

Store

impairment

and

restructuring

charges (a)

 

 

Gain on sale/leaseback transaction

(o)

 

 

Corporate

development

expenses (h)

 

 

Legal

 

 

Stock Option

Expense/Non-

Employee Equity

Compensation/

Restricted

stock units –

time-based

(f)(g)(i)(m)

 

 

Deferred

Rent (d)

 

 

Other

restructuring,

retention and

severance (b)

 

 

Closed

store

expense (e)

 

 

Foreign

currency

gains

 

 

Other

 

 

December 31,

2019

Non-GAAP

basis

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

728,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

728,361

 

Royalties and franchise fees

 

 

3,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,190

 

Total revenues

 

 

731,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

731,551

 

Cost of sales

 

 

435,122

 

 

 

 

 

 

 

(597

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

435,228

 

Wholesale selling expenses

 

 

16,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,174

 

Retail operating expenses

 

 

137,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(835

)

 

 

 

 

 

 

 

 

 

 

136,804

 

Franchise expenses

 

 

3,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,339

 

General and administrative expenses

 

 

51,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,753

)

 

 

247

 

 

 

51

 

 

 

(1,212

)

 

 

(186

)

 

 

 

 

 

 

 

 

 

 

43,322

 

Art and development costs

 

 

5,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,635

 

Development stage expenses

 

 

2,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,772

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

Store impairment and restructuring charges

 

 

3,221

 

 

 

 

 

 

 

(3,221

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Goodwill, intangibles and long-lived assets impairment

 

 

303,531

 

 

 

(303,531

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Total expenses

 

 

958,606

 

 

 

(303,531

)

 

 

(3,818

)

 

 

—

 

 

 

(2,772

)

 

 

(6,753

)

 

 

247

 

 

 

754

 

 

 

(1,212

)

 

 

(1,021

)

 

 

—

 

 

 

—

 

 

 

640,500

 

Income from operations

 

 

(227,055

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

91,051

 

Interest expense, net

 

 

26,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,042

 

Other expense, net

 

 

(4,772

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

(5,375

)

 

 

(9,737

)

Income before income taxes

 

 

(248,325

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

74,746

 

Interest expense, net

 

 

26,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,042

 

Depreciation and amortization

 

 

18,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,736

 

EBITDA

 

 

(203,547

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

119,524

 

Adjustments to EBITDA

 

 

323,071

 

 

 

(303,531

)

 

 

(3,818

)

 

 

—

 

 

 

(2,427

)

 

 

(6,753

)

 

 

247

 

 

 

754

 

 

 

(1,212

)

 

 

(1,021

)

 

 

65

 

 

 

(5,375

)

 

 

—

 

Adjusted EBITDA

 

$

119,524

 

 

$

(303,531

)

 

$

(3,818

)

 

$

—

 

 

$

(2,427

)

 

$

(6,753

)

 

$

247

 

 

$

754

 

 

$

(1,212

)

 

$

(1,021

)

 

$

65

 

 

$

(5,375

)

 

$

119,524

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued

(In thousands, unaudited)

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2020 EBITDA Adjustments

 

 

 

 

 

 

 

December 31, 2020

GAAP

Basis (as

reported)

 

 

Goodwill, intangibles and long-lived assets impairment (c)

 

 

Store

impairment

and

restructuring

charges , including inventory disposal (c)

 

 

Gain on debt refinancing (i)

 

 

Corporate

development

expenses (e)

 

 

Legal(k)

 

 

Stock Option

Expense/Non-

Employee Equity

Compensation/

Restricted

stock units

(g)(h)(i)(n)

 

 

Deferred

Rent (d)

 

 

Other

restructuring,

retention and

severance (b)

 

 

Closed

store

expense (e)(f)

 

 

COVID-

19 (q)

 

 

Foreign

currency

losses

 

 

Other (p)

 

 

December 31,

2020

Non-GAAP

basis

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,843,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,843,444

