Party City Holdco Inc. (the “Company” or “PRTY”; NYSE:PRTY) today
announced financial results for the third quarter ended September
30, 2020, as well as total revenue for fiscal October 2020.
Brad Weston, Chief Executive Officer, stated,
“We are very pleased with our better than expected third quarter
performance, highlighted by the continued strength in our core
business. Against a pandemic-impacted environment, we delivered
$534 million in sales, including an 8.3% brand comparable sales
increase, a stabilization in our Wholesale revenues and an almost
threefold increase in Adjusted EBITDA over the prior year
period.”
“The strides we are making to increase relevancy
and elevate our customer experience across channels continue to
strengthen our position of authority when it comes to celebrations.
In addition, these results reflect the consumers’ desire and
willingness to celebrate and are a testament to the agility and
discipline with which we are operating the business.” Mr. Weston
added.
Third Quarter Summary:
- Total revenues were $533.8 million,
a decrease of 1.2% on a reported basis and a decrease of 1.6% on a
constant currency basis.
- Total Retail sales decreased 1.3%
on a reported basis and 1.5% on a constant currency basis, with a
brand comparable sales increase of 8.3%, offset primarily by the
divestiture of 65 Canadian retail stores in October 2019 as well as
the impact of 76 store closures from the company's store
optimization program throughout 2019 and 2020. The total number of
corporate Party City stores was 739 as of September 30, 2020
compared to 843 a year ago.
- Brand comparable sales increased
8.3% in the third quarter due to strength in our core business
particularly in the balloon, birthday, and entertaining
categories.
- North American digitally enabled
sales increased 36.0% including BOPIS, curbside pickup, and
delivery.
- Net third-party Wholesale revenues
decreased 0.8% or a decrease of 1.6% in constant currency, with
continued improvement in independent and franchise customer
trends.
- Total gross profit margin increased
250 basis points to 33.1% of net sales. Excluding certain items not
indicative of core operating performance, gross profit margin
increased 250 basis points to 34.4% of net sales mainly due to
occupancy leverage, lower sales promotions, and favorable sales
mix.
- Operating expenses totaled $160.2
million or $25.0 million lower than the third quarter of 2019
(excluding the goodwill impairment charges in 2020 and 2019).
Excluding certain items not indicative of core operating
performance, operating expenses totaled $152.4 million, or 28.6% of
revenue, a reduction of $23.6 million or 400 basis points compared
to the third quarter of 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 $13.4 million
during the third quarter of 2020, compared to $29.4 million during
the third quarter of 2019 mainly due to $12.2 million in
forgiveness of certain semi-annual interest as a result of the debt
exchange refinancing transaction completed in July 2020.
- Reported GAAP net income was $239.7
million, or $2.24 per share.
- Adjusted net income was $11.0
million, or $0.10 per diluted share, an improvement of $0.38 per
share compared to adjusted net loss of $25.7 million, or $0.28 per
share, in the third quarter of 2019. (See “Non-GAAP Financial
Information”)
- Adjusted EBITDA was $49.2 million,
versus $17.1 million during the third quarter of 2019. (See
“Non-GAAP Financial Information”)
Fiscal October 2020 Update:
For fiscal October 2020 (for the Company’s
retail segment, fiscal October 2020 consisted of the five-week
period ended October 31, 2020), the Company reported total revenue
of $364.3 million, or 15.9% below the same period of last year.
Total Retail revenue decreased approximately 16.0%. Brand
comparable sales, which include Company-owned Party City stores in
the U.S and North American e-commerce operations, decreased 2.9%
with Halloween declines partially offset by continued strength in
core categories. North American digitally enabled sales, including
BOPIS, curbside pickup, and delivery increased 30.2%. The remaining
decrease was due to a strategic reduction in store count versus the
prior year period. During the month of October 2020, the Company
operated 740 total Party City locations vs 778 in the prior year
period, and 25 temporary Halloween City stores, compared to 256 in
2019.
Mr. Weston continued, “Our Halloween results
were ahead of our expectations, driven by strong results within
décor and better than expected sales of costumes, despite the
challenges of a pandemic-impacted backdrop. We are very proud of
our entire Party City team who delivered an exceptional Halloween
experience for our customers, despite the backdrop. We are
particularly encouraged by the performance of our core categories
into October, which demonstrate the strength and resiliency of our
business and the traction we are seeing from our strategic
initiatives, both of which bode well for our future
performance.”
“We continue to relentlessly focus on our
customers as we work to fulfill our mission of creating joy and
making it easy to create unforgettable memories. We look forward to
building on our progress as we close out the year in a
substantially stronger competitive and financial position,”
concluded Mr. Weston.
Balance Sheet Highlights:
As of the end of the third quarter on September
30, 2020, the Company had $170.6 million in cash and approximately
$178.5 million of availability under the ABL Facility, for total
liquidity of $349.1 million.
In addition, the principal balance of debt net
of cash on September 30, 2020 is $1,323 million. 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 |
|
|
|
September 30,
2020 |
|
|
September 30,
2020 |
|
|
September 30,
2020 |
|
|
December 31,
2019 |
|
|
September 30,
2019 |
|
Balance sheet debt, net of
deferred financing costs |
|
$ |
1,349,512 |
|
|
$ |
303,062 |
|
|
$ |
1,652,574 |
|
|
$ |
1,704,317 |
|
|
$ |
2,038,613 |
|
Less: Future interest payments |
|
|
50,172 |
|
|
|
108,376 |
|
|
|
158,548 |
|
|
|
- |
|
|
|
- |
|
Principal balance of debt
outstanding, net of deferred financing costs |
|
|
1,299,340 |
|
|
|
194,686 |
|
|
|
1,494,026 |
|
|
|
1,704,317 |
|
|
|
2,038,613 |
|
Less: Cash |
|
|
150,352 |
|
|
|
20,210 |
|
|
|
170,562 |
|
|
|
34,917 |
|
|
|
34,572 |
|
Principal balance of debt net of
cash |
|
$ |
1,148,988 |
|
|
$ |
174,476 |
|
|
$ |
1,323,464 |
|
|
$ |
1,669,400 |
|
|
$ |
2,004,041 |
|
Outlook:
The Company is providing the following fiscal
Q4 2020 outlook. This outlook is subject to
potential consumer and marketplace volatility due to the COVID-19
pandemic:
- Total revenue of $675 to $695
million
- Brand comparable sales flat to down
a low single digit percentage
- GAAP net income of $30 to $37
million
- GAAP diluted EPS of $0.28 to
$0.35
- Adjusted EBITDA of $80 to $90
million
- Adjusted net income of $33 to $40
million
- Adjusted diluted EPS of $0.31 to
$0.37
- Interest expense of approximately
$15 million, with cash interest payments of approximately $9
million
- Ending corporate store count is
expected to be approximately 740 stores
- Capital expenditures of
approximately $13 to $18 million in Q4 2020 and approximately $45
to $50 million for the full year
- D&A of approximately $19
million in Q4 2020 and approximately $76 million for the full
year.
