Party City Holdco Inc. (the “Company” or “PRTY”; NYSE:PRTY) today
announced financial results for the quarter ended June 30, 2021.
Brad Weston, Chief Executive Officer of Party
City, stated, “We are very pleased with our strong second quarter
results that exceeded our expectations. We saw sequential
acceleration of the business as the economy opened up and
restrictions subsided, driving increased consumer ability to
celebrate. The quarter was highlighted by robust trends at Retail
with the recovery at Wholesale underway, as expected. The strength
in performance was broad based, particularly across our core
everyday business, along with improved results in our seasonal
categories. The consistent strength that we have demonstrated in
our core everyday performance is a testament to the disciplined
execution of our strategic initiatives and meaningful progress
against our transformation strategy, with the resulting relevancy
strides positioning us to capitalize on the near and long-term
growth opportunities.”
Mr. Weston added, “As we look to the back half of
the year, the environment remains dynamic but we are well
positioned for continued growth. We are excited about our refined
marketing, improved store experience and elevated omni channel
capabilities, as we continue to deliver on our mission of inspiring
joy and making it easy to create unforgettable memories.”
Second Quarter Summary*:
- Total revenues were $535.7 million,
an increase of 110.4% compared to the second quarter 2020 driven by
a strong rebound of retail sales, partially offset by the
divestiture of a significant portion of our international
operations in the first quarter of 2021.
- Total retail sales increased 138.9%
on a reported and constant currency basis versus second quarter
2020 driven by a strong comparable sales increase in core
categories versus prior year.
- The total number of corporate Party
City stores was 749 as of June 30, 2021 compared to 757 in the
prior year period.
- Brand comparable sales increased
118.3% in the second quarter versus the 13 weeks ended June 27,
2020 and increased 19.1% compared to the 13 weeks ended June 29,
2019.
- Net third-party wholesale revenues
increased 33.4% compared to the second quarter of 2020 principally
due to the COVID-19 impact in the prior year period, partially
offset by the divestiture of a significant portion of our
international operations in the first quarter of 2021.
- Total gross profit margin increased
3,390 basis points to 40.5% of net sales. Excluding certain items
not indicative of core operating performance, gross profit margin
improved 2,120 basis points to 41.0% of net sales, primarily due to
fixed cost deleverage in 2020 caused by COVID-19 shutdowns. Gross
profit margin improvement was also driven by fewer promotions and
favorable product mix.
- Operating expenses totaled $155.3
million or $11.7 million higher than the second quarter of 2020
primarily due to higher retail operating expenses offset by
decreased general and administrative expenses. Excluding certain
items not indicative of core operating performance, operating
expenses totaled $150.6 million, or 28.1% of net sales, a
1,730-basis point improvement versus prior-year period primarily
driven by leverage on higher sales.
- Interest expense was $23.1 million
during the second quarter of 2021, compared to $25.4 million during
the second quarter of 2020 mainly due to lower amounts of debt
outstanding.
- Reported GAAP net income was $29.8
million, or earnings of $0.26 per diluted share.
- Adjusted net income was $34.1
million, or earnings of $0.29 per diluted share, compared to
adjusted net loss of $61.3 million, or a loss of $0.66 per share,
in the second quarter of 2020. (See “Non-GAAP Information”)
- Adjusted EBITDA was $85.8 million,
versus a loss of $42.8 million during the second quarter of 2020.
(See “Non-GAAP Information”).
- The effective tax rate for the
second quarter of 2021 was 25.5%.
* Second quarter results in fiscal year 2020
were negatively impacted by extended store closures and other
related impacts due to COVID-19.
Balance Sheet and Cash Flow
Highlights:
As of the end of the second quarter 2021, the
Company had $84.5 million in cash and approximately $170.2 million
of availability under the ABL Facility and approximately $14.6
million of availability under the Anagram ABL Facility, for total
liquidity of $269.3 million.