 

Royalties and franchise fees

 

 

7,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,246

 

Total revenues

 

 

1,850,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,850,690

 

Cost of sales

 

 

1,369,935

 

 

 

 

 

 

 

(105,232

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(214

)

 

 

(4,437

)

 

 

 

 

 

 

(42,952

)

 

 

 

 

 

 

(3,388

)

 

 

1,213,712

 

Wholesale selling expenses

 

 

50,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,840

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(623

)

 

 

 

 

 

 

 

 

 

 

47,658

 

Retail operating expenses

 

 

387,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,165

 

 

 

 

 

 

 

(3,556

)

 

 

(18,268

)

 

 

 

 

 

 

 

 

 

 

368,739

 

Franchise expenses

 

 

12,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(672

)

 

 

 

 

 

 

 

 

 

 

11,474

 

General and administrative expenses

 

 

210,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(210

)

 

 

(7,843

)

 

 

(12,174

)

 

 

196

 

 

 

(7,667

)

 

 

(302

)

 

 

(11,328

)

 

 

 

 

 

 

 

 

 

 

170,916

 

Art and development costs

 

 

17,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,638

 

Development stage expenses

 

 

2,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,932

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Store impairment and restructuring charges

 

 

22,449

 

 

 

 

 

 

 

(22,449

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Loss on assets held for sale

 

 

73,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(73,948

)

 

 

—

 

Goodwill, intangibles and long-lived assets impairment

 

 

581,380

 

 

 

(581,380

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Total expense

 

 

2,728,191

 

 

 

(581,380

)

 

 

(127,681

)

 

 

—

 

 

 

(4,982

)

 

 

(7,843

)

 

 

(12,174

)

 

 

3,147

 

 

 

(12,104

)

 

 

(3,858

)

 

 

(73,843

)

 

 

—

 

 

 

(77,336

)

 

 

1,830,137

 

(Loss) income from operations

 

 

(877,501

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,553

 

Interest expense, net

 

 

77,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77,043

 

Other expense, net

 

 

3,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,215

)

 

 

 

 

 

 

(1,033

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,058

 

 

 

 

 

 

 

1,525

 

(Gain) on debt refinancing

 

 

(273,149

)

 

 

 

 

 

 

 

 

 

 

273,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

(Loss) before income taxes

 

 

(685,110

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58,015

)

Interest expense, net

 

 

77,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77,043

 

Depreciation and amortization

 

 

76,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,506

 

EBITDA

 

 

(531,561

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95,534

 

Adjustments to EBITDA

 

 

627,095

 

 

 

(581,380

)

 

 

(127,681

)

 

 

273,149

 

 

 

(7,197

)

 

 

(7,843

)

 

 

(13,207

)

 

 

3,147

 

 

 

(12,104

)

 

 

(3,858

)

 

 

(73,843

)

 

 

1,058

 

 

 

(77,336

)

 

 

—

 

Adjusted EBITDA

 

$

95,534

 

 

$

(581,380

)

 

$

(127,681

)

 

$

273,149

 

 

$

(7,197

)

 

$

(7,843

)

 

$

(13,207

)

 

$

3,147

 

 

$

(12,104

)

 

$

(3,858

)

 

$

(73,843

)

 

$

1,058

 

 

$

(77,336

)

 

$

95,534

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued

(In thousands, unaudited)

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2019 EBITDA Adjustments

 

 

 

 

 

 

 

December 31, 2019

GAAP

Basis (as

reported)

 

 

Goodwill, intangibles and long-lived assets impairment (o)

 

 

Store

impairment

and

restructuring

charges (c)

 

 

Gain on sale/leaseback transaction

(a)

 

 

Corporate

development

expenses (e)

 

 

Legal(k)

 

 

Stock Option

Expense/Non-

Employee Equity

Compensation/

Restricted

stock units

(g)(h)(i)(m)

 

 

Deferred

Rent (d)

