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 |
|
|
PrincipalAmount |
|
|
Net CarryingAmount |
|
|
Net CarryingAmount |
|
|
Net CarryingAmount |
|
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.
|
|
|
|
|
|
|
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
EndedDecember 31, |
|
|
Year EndedDecember 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,
2020GAAPBasis
(asreported) |
|
|
Storeimpairmentandrestructuringcharges
(c) |
|
|
Corporatedevelopmentexpenses
(h) |
|
|
Legal |
|
|
Stock
OptionExpense/Non-Employee EquityCompensation/Restrictedstock
units
–time-based(f)(g)(i)(n) |
|
|
DeferredRent (d) |
|
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(e) |
|
|
COVID-19 (l) |
|
|
Foreigncurrencylosses |
|
|
Other (p) |
|
|
December
31,2020Non-GAAPbasis |
|
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,
2019GAAPBasis
(asreported) |
|
|
Goodwill, intangibles and long-lived assets impairment
(c) |
|
|
Storeimpairmentandrestructuringcharges
(a) |
|
|
Gain on sale/leaseback
transaction(o) |
|
|
Corporatedevelopmentexpenses
(h) |
|
|
Legal |
|
|
Stock
OptionExpense/Non-Employee EquityCompensation/Restrictedstock
units
–time-based(f)(g)(i)(m) |
|
|
DeferredRent (d) |
|
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(e) |
|
|
Foreigncurrencygains |
|
|
Other |
|
|
December
31,2019Non-GAAPbasis |
|
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,
2020GAAPBasis
(asreported) |
|
|
Goodwill, intangibles and long-lived assets impairment
(c) |
|
|
Storeimpairmentandrestructuringcharges
, including inventory disposal (c) |
|
|
Gain on debt refinancing (i) |
|
|
Corporatedevelopmentexpenses
(e) |
|
|
Legal(k) |
|
|
Stock
OptionExpense/Non-Employee EquityCompensation/Restrictedstock
units(g)(h)(i)(n) |
|
|
DeferredRent (d) |
|
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(e)(f) |
|
|
COVID-19 (q) |
|
|
Foreigncurrencylosses |
|
|
Other (p) |
|
|
December
31,2020Non-GAAPbasis |
|
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,
2019GAAPBasis
(asreported) |
|
|
Goodwill, intangibles and long-lived assets impairment
(o) |
|
|
Storeimpairmentandrestructuringcharges
(c) |
|
|
Gain on sale/leaseback
transaction(a) |
|
|
Corporatedevelopmentexpenses
(e) |
|
|
Legal(k) |
|
|
Stock
OptionExpense/Non-Employee EquityCompensation/Restrictedstock
units(g)(h)(i)(m) |
|
|
DeferredRent (d) |
|
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(f) |
|
|
Non-CashPurchaseAccountingAdjustments |
|
|
Foreigncurrencygains |
|
|
Other (r)(s) |
|
|
December
31,2019Non-GAAPbasis |
|
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
EndedDecember 31, |
|
|
Year EndedDecember 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 inThousands |
|
|
Percentage ofNet Sales |
|
Dollars inThousands |
|
|
Percentage ofNet 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 inThousands |
|
|
Percentage ofNet Sales |
|
Dollars inThousands |
|
|
Percentage ofNet 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. |
|
|
Contact:
ICR
Farah Soi and Rachel Schacter
203-682-8200
InvestorRelations@partycity.com
Source: Party City Holdco Inc.
Party City Holdco (NYSE:PRTY)
Historical Stock Chart
From Feb 2024 to Mar 2024
Party City Holdco (NYSE:PRTY)
Historical Stock Chart
From Mar 2023 to Mar 2024