The carrying value of the Company's debt as of
June 30, 2021 was $1,460.1 million. The principal balance of debt
net of cash on June 30, 2021 was $1,258.9 million versus $1,756.2
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 reflects both principal
amounts as well as net carrying amounts of debt across the
Company’s debt instruments:
|
|
|
|
|
Party CityCredit Group |
|
AnagramHoldings, LLC |
|
PCHIConsolidated |
|
|
|
|
|
June 30, 2021 |
|
June 30, 2021 |
(in Thousands) |
|
PrincipalAmount |
|
Net CarryingAmount |
|
Net CarryingAmount |
|
Net CarryingAmount |
8.75% Senior Secured First Lien Notes – due 2026 |
|
$ |
750,000 |
|
|
|
731,305 |
|
|
|
- |
|
|
$ |
731,305 |
|
6.125% Senior Notes – due 2023 |
|
|
22,924 |
|
|
|
22,806 |
|
|
|
- |
|
|
|
22,806 |
|
6.625% Senior Notes – due 2026 |
|
|
92,254 |
|
|
|
91,519 |
|
|
|
- |
|
|
|
91,519 |
|
First Lien Party City Notes – due 2025 |
|
|
161,669 |
|
|
|
202,588 |
|
|
|
- |
|
|
|
202,588 |
|
First Lien Anagram Notes – due 2025 |
|
|
112,979 |
|
|
|
- |
|
|
|
150,451 |
|
|
|
150,451 |
|
Second Lien Anagram Notes – due 2026 |
|
|
86,981 |
|
|
|
- |
|
|
|
148,114 |
|
|
|
148,114 |
|
Finance lease obligations |
|
|
13,398 |
|
|
|
13,398 |
|
|
|
- |
|
|
|
13,398 |
|
Total long-term obligations |
|
|
1,240,205 |
|
|
|
1,061,616 |
|
|
|
298,565 |
|
|
|
1,360,181 |
|
Less: current portion |
|
N/A |
|
|
|
(1,265 |
) |
|
|
- |
|
|
|
(1,265 |
) |
Long-term obligations, excluding current portion |
|
|
1,240,205 |
|
|
|
1,060,351 |
|
|
|
298,565 |
|
|
|
1,358,916 |
|
Loans and notes payable* |
|
|
103,175 |
|
|
|
99,933 |
|
|
|
- |
|
|
|
99,933 |
|
Less: Cash |
|
|
(84,452 |
) |
|
|
(56,130 |
) |
|
|
(28,322 |
) |
|
|
(84,452 |
) |
Principal balance net of cash |
|
$ |
1,258,928 |
|
|
$ |
1,104,154 |
|
|
$ |
270,243 |
|
|
$ |
1,374,397 |
|
*Balance consists of ABL Facility.
Net cash provided by operating activities in the
first six months of 2021 was $13.8 million, compared to net cash
used in operating activities of $48.8 million in the prior year
period, with the year-over-year improvement driven primarily by
higher net sales and improved operating income, partially offset by
the change in working capital. Free cash flowa in the first six
months of 2021 was $77.8 million compared to $(49.2) million in the
prior year period, with the improvement driven by higher Adjusted
EBITDA due to improved operating results, partially offset by
higher capital expenditures. aFree cash flow defined as Adjusted
EBITDA less capital expenditures (See “Non-GAAP Financial
Information”).
Outlook:
The Company is providing the following fiscal
third quarter 2021 outlook. This outlook is subject to potential
consumer and marketplace volatility due to the COVID-19
pandemic:
- Total revenue of $490 to $515 million
- Brand comparable sales percentage increase of high single
digits compared to third quarter 2020, or mid-teens compared to
third quarter 2019
- GAAP net loss of $5 million to net income of $4 million with an
assumed Q3 tax rate of 27%
- Adjusted EBITDA of $35 to $45 million
The Company is providing the following updated
annual 2021 outlook:
- FY 2021 Interest expense of approximately $86 to $91
million
- FY 2021 Capital expenditures of approximately $80 to $90
million
The table below sets forth a reconciliation from
our third quarter 2021 forecasted GAAP Net Income to our Adjusted
EBITDA.
|
|
Q3 2021 |
|
Q3 2021 |
|
(in thousands) |
|
High |
|
Low |
|
Net Income |
|
$ |
3,500 |
|
$ |
(5,300 |
) |
Provision for Income Taxes |
|
|
1,300 |
|
|
(1,900 |
) |
Interest Expense |
|
|
22,000 |
|
|
23,000 |
|
Depreciation and Amortization Expense |
|
|
16,200 |
|
|
17,200 |
|
EBITDA |
|
$ |
43,000 |
|
$ |
33,000 |
|
EBITDA Add-Backs |
|
|
2,000 |
|
|
2,000 |
|
Adjusted EBITDA |
|
$ |
45,000 |
|
$ |
35,000 |
|
Conference Call Information
A conference call to discuss the second quarter
2021 financial results is scheduled for today, August 5, 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. We also
utilized operating expense excluding certain items not indicative
of core operating performance. 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 debt principal net of cash, 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 also define free cash flow as
Adjusted EBITDA less capital expenditures. 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 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 831 specialty retail party supply stores
(including franchise stores) throughout North America operating
under the names Party City and Halloween City, and e-commerce
websites, principally through the domain name PartyCity.com.