 

 

Other

restructuring,

retention and

severance (b)

 

 

Closed

store

expense (f)

 

 

Non-Cash

Purchase

Accounting

Adjustments

 

 

Foreign

currency

gains

 

 

Other (r)(s)

 

 

December 31,

2019

Non-GAAP

basis

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,339,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,339,510

 

Royalties and franchise fees

 

$

9,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,279

 

Total revenues

 

 

2,348,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,348,789

 

Cost of sales

 

 

1,500,633

 

 

 

 

 

 

 

(29,740

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,472,427

 

Wholesale selling expenses

 

 

67,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,103

 

Retail operating expenses

 

 

440,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31

)

 

 

(3,946

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

436,418

 

Franchise expenses

 

 

13,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,152

 

General and administrative expenses

 

 

177,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,548

)

 

 

(3,867

)

 

 

262

 

 

 

(6,429

)

 

 

(500

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

158,590

 

Art and development costs

 

 

23,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,203

 

Development stage expenses

 

 

10,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,736

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Gain on sale/leaseback transaction

 

 

(58,381

)

 

 

 

 

 

 

 

 

 

 

58,381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Store impairment and restructuring charges

 

 

29,038

 

 

 

 

 

 

 

(29,038

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Goodwill, intangibles and long-lived assets impairment

 

 

562,631

 

 

 

(562,631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

Total expenses

 

 

2,766,182

 

 

 

(562,631

)

 

 

(58,778

)

 

 

58,381

 

 

 

(10,736

)

 

 

(8,548

)

 

 

(3,867

)

 

 

1,796

 

 

 

(6,460

)

 

 

(4,446

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,170,893

 

(Loss) income from operations

 

 

(417,393

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

177,896

 

Interest expense, net

 

 

114,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114,899

 

Other expense, net

 

 

1,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,471

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,001

)

 

 

(421

)

 

 

(5,155

)

 

 

(10,177

)

(Loss) income before income taxes

 

 

(534,163

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73,174

 

Interest expense, net

 

 

114,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114,899

 

Depreciation and amortization

 

 

81,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81,116

 

EBITDA

 

 

(338,148

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

269,189

 

Adjustments to EBITDA

 

 

607,337

 

 

 

(562,631

)

 

 

(58,778

)

 

 

58,381

 

 

 

(14,207

)

 

 

(8,548

)

 

 

(3,867

)

 

 

1,796

 

 

 

(6,460

)

 

 

(4,446

)

 

 

(3,001

)

 

 

(421

)

 

 

(5,155

)

 

 

—

 

Adjusted EBITDA

 

$

269,189

 

 

$

(562,631

)

 

$

(58,778

)

 

$

58,381

 

 

$

(14,207

)

 

$

(8,548

)

 

$

(3,867

)

 

$

1,796

 

 

$

(6,460

)

 

$

(4,446

)

 

$

(3,001

)

 

$

(421

)

 

$

(5,155

)

 

$

269,189

 

 

 

 

 

PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED NET INCOME

(In thousands, except share and per share data, unaudited)

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) before income taxes

 

$

(124,755

)

 

$

(248,325

)

 

$

(685,110

)

 

$

(534,163

)

Intangible asset amortization (l)

 

 

2,918

 

 

 

3,572

 

 

 

11,362

 

 

 

14,100

 

Non-cash purchase accounting adjustments

 

 

—

 

 

 

2

 

 

 

—

 

 

 

4,202

 

Amortization of deferred financing costs and original issuance discounts (m)

 

 

922

 

 

 

1,211

 

 

 

4,198

 

 

 

4,722

 

Store impairment and restructuring charges (c)

 

 

1,338

 

 

 

3,818

 

 

 

30,813

 

 

 

58,778

 

Goodwill and intangibles impairment (o)

 

 

—

 

 

 

303,531

 

 

 

581,380

 

 

 

562,631

 