- Principal balance of debt, net of
cash at end of year of approximately $1.3 billion
- Fiscal 2020 will contain an
additional, non-comparable “53rd week” in the fourth quarter. The
53rd week is expected to contribute approximately $35 million in
sales, approximately $7 million in adjusted EBITDA, and
approximately $0.05 in adjusted diluted EPS.
Conference Call
Information:
A conference call to discuss the third
quarter 2020 financial results is scheduled for today, November 9,
2020, 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 866-270-1533 (U.S. domestic) or
412-317-0797 (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 and Adjusted
Earnings per Share. 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 free cash flow, defined as Adjusted EBITDA less capital
expenditures, and 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. Adjusted Earnings per Share is
calculated by dividing Adjusted Net Income by the Weighted Average
Number of Common Shares-Diluted. 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, including Party City’s expectations regarding its
ability to maximize the potential of its plans to open and close
stores, plans to invest capital expenditures, and anticipated
interest expense and depreciation and amortization expense for
fiscal year 2020. 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: potential risks and uncertainties relating to the ultimate
geographic spread of COVID-19; the severity of the COVID-19
pandemic; the duration of the COVID-19 pandemic; actions that may
be taken by governmental authorities to contain the COVID-19
pandemic or to treat its impact; the potential negative impacts of
COVID-19 on the global economy and foreign sourcing; the impacts of
COVID-19 on our financial condition and business operation; 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 helium shortages 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, including as a result of the COVID-19
pandemic; 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, 2019 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)
|
|
September 30,2020 |
|
|
December 31,2019 |
|
|
|
(Note 2)(Unaudited) |
|
|
(Note 2) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
170,562 |
|
|
$ |
34,917 |
|
Accounts receivable, net |
|
|
149,825 |
|
|
|
149,109 |
|
Inventories, net |
|
|
630,357 |
|
|
|
658,419 |
|
Prepaid expenses and other current assets |
|
|
112,038 |
|
|
|
51,685 |
|
Total current assets |
|
|
1,062,782 |
|
|
|
894,130 |
|
Property, plant and equipment,
net |
|
|
206,447 |
|
|
|
243,572 |
|
Operating lease asset |
|
|
741,524 |
|
|
|
802,634 |
|
Goodwill |
|
|
669,564 |
|
|
|
1,072,330 |
|
Trade names |
|
|
383,666 |
|
|
|
530,320 |
|
Other intangible assets, net |
|
|
34,505 |
|
|
|
45,060 |
|
Other assets, net |
|
|
9,521 |
|
|
|
7,273 |
|
Total assets |
|
$ |
3,108,009 |
|
|
$ |
3,595,319 |
|
LIABILITIES, REDEEMABLE
SECURITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Loans and notes payable |
|
$ |
303,894 |
|
|
$ |
128,806 |
|
Accounts payable |
|
|
179,938 |
|
|
|
152,300 |
|
Accrued expenses |
|
|
202,636 |
|
|
|
150,921 |
|
Current portion of operating lease liability |
|
|
194,476 |
|
|
|
155,471 |
|
Income taxes payable |
|
|
— |
|
|
|
35,905 |
|
Current portion of long-term obligations |
|
|
14,342 |
|
|
|
71,524 |
|
Total current liabilities |
|
|
895,286 |
|
|
|
694,927 |
|
Long-term obligations, excluding
current portion |
|
|
1,334,338 |
|
|
|
1,503,987 |
|
Long-term portion of operating
lease liability |
|
|
677,183 |
|
|
|
720,735 |
|
Deferred income tax liabilities,
net |
|
|
49,508 |
|
|
|
126,081 |
|
Other long-term liabilities |
|
|
15,559 |
|
|
|
16,517 |
|
Total liabilities |
|
|
2,971,874 |
|
|
|
3,062,247 |
|
Redeemable securities |
|
|
— |
|
|
|
3,351 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock (110,573,555 and 94,461,576 shares outstanding and
121,848,074 and 121,662,540 shares issued at September 30,
2020 and December 31, 2019, respectively) |
|
|
1,371 |
|
|
|
1,211 |
|
Additional paid-in capital |
|
|
970,145 |
|
|
|
928,573 |
|
Accumulated deficit |
|
|
(469,040 |
) |
|
|
(37,219 |
) |
Accumulated other comprehensive loss |
|
|
(38,907 |
) |
|
|
(35,734 |
) |
Total Party City Holdco Inc. stockholders’ equity before common
stock held in treasury |
|
|
463,569 |
|
|
|
856,831 |
|
Less: Common stock held in treasury, at cost (11,274,519 and
27,200,964 shares at September 30, 2020 and December 31,
2019, respectively) |
|
|
(327,170 |
) |
|
|
(327,086 |
) |
Total Party City Holdco Inc. stockholders’ equity |
|
|
136,399 |
|
|
|
529,745 |
|
Noncontrolling interests |
|
|
(264 |
) |
|
|
(24 |
) |
Total stockholders’ equity |
|
|
136,135 |
|
|
|
529,721 |
|
Total liabilities, redeemable securities and
stockholders’ equity |
|
$ |
3,108,009 |
|
|
$ |
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
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
532,053 |
|
|
$ |
538,345 |
|
|
$ |
1,198,160 |
|
|
$ |
1,611,149 |
|
Royalties and franchise fees |
|
|
1,722 |
|
|
|
1,886 |
|
|
|
4,349 |
|
|
|
6,089 |
|
Total revenues |
|
|
533,775 |
|
|
|
540,231 |
|
|
|
1,202,509 |
|
|
|
1,617,238 |
|
Cost of sales |
|
|
355,923 |
|
|
|
373,413 |
|
|
|
890,587 |
|
|
|
1,065,511 |
|
Wholesale selling expenses |
|
|
11,950 |
|
|
|
16,084 |
|
|
|
37,115 |
|
|
|
50,929 |
|
Retail operating expenses |
|
|
97,100 |
|
|
|
111,595 |
|
|
|
250,502 |
|
|
|
302,756 |
|
Franchise expenses |
|
|
2,795 |
|
|
|
3,274 |
|
|
|
9,225 |
|
|
|
9,813 |
|
General and administrative
expenses |
|
|
42,191 |
|
|
|
43,062 |
|
|
|
162,118 |
|
|
|