Contact: ICR Farah Soi and
Rachel Schacter 203-682-8200 InvestorRelations@partycity.com
Source: Party City Holdco Inc.
PARTY CITY HOLDCO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except share data, unaudited)
|
|
June 30, 2021 |
|
December 31, 2020 |
|
June 30, 2020 |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
84,452 |
|
|
$ |
119,532 |
|
|
$ |
154,133 |
|
Accounts receivable, net |
|
|
86,745 |
|
|
|
90,879 |
|
|
|
85,081 |
|
Inventories, net |
|
|
426,128 |
|
|
|
412,285 |
|
|
|
635,014 |
|
Prepaid expenses and other current assets |
|
|
68,363 |
|
|
|
45,905 |
|
|
|
94,710 |
|
Income tax receivable |
|
|
55,421 |
|
|
|
57,549 |
|
|
|
— |
|
Assets held for sale, net |
|
|
— |
|
|
|
83,110 |
|
|
|
— |
|
Total current assets |
|
|
721,109 |
|
|
|
809,260 |
|
|
|
968,938 |
|
Property, plant and equipment, net |
|
|
218,532 |
|
|
|
209,412 |
|
|
|
223,433 |
|
Operating lease asset |
|
|
684,802 |
|
|
|
700,087 |
|
|
|
755,288 |
|
Goodwill |
|
|
660,597 |
|
|
|
661,251 |
|
|
|
666,084 |
|
Trade names |
|
|
383,761 |
|
|
|
384,428 |
|
|
|
394,203 |
|
Other intangible assets, net |
|
|
27,825 |
|
|
|
32,134 |
|
|
|
39,402 |
|
Other assets, net |
|
|
26,193 |
|
|
|
9,883 |
|
|
|
9,435 |
|
Total assets |
|
$ |
2,722,819 |
|
|
$ |
2,806,455 |
|
|
$ |
3,056,783 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Loans and notes payable |
|
$ |
99,933 |
|
|
$ |
175,707 |
|
|
$ |
325,754 |
|
Accounts payable |
|
|
129,802 |
|
|
|
118,928 |
|
|
|
144,849 |
|
Accrued expenses |
|
|
190,347 |
|
|
|
160,605 |
|
|
|
179,159 |
|
Liabilities held for sale |
|
|
— |
|
|
|
68,492 |
|
|
|
— |
|
Current portion of operating lease liability |
|
|
136,749 |
|
|
|
176,045 |
|
|
|
202,971 |
|
Income taxes payable |
|
|
2,537 |
|
|
|
524 |
|
|
|
— |
|
Current portion of long-term obligations |
|
|
1,265 |
|
|
|
13,576 |
|
|
|
13,810 |
|
Total current liabilities |
|
|
560,633 |
|
|
|
713,877 |
|
|
|
866,543 |
|
Long-term obligations, excluding current portion |
|
|
1,358,916 |
|
|
|
1,329,808 |
|
|
|
1,557,576 |
|
Long-term portion of operating lease liability |
|
|
625,157 |
|
|
|
654,729 |
|
|
|
685,290 |
|
Deferred income tax liabilities, net |
|
|
37,052 |
|
|
|
34,705 |
|
|
|
67,458 |
|
Other long-term liabilities |
|
|
33,288 |
|
|
|
22,815 |
|
|
|
16,932 |
|
Total liabilities |
|
|
2,615,046 |
|
|
|
2,755,934 |
|
|
|
3,193,799 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock (111,476,496, 110,781,613 and 94,602,386 shares
outstanding and 122,790,983, 122,061,711 and 121,819,456 shares
issued at June 30, 2021, December 31, 2020, and June 30,
2020 respectively) |
|
|
1,383 |
|
|
|
1,373 |
|
|
|
1,211 |
|
Additional paid-in capital |
|
|
978,167 |
|
|
|
971,972 |
|
|
|
941,745 |
|
Accumulated deficit |
|
|
(549,693 |
) |
|
|
(565,457 |
) |
|
|
(708,747 |
) |