Refinancing charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

36

 

Stock option expense (g)

 

 

125

 

 

 

169

 

 

 

8,643

 

 

 

1,319

 

Restricted stock units expense—performance based (i)

 

 

1,460

 

 

 

(1,036)

 

 

 

1,460

 

 

 

—

 

Non-employee equity based compensation (h)

 

 

—

 

 

 

129

 

 

 

1,033

 

 

 

515

 

(Gain) on sale-leaseback (a)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(58,381

)

(Gain) on debt refinancing (j)

 

 

 

—

 

 

—

 

 

 

273,149

 

 

 

—

 

Other restructuring charges (b)

 

 

—

 

 

 

389

 

 

 

10,139

 

 

 

3,211

 

(Gain) on sale of Canada retail assets (r)

 

 

—

 

 

 

(2,873

)

 

 

—

 

 

 

(2,873

)

Non-recurring legal settlements/costs

 

 

68

 

 

 

6,500

 

 

 

7,094

 

 

 

6,500

 

Loss on assets held for sale (p)

 

 

73,948

 

 

 

—

 

 

 

73,948

 

 

 

—

 

Inventory disposal (c)

 

 

88,358

 

 

 

—

 

 

 

88,358

 

 

 

—

 

COVID – 19 (q)

 

 

2,548

 

 

 

—

 

 

 

73,661

 

 

 

—

 

Adjusted income (loss) before income taxes

 

$

46,930

 

 

$

67,087

 

 

$

(66,170

)

 

$

60,597

 

Adjusted income tax (benefit) expense (n)

 

 

19,476

 

 

 

19,300

 

 

 

(16,940

)

 

 

17,183

 

Adjusted net income (loss)

 

$

27,454

 

 

$

47,787

 

 

$

(49,230

)

 

$

43,414

 

Adjusted net income(loss) per common share - diluted

 

$

0.25

 

 

$

0.51

 

 

 

(0.49

)

 

$

0.46

 

Weighted-average number of common shares-diluted

 

 

111,298,379

 

 

 

93,372,232

 

 

 

100,804,944

 

 

 

93,604,794

 

 

 

(a)

During June 2019, the Company reported a $58.4 million gain from the sale and leaseback of its main distribution center in Chester, New York and its metallic balloons manufacturing facility in Eden Prairie, Minnesota. The aggregate sale price for the three properties was $128.0 million. Simultaneous with the sale, the Company entered into twenty-year leases for each of the facilities

(b)

Amounts expensed during 2020 principally related to severance due to organizational changes. Amounts expensed during 2019 principally relate to executive severance and the write-off of inventory for a section of the Company’s Party City stores that were restructured

(c)

During the years ended December 31, 2020 and 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and, after careful consideration and evaluation of the store locations, the Company made the decision to accelerate the optimization of its store portfolio. In 2019, 55 stores were identified for closure, out of which 35 stores were closed in 2019 and 20 stores were closed in January 2020. In 2020, 21 stores identified for closure in the first quarter of 2020 and were closed in the third quarter. These closings should provide the Company with capital flexibility to expand into underserved markets. In addition, the Company evaluated the recoverability of long-lived assets at the open stores and recorded an impairment charge associated with the

operating lease asset and property, plant and equipment for open stores where sales were affected due to the outbreak of, and local, state and federal governmental responses to, COVID-19. In conjunction with the store optimization program and store impairment, during the years ended December 31, 2020 and 2019, the Company recorded charges as detailed in Note 3 – Store Impairment and Restructuring Charges, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

 

          As indicated in Note 7 – Inventories, Net, of Item 8, “Financial Statements and Supplementary Data,” during the fourth quarter of 2020, the Company continued to make progress in improving inventory levels across its stores and distribution network. Consistent with the strategy of rationalizing in-store SKU count and improving working capital velocity, the Company has updated its seasonal assortment strategy to target higher in-season sell-through of merchandise and reduce annual inventory carry-over. The more edited and curated assortments are expected to improve the customer experience by making stores easier to shop and product selections more relevant to consumers, while also improving the efficiency of inventory management and reducing working capital needs. As a result, the Company disposed of $88,358 in inventory during the fourth quarter of 2020 that will not be required in future seasons

(d)

The deferred rent adjustment reflects the difference between accounting for rent and landlord incentives in accordance with GAAP and the Company’s actual cash outlay for such items.