126,497 |
|
Art and development costs |
|
|
4,257 |
|
|
|
5,927 |
|
|
|
13,095 |
|
|
|
17,568 |
|
Development stage expenses |
|
|
— |
|
|
|
2,728 |
|
|
|
2,932 |
|
|
|
7,966 |
|
Gain on sale/leaseback
transaction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(58,381 |
) |
Store impairment and
restructuring charges |
|
|
1,926 |
|
|
|
2,574 |
|
|
|
20,818 |
|
|
|
25,817 |
|
Goodwill, intangibles and
long-lived assets impairment |
|
|
44,732 |
|
|
|
259,100 |
|
|
|
581,380 |
|
|
|
259,100 |
|
Total expenses |
|
|
560,874 |
|
|
|
817,757 |
|
|
|
1,967,772 |
|
|
|
1,807,576 |
|
Loss from operations |
|
|
(27,099 |
) |
|
|
(277,526 |
) |
|
|
(765,263 |
) |
|
|
(190,338 |
) |
Interest expense, net |
|
|
13,422 |
|
|
|
29,424 |
|
|
|
63,954 |
|
|
|
88,857 |
|
Other (income) expense, net |
|
|
(2,873 |
) |
|
|
2,047 |
|
|
|
4,287 |
|
|
|
6,643 |
|
(Gain) on debt refinancing |
|
|
(273,149 |
) |
|
|
— |
|
|
|
(273,149 |
) |
|
|
— |
|
Income (loss) before income taxes |
|
|
235,501 |
|
|
|
(308,997 |
) |
|
|
(560,355 |
) |
|
|
(285,838 |
) |
Income tax (benefit) |
|
|
(4,164 |
) |
|
|
(27,252 |
) |
|
|
(128,293 |
) |
|
|
(21,809 |
) |
Net income (loss) |
|
|
239,665 |
|
|
|
(281,745 |
) |
|
|
(432,062 |
) |
|
|
(264,029 |
) |
Less: Net (loss) attributable to
noncontrolling interests |
|
|
(42 |
) |
|
|
(212 |
) |
|
|
(241 |
) |
|
|
(352 |
) |
Net income (loss) attributable to common shareholders of Party City
Holdco Inc. |
|
$ |
239,707 |
|
|
$ |
(281,533 |
) |
|
$ |
(431,821 |
) |
|
$ |
(263,677 |
) |
Net income (loss) per share
attributable to common shareholders of Party City Holdco
Inc.–Basic |
|
$ |
2.25 |
|
|
$ |
(3.02 |
) |
|
$ |
(4.41 |
) |
|
$ |
(2.83 |
) |
Net income (loss) per share
attributable to common shareholders of Party City Holdco
Inc.–Diluted |
|
$ |
2.24 |
|
|
$ |
(3.02 |
) |
|
$ |
(4.41 |
) |
|
$ |
(2.83 |
) |
Weighted-average number of common
shares-Basic |
|
|
106,709,307 |
|
|
|
93,346,448 |
|
|
|
97,872,174 |
|
|
|
93,271,392 |
|
Weighted-average number of common
shares-Diluted |
|
|
106,875,631 |
|
|
|
93,346,448 |
|
|
|
97,872,174 |
|
|
|
93,271,392 |
|
Dividends declared per share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Comprehensive income (loss) |
|
$ |
244,607 |
|
|
$ |
(288,573 |
) |
|
$ |
(435,235 |
) |
|
$ |
(266,883 |
) |
Less: Comprehensive (loss)
attributable to noncontrolling interests |
|
|
(42 |
) |
|
|
(213 |
) |
|
|
(241 |
) |
|
|
(364 |
) |
Comprehensive income (loss) attributable to common shareholders of
Party City Holdco Inc. |
|
$ |
244,649 |
|
|
$ |
(288,360 |
) |
|
$ |
(434,994 |
) |
|
$ |
(266,519 |
) |
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED EBITDA(In thousands,
unaudited)
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
239,665 |
|
|
$ |
(281,745 |
) |
|
$ |
(432,062 |
) |
|
$ |
(264,029 |
) |
Interest expense, net |
|
|
13,422 |
|
|
|
29,424 |
|
|
|
63,954 |
|
|
|
88,857 |
|
Income tax (benefit) |
|
|
(4,164 |
) |
|
|
(27,252 |
) |
|
|
(128,293 |
) |
|
|
(21,809 |
) |
Depreciation and amortization |
|
|
17,278 |
|
|
|
19,155 |
|
|
|
57,796 |
|
|
|
62,380 |
|
EBITDA |
|
|
266,201 |
|
|
|
(260,418 |
) |
|
|
(438,605 |
) |
|
|
(134,601 |
) |
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,757 |
|
Store impairment and restructuring charges (a) |
|
|
6,763 |
|
|
|
8,694 |
|
|
|
36,285 |
|
|
|
54,960 |
|
Other restructuring, retention and severance (b) |
|
|
2,957 |
|
|
|
(73 |
) |
|
|
11,701 |
|
|
|
5,248 |
|
Goodwill, intangibles and long-lived assets impairment (c) |
|
|
44,732 |
|
|
|
259,100 |
|
|
|
581,380 |
|
|
|
259,100 |
|
Deferred rent (d) |
|
|
254 |
|
|
|
446 |
|
|
|
(2,618 |
) |
|
|
(1,042 |
) |
Closed store expense (e) |
|
|
1,247 |
|
|
|
2,326 |
|
|
|
2,882 |
|
|
|
3,424 |
|
Foreign currency losses/(gains), net |
|
|
(3,312 |
) |
|
|
646 |
|
|
|
955 |
|
|
|
486 |
|
Stock option expense – time – based (f) |
|
|
111 |
|
|
|
409 |
|
|
|
671 |
|
|
|
1,150 |
|
Stock option expense – performance – based (n) |
|
|
— |
|
|
|
— |
|
|
|
7,847 |
|
|
|
— |
|
Restricted stock unit and restricted cash awards expense –
performance-based |
|
|
510 |
|
|
|
— |
|
|
|
510 |
|
|
|
— |
|
Non-employee equity-based compensation (g) |
|
|
— |
|
|
|
128 |
|
|
|
1,033 |
|
|
|
386 |
|
Undistributed income (loss) in equity method investments |
|
|
(59 |
) |
|
|
7 |
|
|
|
356 |
|
|
|
(195 |
) |
Corporate development expenses (h) |
|
|
581 |
|
|
|
4,588 |
|
|
|
6,193 |
|
|
|
11,782 |
|
Restricted stock units – time-based (i) |
|
|
429 |
|
|
|
610 |
|
|
|
1,568 |
|
|
|
1,543 |
|
Restricted stock unit expense – performance-based (m) |
|
|
— |
|
|
|
560 |
|
|
|
— |
|
|
|
1,036 |
|
Non-recurring legal settlements/costs |
|
|
661 |
|
|
|
194 |
|
|
|
7,170 |
|
|
|
1,795 |
|
(Gain) on debt refinancing (p) |
|
|
(273,149 |
) |
|
|
— |
|
|
|
(273,149 |
) |
|
|
— |
|
Gain on sale/leaseback transaction (o) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(58,381 |
) |
COVID - 19 (l) |
|
|
679 |
|
|
|
— |
|
|
|
71,059 |
|
|
|
— |
|
Other |
|
|
546 |
|
|
|
(75 |
) |
|
|
3,034 |
|
|
|
217 |
|
Adjusted
EBITDA |
|
$ |
49,151 |
|
|
$ |
17,142 |
|
|
$ |
18,272 |
|
|
$ |
149,665 |
|
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED EBITDA, Continued(In thousands,
unaudited)
|
|
|
|
|
Three Months Ended September 30, 2020 EBITDA
Adjustments |
|
|
|
|
|
|
September 30,
2020GAAPBasis
(asreported) |
|
|
Goodwill, intangibles and
long-lived assets impairment (c) |
|
|
Storeimpairmentandrestructuringcharges
(a) |
|
|
Gain on debt refinancing (p) |
|
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 |
|
|
September