(e)

Principally represents third-party costs related to acquisitions (primarily legal expenses and diligence fees). Such costs are excluded from the definition of “Consolidated Adjusted EBITDA” that is utilized for certain covenants in the Company’s credit agreements. Additionally, 2019 and 2020 include start-up costs for Kazzam (see Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion)

(f)

Principally charges incurred related to closing underperforming stores

(g)

Represents non-cash charges related to stock options

(h)

Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion

(i)

Non-cash charges for restricted stock units that vest based on service conditions and performance restricted stock units that vest based on service and performance conditions

(j)

As described in Note 12 — Long-Term Obligations of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K, the Company recognized a gain of $273,149 on debt refinancing transactions

(k)

Non-recurring legal settlements/costs

(l)

Represents the non-cash amortization of intangible assets.

(m)

Includes the non-cash amortization of deferred financing costs, original issuance discounts and capitalized call premiums. Additionally, certain years include charges related to debt refinancings. See note (c) for further discussion

(n)

Represents income tax expense/benefit after excluding the specific tax impacts for each of the pre-tax adjustments. The tax impacts for each of the adjustments were determined by applying to the pre-tax adjustments the effective income tax rates for the specific legal entities in which the adjustments were recorded.

(o)

As a result of a sustained decline in market capitalization, the Company recognized a non-cash pre-tax goodwill and intangibles impairment charges during the year ended December 31, 2019 and December 31, 2020, respectively. (see Note 4, Goodwill, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion)

(p)

Note 6 – Disposition of Assets and Assets and Liabilities Held for Sale, the Company closed the previously disclosed sale of a substantial portion of its international operations. As of December 31, 2020, the Company reported the assets and liabilities of the international operations as held for sale and recorded a loss reserve of $73,948 against the net assets

(q)

Represents COVID-19 expenses for employees on temporary furlough for whom the Company provides health benefits; non-payroll expenses including advertising, occupancy and other store expenses

(r)

The Company recorded a $2.9 million gain on sale of its Canadian-based Party City stores, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income

(s)

Represents a loss on sale of ownership interest in Punchbowl (see Note 21, Fair Value Measurements, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion) and certain property, plant and equipment, and a write-off of goodwill related to the Company’s sale of its Canadian-based Party City stores

 

PARTY CITY HOLDCO INC.
SEGMENT INFORMATION

(In thousands, except percentages, unaudited)

 

 

 

Three Months Ended December 31,

 

 

2020

 

 

2019

 

 

Dollars in Thousands

 

 

Percentage of Total Revenues

 

Dollars in Thousands

 

 

Percentage of Total Revenues

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

$

247,513

 

 

 

38.2

%

 

$

277,233

 

 

 

37.9

%

Eliminations

 

 

(126,697

)

 

 

(19.5

)

 

 

(120,231

)

 

 

(16.4

)

Net wholesale

 

 

120,816

 

 

 

18.6

 

 

 

157,002

 

 

 

21.5

 

Retail

 

 

524,467

 

 

 

80.8

 

 

 

571,359

 

 

 

78.1

 

Total net sales

 

 

645,283

 

 

 

99.6

 

 

 

728,361

 

 

 

99.6

 

Royalties and franchise fees

 

 

2,898

 

 

 

0.4

 

 

 

3,190

 

 

 

0.4

 

Total revenues

 

$

648,181

 

 

 

100.0

%

 

$

731,551

 

 

 

100.0

%

 

 

 