30,2020Non-GAAPbasis |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
532,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
532,053 |
Royalties and franchise fees |
|
|
1,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,722 |
Total revenues |
|
|
533,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533,775 |
Cost of sales |
|
|
355,923 |
|
|
|
|
|
|
|
(4,837 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(80 |
) |
|
|
|
|
|
|
|
|
|
|
(1,266 |
) |
|
|
|
|
|
(469 |
) |
|
|
349,271 |
Wholesale selling expenses |
|
|
11,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,950 |
Retail operating expenses |
|
|
97,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(224 |
) |
|
|
|
|
|
|
(1,225 |
) |
|
|
(1,745 |
) |
|
|
|
|
|
|
|
|
|
93,906 |
Franchise expenses |
|
|
2,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,795 |
General and administrative
expenses |
|
|
42,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(370 |
) |
|
|
(661 |
) |
|
|
(1,050 |
) |
|
|
50 |
|
|
|
(2,957 |
) |
|
|
(22 |
) |
|
|
2,332 |
|
|
|
|
|
|
|
|
|
|
39,513 |
Art and development costs |
|
|
4,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,257 |
Store impairment and
restructuring charges |
|
|
1,926 |
|
|
|
|
|
|
|
(1,926 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Goodwill, intangibles and
long-lived assets impairment |
|
|
44,732 |
|
|
|
(44,732 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Total expenses |
|
|
560,874 |
|
|
|
(44,732 |
) |
|
|
(6,763 |
) |
|
|
— |
|
|
(370 |
) |
|
|
(661 |
) |
|
|
(1,050 |
) |
|
|
(254 |
) |
|
|
(2,957 |
) |
|
|
(1,247 |
) |
|
|
(679 |
) |
|
|
— |
|
|
(469 |
) |
|
|
501,692 |
(Loss) from
operations |
|
|
(27,099 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,083 |
Interest expense, net |
|
|
13,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,422 |
Other (income) expense, net |
|
|
(2,873 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,312 |
|
|
(18 |
) |
|
|
210 |
(Gain) on debt refinancing |
|
|
(273,149 |
) |
|
|
|
|
|
|
|
|
|
|
273,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Income (loss) before income
taxes |
|
|
235,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,451 |
Interest expense, net |
|
|
13,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,422 |
Depreciation and amortization |
|
|
17,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,278 |
EBITDA |
|
|
266,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,151 |
Adjustments to EBITDA |
|
|
(217,050 |
) |
|
|
(44,732 |
) |
|
|
(6,763 |
) |
|
|
273,149 |
|
|
(581 |
) |
|
|
(661 |
) |
|
|
(1,050 |
) |
|
|
(254 |
) |
|
|
(2,957 |
) |
|
|
(1,247 |
) |
|
|
(679 |
) |
|
|
3,312 |
|
|
(487 |
) |
|
|
— |
Adjusted
EBITDA |
|
$ |
49,151 |
|
|
$ |
(44,732 |
) |
|
$ |
(6,763 |
) |
|
$ |
273,149 |
|
$ |
(581 |
) |
|
$ |
(661 |
) |
|
$ |
(1,050 |
) |
|
$ |
(254 |
) |
|
$ |
(2,957 |
) |
|
$ |
(1,247 |
) |
|
$ |
(679 |
) |
|
$ |
3,312 |
|
$ |
(487 |
) |
|
$ |
49,151 |
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED EBITDA, Continued(In thousands,
unaudited)
|
|
|
|
|
|
Three Months Ended September 30, 2019 EBITDA
Adjustments |
|
|
|
|
|
|
September 30,
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 |
|
September
30,2019Non-GAAPbasis |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
538,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
538,345 |
|
Royalties and franchise fees |
|
|
1,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,886 |
|
Total revenues |
|
|
540,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,231 |
|
Cost of sales |
|
|
373,413 |
|
|
|
|
|
|
|
(6,120 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(656 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
366,637 |
|
Wholesale selling expenses |
|
|
16,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,084 |
|
Retail operating expenses |
|
|
111,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,240 |
) |
|
|
|
|
|
|
|
|
|
109,355 |
|
Franchise expenses |
|
|
3,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,274 |
|
General and administrative
expenses |
|
|
43,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(194 |
) |
|
|
(1,707 |
) |
|
|
210 |
|
|
|
73 |
|
|
(86 |
) |
|
|
|
|
|
|
|
|
|
41,358 |
|
Art and development costs |
|
|
5,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,927 |
|
Development stage expenses |
|
|
2,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,728 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Store impairment and
restructuring charges |
|
|
2,574 |
|
|
|
|
|
|
|
(2,574 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Goodwill, intangibles and
long-lived assets impairment |
|
|
259,100 |
|
|
|
(259,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Total expenses |
|
|
817,757 |
|
|
|
(259,100 |
) |
|
|
(8,694 |
) |
|
|
— |
|
|
(2,728 |
) |
|
|
(194 |
) |
|
|
(1,707 |
) |
|
|
(446 |
) |
|
|
73 |
|
|
(2,326 |
) |
|
|
— |
|
|
|
— |
|
|
542,635 |
|
Income from
operations |
|
|
(277,526 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,404 |
) |
Interest expense, net |
|
|
29,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,424 |
|
Other expense, net |
|
|
2,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,860 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(646 |
) |
|
|
68 |
|
|
(391 |
) |
Income before income taxes |
|
|
(308,997 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,437 |
) |
Interest expense, net |
|
|
29,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,424 |
|
Depreciation and amortization |
|
|
19,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,155 |