Fiscal Year Ended December 31,

 

 

2020

 

 

2019

 

 

Dollars in Thousands

 

 

Percentage of Total Revenues

 

Dollars in Thousands

 

 

Percentage of Total Revenues

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

$

940,228

 

 

 

50.8

%

 

$

1,240,026

 

 

 

52.8

%

Eliminations

 

 

(471,863

)

 

 

(25.5

)

 

 

(642,652

)

 

 

(27.4

)

Net wholesale

 

 

468,365

 

 

 

25.3

 

 

 

597,374

 

 

 

25.4

 

Retail

 

 

1,375,079

 

 

 

74.3

 

 

 

1,742,136

 

 

 

74.2

 

Total net sales

 

 

1,843,444

 

 

 

99.6

 

 

 

2,339,510

 

 

 

99.6

 

Royalties and franchise fees

 

 

7,246

 

 

 

0.4

 

 

 

9,279

 

 

 

0.4

 

Total revenues

 

$

1,850,690

 

 

 

100.0

%

 

$

2,348,789

 

 

 

100.0

%

 

 

 

Three Months Ended December 31,

 

 

2020

 

 

2019

 

 

Dollars in
Thousands

 

 

Percentage of
Net Sales

 

Dollars in
Thousands

 

 

Percentage of
Net Sales

Retail

 

$

143,702

 

 

 

27.4

%

 

$

259,678

 

 

 

45.4

%

Wholesale

 

 

23,717

 

 

 

19.6

 

 

 

33,561

 

 

 

21.4

 

Total gross profit

 

$

167,420

 

 

 

25.7

%

 

$

293,239

 

 

 

40.3

%

 

 

 

Fiscal Year Ended December 31,

 

 

2020

 

 

2019

 

 

Dollars in
Thousands

 

 

Percentage of
Net Sales

 

Dollars in
Thousands

 

 

Percentage of
Net Sales

Retail

 

$

400,738

 

 

 

29.1

%

 

$

696,439

 

 

 

40.0

%

Wholesale

 

 

74,256

 

 

 

15.9

 

 

 

142,438

 

 

 

23.8

 

Total gross profit

 

$

474,994

 

 

 

25.7

%

 

$

838,877

 

 

 

35.9

%

 

PARTY CITY HOLDCO INC.
OPERATING METRICS

 

 

 

Three Months Ended December 31,

 

 

LTM

 

 

 

2020

 

 

2019

 

 

2020

 

Store Count

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Stores:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

739

 

 

 

778

 

 

 

777

 

New stores opened

 

 

3

 

 

—

 

 

 

5

 

Acquired

 

 

4

 

 

—

 

 

 

6

 

Closed

 

 

—

 

 

 

(1

)

 

 

(42

)

End of period

 

 

746

 

 

 

777

 

 

 

746

 

Franchise Stores

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

90

 

 

 

98

 

 

 

98

 

New stores opened

 

 

—

 

 

 

—

 

 

—

 

Sold to Party City

 

 

—

 

 

 

—

 

 

 

(2

)

Closed

 

 

(5

)

 

 

—

 

 

 

(11

)

End of period

 

 

85

 

 

 

98

 

 

 

85

 

Grand Total

 

 

831

 

 

 

875

 

 

 

831

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Wholesale Share of Shelf (a)

 

83.1%

 

 

82.8%

 

 

82.1%

 

 

79.6%

 

Manufacturing Share of Shelf (b)

 

19.6%

 

 

17.2%

 

 

26.0%

 

 

23.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Brand comparable sales (c)

 

-5.9%

 

 

-5.1%

 

 

-16.5%

 

 

-3.0%

 

 

(a)

Wholesale share of shelf represents the percentage of our retail product cost of sales supplied by our wholesale operations.

(b)

Manufacturing share of shelf represents the percentage of our retail product cost of sales manufactured by the company.

(c)

Party city brand comparable sales include North American e-commerce sales.