|
EBITDA |
|
|
(260,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,142 |
|
Adjustments to EBITDA |
|
|
277,560 |
|
|
|
(259,100 |
) |
|
|
(8,694 |
) |
|
|
— |
|
|
(4,588 |
) |
|
|
(194 |
) |
|
|
(1,707 |
) |
|
|
(446 |
) |
|
|
73 |
|
|
(2,326 |
) |
|
|
(646 |
) |
|
|
68 |
|
|
— |
|
Adjusted
EBITDA |
|
$ |
17,142 |
|
|
$ |
(259,100 |
) |
|
$ |
(8,694 |
) |
|
$ |
— |
|
$ |
(4,588 |
) |
|
$ |
(194 |
) |
|
$ |
(1,707 |
) |
|
$ |
(446 |
) |
|
$ |
73 |
|
$ |
(2,326 |
) |
|
$ |
(646 |
) |
|
$ |
68 |
|
$ |
17,142 |
|
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED EBITDA, Continued(In thousands,
unaudited)
|
|
|
|
|
|
Nine Months Ended September 30, 2020 EBITDA
Adjustments |
|
|
|
|
|
|
|
September 30,
2020GAAPBasis
(asreported) |
|
|
Goodwill, intangibles and
long-lived assets impairment (c) |
|
|
Storeimpairmentandrestructuringcharges
(a) |
|
|
Gain on debt refinancing (p) |
|
Corporatedevelopmentexpenses
(h) |
|
|
Legal |
|
|
Stock
OptionExpense/Non-Employee EquityCompensation/Restrictedstock
units(f)(g)(i)(n) |
|
|
DeferredRent (d) |
|
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(e) |
|
|
COVID-19 (l) |
|
|
Foreigncurrencylosses |
|
|
Other |
|
|
September
30,2020Non-GAAPbasis |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,198,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,198,160 |
|
Royalties and franchise fees |
|
|
4,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,349 |
|
Total revenues |
|
|
1,202,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,202,509 |
|
Cost of sales |
|
|
890,587 |
|
|
|
|
|
|
|
(15,467 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(214 |
) |
|
|
(4,437 |
) |
|
|
|
|
|
|
(42,446 |
) |
|
|
|
|
|
|
(898 |
) |
|
|
827,125 |
|
Wholesale selling expenses |
|
|
37,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,840 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(623 |
) |
|
|
|
|
|
|
|
|
|
|
34,652 |
|
Retail operating expenses |
|
|
250,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,685 |
|
|
|
|
|
|
|
(2,733 |
) |
|
|
(16,312 |
) |
|
|
|
|
|
|
|
|
|
|
234,142 |
|
Franchise expenses |
|
|
9,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(672 |
) |
|
|
|
|
|
|
|
|
|
|
8,553 |
|
General and administrative
expenses |
|
|
162,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(570 |
) |
|
|
(7,170 |
) |
|
|
(10,596 |
) |
|
|
147 |
|
|
|
(7,264 |
) |
|
|
(149 |
) |
|
|
(11,006 |
) |
|
|
|
|
|
|
|
|
|
|
125,510 |
|
Art and development costs |
|
|
13,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,095 |
|
Development stage expenses |
|
|
2,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,932 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
(Gain) on sale/leaseback
transaction |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Store impairment and
restructuring charges |
|
|
20,818 |
|
|
|
|
|
|
|
(20,818 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Goodwill, intangibles and
long-lived assets impairment |
|
|
581,380 |
|
|
|
(581,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Total expense |
|
|
1,967,772 |
|
|
|
(581,380 |
) |
|
|
(36,285 |
) |
|
|
— |
|
|
(5,342 |
) |
|
|
(7,170 |
) |
|
|
(10,596 |
) |
|
|
2,618 |
|
|
|
(11,701 |
) |
|
|
(2,882 |
) |
|
|
(71,059 |
) |
|
|
— |
|
|
|
(898 |
) |
|
|
1,243,077 |
|
(Loss) from
operations |
|
|
(765,263 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,568 |
) |
Interest expense, net |
|
|
63,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,954 |
|
Other expense, net |
|
|
4,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(851 |
) |
|
|
|
|
|
|
(1,033 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(955 |
) |
|
|
(2,492 |
) |
|
|
(1,044 |
) |
(Gain) on debt refinancing |
|
|
(273,149 |
) |
|
|
|
|
|
|
|
|
|
|
273,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
(Loss) before income taxes |
|
|
(560,355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(103,478 |
) |
Interest expense, net |
|
|
63,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,954 |
|
Depreciation and amortization |
|
|
57,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,796 |
|
EBITDA |
|
|
(438,605 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,272 |
|
Adjustments to EBITDA |
|
|
456,877 |
|
|
|
(581,380 |
) |
|
|
(36,285 |
) |
|
|
273,149 |
|
|
(6,193 |
) |
|
|
(7,170 |
) |
|
|
(11,629 |
) |
|
|
2,618 |
|
|
|
(11,701 |
) |
|
|
(2,882 |
) |
|
|
(71,059 |
) |
|
|
(955 |
) |
|
|
(3,390 |
) |
|
|
— |
|
Adjusted
EBITDA |
|
$ |
18,272 |
|
|
$ |
(581,380 |
) |
|
$ |
(36,285 |
) |
|
$ |
273,149 |
|
$ |
(6,193 |
) |
|
$ |
(7,170 |
) |
|
$ |
(11,629 |
) |
|
$ |
2,618 |
|
|
$ |
(11,701 |
) |
|
$ |
(2,882 |
) |
|
$ |
(71,059 |
) |
|
$ |
(955 |
) |
|
$ |
(3,390 |
) |
|
$ |
18,272 |
|
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED EBITDA, Continued(In thousands,
unaudited)
|
|
|
|
|
|
Nine Months Ended September 30, 2019 EBITDA
Adjustments |
|
|
|
|
|
|
|
September 30,
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(f)(g)(i)(m) |
|
|
DeferredRent (d) |
|
Otherrestructuring,retention
andseverance (b) |
|
|
Closedstoreexpense
(e) |
|
|
Non-CashPurchaseAccountingAdjustments |
|
|
Foreigncurrencygains |
|
|
Other |
|
|
September
30,2019Non-GAAPbasis |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,611,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,611,149 |
|
Royalties and franchise fees |
|
|
6,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,089 |
|
Total revenues |
|
|
1,617,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,617,238 |
|
Cost of sales |
|
|
1,065,511 |
|
|
|
|
|
|
|
(29,143 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,037,199 |
|
Wholesale selling expenses |
|
|
50,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,929 |
|
Retail operating expenses |
|
|
302,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31 |
) |
|
|
(3,111 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299,614 |
|
Franchise expenses |
|
|
9,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,813 |
|
General and administrative
expenses |
|
|
126,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,795 |
) |
|
|
(4,115 |
) |
|
|
211 |
|
|
(5,217 |
) |
|
|
(313 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,268 |
|
Art and development costs |
|
|
17,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,568 |
|
Development stage expenses |
|
|
7,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,965 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Gain on sale/leaseback
transaction |
|
|
(58,381 |
) |
|
|
|
|
|
|
|
|
|
|
58,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Store impairment and
restructuring charges |
|
|
25,817 |
|
|
|
|
|
|
|
(25,817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Goodwill, intangibles and
long-lived assets impairment |
|
|
259,100 |
|
|
|
(259,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Total expenses |
|
|
1,807,576 |
|
|
|
(259,100 |
) |
|
|
(54,960 |
) |
|
|
58,381 |
|
|
(7,965 |
) |
|
|
(1,795 |
) |
|
|
(4,115 |
) |
|
|
1,042 |
|
|
(5,248 |
) |
|
|
(3,424 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,530,392 |
|
Income from
operations |
|
|
(190,338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,846 |
|
Interest expense, net |
|
|
88,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,857 |
|
Other expense, net |
|
|
6,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,757 |
) |
|
|
(486 |
) |
|
|
(22 |
) |
|
|
(439 |
) |
(Loss) before income taxes |
|
|
(285,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,572 |
) |
Interest expense, net |
|
|
88,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,857 |
|
Depreciation and amortization |
|
|
62,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,380 |
|
EBITDA |
|
|
(134,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,665 |
|
Adjustments to EBITDA |
|
|
284,266 |
|
|
|
(259,100 |
) |
|
|
(54,960 |
) |
|
|
58,381 |
|
|
(11,782 |
) |
|
|
(1,795 |
) |
|
|
(4,115 |
) |
|
|
1,042 |
|
|
(5,248 |
) |
|
|
(3,424 |
) |
|
|
(2,757 |
) |
|
|
(486 |
) |
|
|
(22 |
) |
|
|
— |
|
Adjusted
EBITDA |
|
$ |
149,665 |
|
|
$ |
(259,100 |
) |
|
$ |
(54,960 |
) |
|
$ |
58,381 |
|
$ |
(11,782 |
) |
|
$ |
(1,795 |
) |
|
$ |
(4,115 |
) |
|
$ |
1,042 |
|
$ |
(5,248 |
) |
|
$ |
(3,424 |
) |
|
$ |
(2,757 |
) |
|
$ |
(486 |
) |
|
$ |
(22 |
) |
|
$ |
149,665 |
|
|
(a) |
|
During the three and nine months ended September 30, 2019, the
Company initiated a store optimization program under which it
identified 55 stores for closure, out of which 35 stores were
closed in 2019 and 20 stores were closed in January 2020. In
addition, 21 stores identified for closure in the first quarter of
2020 were closed in the third quarter. In conjunction with the
program, during the nine months ended September 30, 2020, the
Company recorded the following charges: inventory reserves:
$12,880, operating lease asset impairment: $14,530 (including
$6,051 related primarily to its active stores that were closed in
earlier in 2020 due to COVID-19), plant and equipment impairment:
$2,065 and labor and other costs related to closing the stores:
$4,223. During the first nine months ended September 30, 2019, the
Company recorded the following charges related to the store
optimization program: inventory reserves: $21,285, operating lease
asset impairment: $14,149, property, plant and equipment
impairment: $4,680, labor and other costs relates to closing
stores: $6,327 and severance: $661. See Note 3 – Store Impairment
and Restructuring Charges in Item 1 for further discussion.
Additionally, during the process of liquidating the inventory in
such stores, the Company lost margin of $5,230. |
(b) |
|
Amounts
expensed during the first nine months of 2020 principally relate 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) |
|
As a
result of a sustained decline in market capitalization and reduced
fair value of certain intangibles and long-lived assets, the
Company recognized non-cash pre-tax goodwill and intangibles
impairment charges for the nine months ended September 30, 2020
totaling $581.4. |
(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. During the
first quarter of 2019, the Company adopted ASC 842. Under the
standard, the difference between accounting for rent and landlord
incentives in accordance with GAAP and the Company’s actual cash
outlay for such items is now incorporated in the Company’s
operating lease asset. |
(e) |
|
Charges
incurred related to closing and relocating stores in the ordinary
course of business. |
(f) |
|
Represents non-cash charges related to stock options – time-based
and performance-based. |
(g) |
|
The
acquisition of Ampology’s interest in Kazzam, LLC in an equity
transaction. See Note 19 – Kazzam, LLC in Item 1 for further
discussion. |
(h) |
|
Primarily
represents costs for Kazzam (see Note 19 – Kazzam, LLC in Item 1
for further discussion) and third-party costs related to
acquisitions (principally legal and diligence expenses). |
(i) |
|
Non-cash
charges for restricted stock units that vest based on service
conditions. |
(j) |
|
During
February 2018, the Company amended the Term Loan Credit Agreement.
In conjunction with the amendment, the Company wrote-off
capitalized deferred financing costs, original issue discounts and
call premiums. The amounts are included in “Amortization of
deferred financing costs and original issuance discounts” in the
adjusted net income table above. |
(k) |
|
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. |
(l) |
|
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. |
(m) |
|
Non-cash
charges for restricted stock units that vest based on performance
conditions. |
(n) |
|
Represents non-cash charges related to stock options that vest
based on performance conditions. For the three and nine months
ended September 30, 2020, this includes a one-time compensation
expense of $7,847 that resulted from THL not achieving specified
investment returns. See Note 10, Capital Stock of Item 1,
“Condensed Consolidated Financial Statements (Unaudited)” in this
Quarterly Report on Form 10-Q. |
(o) |
|
During
June 2019, the Company reported a $58,381 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
$128,000. Simultaneous with the sale, the Company entered into
twenty-year leases for each of the facilities. |
(p) |
|
As
described in Note 16 – Current and Long-Term Obligations of Item 1,
“Condensed Consolidated Financial Statements (Unaudited)” in this
Quarterly Report on Form 10-Q, the Company recognized a gain of
$273,149 on debt refinancing transactions. |
|
|
|
|
|
|
PARTY CITY HOLDCO INC.RECONCILIATION OF
ADJUSTED NET INCOME(In thousands, except share and
per share data,
unaudited)
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
(Dollars in thousands,
except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
$ |
235,501 |
|
|
$ |
(308,997 |
) |
|
$ |
(560,355 |
) |
|
$ |
(285,838 |
) |
Intangible asset amortization |
|
|
2,899 |
|
|
|
3,553 |
|
|
|
8,444 |
|
|
|
10,528 |
|
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
424 |
|
|
|
— |
|
|
|
4,200 |
|
Amortization of deferred financing costs and original issuance
discounts (j) |
|
|
875 |
|
|
|
1,222 |
|
|
|
3,276 |
|
|
|
3,511 |
|
Store impairment and restructuring charges (a) |
|
|
1,321 |
|
|
|
8,694 |
|
|
|
29,475 |
|
|
|
54,960 |
|
Other restructuring charges (b) |
|
|
2,622 |
|
|
|
(263 |
) |
|
|
10,139 |
|
|
|
2,822 |
|
Goodwill, intangibles and long-lived assets impairment (c) |
|
|
44,732 |
|
|
|
259,100 |
|
|
|
581,380 |
|
|
|
259,100 |
|
Non-employee equity-based compensation (g) |
|
|
— |
|
|
|
128 |
|
|
|
1,033 |
|
|
|
386 |
|
Refinancing charges (j) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
36 |
|
Non-recurring legal settlements/costs |
|
|
605 |
|
|
|
— |
|
|
|
7,026 |
|
|
|
— |
|
Stock option expense – time – based (f) |
|
|
110 |
|
|
|
409 |
|
|
|
671 |
|
|
|
1,150 |
|
Stock option expense – performance – based (n) |
|
|
— |
|
|
|
— |
|
|
|
7,847 |
|
|
|
— |
|
Gain on sale/leaseback transaction (o) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(58,381 |
) |
(Gain) on debt refinancing (p) |
|
|
(273,149 |
) |
|
|
— |
|
|
|
(273,149 |
) |
|
|
— |
|
Restricted stock unit expense – performance-based (m) |
|
|
— |
|
|
|
560 |
|
|
|
— |
|
|
|
1,036 |
|
COVID - 19 (l) |
|
|
733 |
|
|
|
— |
|
|
|
71,113 |
|
|
|
— |
|
Adjusted income (loss)
before income taxes |
|
|
16,249 |
|
|
|
(35,170 |
) |
|
|
(113,100 |
) |
|
|
(6,490 |
) |
Adjusted income tax (benefit) expense (k) |
|
|
5,234 |
|
|
|
(9,459 |
) |
|
|
(36,416 |
) |
|
|
(2,117 |
) |
Adjusted net (loss)
income |
|
$ |
11,015 |
|
|
$ |
(25,711 |
) |
|
$ |
(76,684 |
) |
|
$ |
(4,373 |
) |
Adjusted net (loss)
income per common share –
diluted |
|
$ |
0.10 |
|
|
$ |
(0.28 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.05 |
) |
Weighted-average number of common
shares-diluted |
|
|
106,875,631 |
|
|
|
93,346,448 |
|
|
|
97,872,174 |
|
|
|
93,271,392 |
|
|
(a) |
|
During the
three and nine months ended September 30, 2019, the Company
initiated a store optimization program under which it identified 55
stores for closure, out of which 35 stores were closed in 2019 and
20 stores were closed in January 2020. In addition, 21 stores
identified for closure in the first quarter of 2020 were closed in
the third quarter. In conjunction with the program, during the nine
months ended September 30, 2020, the Company recorded the following
charges: inventory reserves: $12,880, operating lease asset
impairment: $14,530 (including $6,051 related primarily to its
active stores that were closed in earlier in 2020 due to COVID-19),
plant and equipment impairment: $2,065 and labor and other costs
related to closing the stores: $4,223. During the first nine months
ended September 30, 2019, the Company recorded the following
charges related to the store optimization program: inventory
reserves: $21,285, operating lease asset impairment: $14,149,
property, plant and equipment impairment: $4,680, labor and other
costs relates to closing stores: $6,327 and severance: $661. See
Note 3 – Store Impairment and Restructuring Charges in Item 1 for
further discussion. Additionally, during the process of liquidating
the inventory in such stores, the Company lost margin of
$5,230. |
(b) |
|
Amounts expensed during the first nine months of 2020
principally relate 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) |
|
As a result of a sustained decline in market capitalization and
reduced fair value of certain intangibles and long-lived assets,
the Company recognized non-cash pre-tax goodwill and intangibles
impairment charges for the nine months ended September 30, 2020
totaling $581.4. |
(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. During the
first quarter of 2019, the Company adopted ASC 842. Under the
standard, the difference between accounting for rent and landlord
incentives in accordance with GAAP and the Company’s actual cash
outlay for such items is now incorporated in the Company’s
operating lease asset. |
(e) |
|
Charges incurred related to closing and relocating stores in
the ordinary course of business. |
(f) |
|
Represents non-cash charges related to stock options –
time-based and performance-based. |
(g) |
|
The acquisition of Ampology’s interest in Kazzam, LLC in an
equity transaction. See Note 19 – Kazzam, LLC in Item 1 for further
discussion. |
(h) |
|
Primarily represents costs for Kazzam (see Note 19 – Kazzam,
LLC in Item 1 for further discussion) and third-party costs related
to acquisitions (principally legal and diligence expenses). |
(i) |
|
Non-cash charges for restricted stock units that vest based on
service conditions. |
(j) |
|
During February 2018, the Company amended the Term Loan Credit
Agreement. In conjunction with the amendment, the Company wrote-off
capitalized deferred financing costs, original issue discounts and
call premiums. The amounts are included in “Amortization of
deferred financing costs and original issuance discounts” in the
adjusted net income table above. |
(k) |
|
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. |
(l) |
|
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. |
(m) |
|
Non-cash charges for restricted stock units that vest based on
performance conditions. |
(n) |
|
Represents non-cash charges related to stock options that vest
based on performance conditions. For the three and nine months
ended September 30, 2020, this includes a one-time compensation
expense of $7,847 that resulted from THL not achieving specified
investment returns. See Note 10, Capital Stock of Item 1,
“Condensed Consolidated Financial Statements (Unaudited)” in this
Quarterly Report on Form 10-Q. |
(o) |
|
During June 2019, the Company reported a $58,381 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 $128,000. Simultaneous with the sale, the Company
entered into twenty-year leases for each of the facilities. |
(p) |
|
As described in Note 16 – Current and Long-Term Obligations of
Item 1, “Condensed Consolidated Financial Statements (Unaudited)”
in this Quarterly Report on Form 10-Q, the Company recognized a
gain of $273,149 on debt refinancing transactions. |
|
|
|
|
|
|
PARTY CITY HOLDCO INC.SEGMENT
INFORMATION(In thousands, except
percentages,
unaudited)
|
|
Three Months Ended
September 30, |
|
|
2020 |
|
2019 |
|
|
Dollars inThousands |
|
|
Percentage ofTotal Revenues |
|
Dollars inThousands |
|
|
Percentage ofTotal Revenues |
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
346,621 |
|
|
|
64.9 |
|
% |
|
$ |
383,425 |
|
|
|
71.0 |
|
% |
Eliminations |
|
|
(179,049 |
) |
|
|
(33.5 |
) |
|
|
|
(214,547 |
) |
|
|
(39.7 |
) |
|
Net wholesale |
|
|
167,572 |
|
|
|
31.4 |
|
|
|
|
168,878 |
|
|
|
31.3 |
|
|
Retail |
|
|
364,481 |
|
|
|
68.3 |
|
|
|
|
369,467 |
|
|
|
68.4 |
|
|
Total net sales |
|
|
532,053 |
|
|
|
99.7 |
|
|
|
|
538,345 |
|
|
|
99.7 |
|
|
Royalties and franchise fees |
|
|
1,722 |
|
|
|
0.3 |
|
|
|
|
1,886 |
|
|
|
0.3 |
|
|
Total revenues |
|
$ |
533,775 |
|
|
|
100.0 |
|
% |
|
$ |
540,231 |
|
|
|
100.0 |
|
% |
|
|
|
Nine Months Ended
September 30, |
|
|
2020 |
2019 |
|
|
Dollars inThousands |
|
|
Percentage ofTotal Revenues |
|
Dollars inThousands |
|
|
Percentage ofTotal Revenues |
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
692,715 |
|
|
|
57.6 |
|
% |
|
$ |
962,793 |
|
|
|
59.5 |
|
% |
Eliminations |
|
|
(345,167 |
) |
|
|
(28.7 |
) |
|
|
|
(522,421 |
) |
|
|
(32.3 |
) |
|
Net wholesale |
|
|
347,548 |
|
|
|
28.9 |
|
|
|
|
440,372 |
|
|
|
27.2 |
|
|
Retail |
|
|
850,612 |
|
|
|
70.7 |
|
|
|
|
1,170,777 |
|
|
|
72.4 |
|
|
Total net sales |
|
|
1,198,160 |
|
|
|
99.6 |
|
|
|
|
1,611,149 |
|
|
|
99.6 |
|
|
Royalties and franchise fees |
|
|
4,349 |
|
|
|
0.4 |
|
|
|
|
6,089 |
|
|
|
0.4 |
|
|
Total revenues |
|
$ |
1,202,509 |
|
|
|
100.0 |
|
% |
|
$ |
1,617,238 |
|
|
|
100.0 |
|
% |
|
|
|
|
|
Three Months Ended
September 30, |
|
|
2020 |
|
2019 |
|
|
Dollars inThousands |
|
|
Percentageof Net
Sales |
|
|
|
Dollars inThousands |
|
|
Percentageof Net
Sales |
|
|
Retail |
|
$ |
133,817 |
|
|
|
36.7 |
|
% |
|
$ |
128,692 |
|
|
|
34.8 |
|
% |
Wholesale |
|
|
42,313 |
|
|
|
25.3 |
|
|
|
|
36,240 |
|
|
|
21.5 |
|
|
Total Gross Profit |
|
$ |
176,130 |
|
|
|
33.1 |
|
% |
|
$ |
164,932 |
|
|
|
30.6 |
|
% |
|
|
|
Nine Months Ended
September 30, |
|
|
2020 |
2019 |
|
|
Dollars inThousands |
|
|
Percentageof Net
Sales |
|
|
|
Dollars inThousands |
|
|
Percentageof Net
Sales |
|
|
Retail |
|
$ |
257,035 |
|
|
|
30.2 |
|
% |
|
$ |
436,761 |
|
|
|
37.3 |
|
% |
Wholesale |
|
|
50,538 |
|
|
|
14.5 |
|
|
|
|
108,877 |
|
|
|
24.7 |
|
|
Total Gross Profit |
|
$ |
307,573 |
|
|
|
25.7 |
|
% |
|
$ |
545,638 |
|
|
|
33.9 |
|
% |
|
|
PARTY CITY HOLDCO INC.OPERATING
METRICS
|
|
Three Months Ended
September 30, |
|
|
LTM |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Stores: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
757 |
|
|
|
865 |
|
|
|
843 |
|
New stores opened |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
Acquired |
|
|
2 |
|
|
|
3 |
|
|
|
2 |
|
Closed |
|
|
(21 |
) |
|
|
(25 |
) |
|
|
(108 |
) |
End of period |
|
|
739 |
|
|
|
843 |
|
|
|
739 |
|
Franchise Stores |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
96 |
|
|
|
98 |
|
|
|
98 |
|
New stores opened |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Sold to Party City |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
Closed |
|
|
(5 |
) |
|
|
— |
|
|
|
(6 |
) |
End of period |
|
|
90 |
|
|
|
98 |
|
|
|
90 |
|
Grand Total |
|
|
829 |
|
|
|
941 |
|
|
|
829 |
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Share of
Shelf (a) |
|
81.1% |
|
78.3% |
|
81.4% |
|
78.0% |
Manufacturing Share of
Shelf (b) |
|
29.6% |
|
25.4% |
|
30.2% |
|
26.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand comparable sales
(c) |
|
8.3% |
|
-2.6% |
|
-21.8% |
|
-2.0% |
|
(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. |
|
|
|
Contacts:
Investor Relations
ICR
Farah Soi and Rachel Schacter
203-682-8200
InvestorRelations@partycity.com
Media Relations
ICR
Brittany Fraser
203-682-8200
PartyCityPR@partycity.com
Source: Party City Holdco Inc.
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