Accumulated other comprehensive income (loss) |
|
|
6,096 |
|
|
|
(29,916 |
) |
|
|
(43,849 |
) |
Total Party City Holdco Inc. stockholders’ equity before common
stock held in treasury |
|
|
435,953 |
|
|
|
377,972 |
|
|
|
190,360 |
|
Less: Common stock held in treasury, at cost (11,314,487,
11,280,098 and 27,217,070 shares at June 30, 2021,
December 31, 2020, and June 30, 2020, respectively) |
|
|
(327,394 |
) |
|
|
(327,182 |
) |
|
|
(327,170 |
) |
Total Party City Holdco Inc. stockholders’ equity |
|
|
108,559 |
|
|
|
50,790 |
|
|
|
(136,810 |
) |
Noncontrolling interests |
|
|
(786 |
) |
|
|
(269 |
) |
|
|
(206 |
) |
Total stockholders’ equity |
|
|
107,773 |
|
|
|
50,521 |
|
|
|
(137,016 |
) |
Total liabilities and stockholders’ equity |
|
$ |
2,722,819 |
|
|
$ |
2,806,455 |
|
|
$ |
3,056,783 |
|
PARTY CITY HOLDCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (In thousands, except
share and per share data, unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net sales* |
|
$ |
535,746 |
|
|
$ |
254,691 |
|
|
$ |
962,553 |
|
|
$ |
668,734 |
|
Cost of sales |
|
|
318,574 |
|
|
|
237,907 |
|
|
|
593,095 |
|
|
|
534,664 |
|
Gross Profit |
|
|
217,172 |
|
|
|
16,784 |
|
|
|
369,458 |
|
|
|
134,070 |
|
Wholesale selling expenses |
|
|
7,358 |
|
|
|
9,707 |
|
|
|
16,474 |
|
|
|
25,165 |
|
Retail operating expenses |
|
|
97,179 |
|
|
|
65,236 |
|
|
|
186,075 |
|
|
|
153,402 |
|
General and administrative expenses |
|
|
45,795 |
|
|
|
63,955 |
|
|
|
91,833 |
|
|
|
129,289 |
|
Art and development costs |
|
|
5,004 |
|
|
|
3,516 |
|
|
|
9,975 |
|
|
|
8,838 |
|
Store impairment and restructuring charges |
|
|
— |
|
|
|
1,164 |
|
|
|
— |
|
|
|
18,892 |
|
Loss on disposal of assets in international operations |
|
|
— |
|
|
|
— |
|
|
|
3,211 |
|
|
|
— |
|
Goodwill, intangibles and long-lived assets impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
536,648 |
|
Income (loss) from operations |
|
|
61,836 |
|
|
|
(126,794 |
) |
|
|
61,890 |
|
|
|
(738,164 |
) |
Interest expense, net |
|
|
23,116 |
|
|
|
25,412 |
|
|
|
40,330 |
|
|
|
50,532 |
|
Other (income) expense, net |
|
|
(1,300 |
) |
|
|
1,484 |
|
|
|
(873 |
) |
|
|
7,160 |
|
Income (loss) before income taxes |
|
|
40,020 |
|
|
|
(153,690 |
) |
|
|
22,433 |
|
|
|
(795,856 |
) |
Income tax expense (benefit) |
|
|
10,209 |
|
|
|
(23,631 |
) |
|
|
6,740 |
|
|
|
(124,129 |
) |
Net income (loss) |
|
|
29,811 |
|
|
|
(130,059 |
) |
|
|
15,693 |
|
|
|
(671,727 |
) |
Less: Net (loss) attributable to noncontrolling interests |
|
|
— |
|
|
|
(44 |
) |
|
|
(54 |
) |
|
|
(199 |
) |
Net income (loss) attributable to common shareholders of Party City
Holdco Inc. |
|
$ |
29,811 |
|
|
$ |
(130,015 |
) |
|
$ |
15,747 |
|
|
$ |
(671,528 |
) |
Net income (loss) per share attributable to common shareholders of
Party City Holdco Inc.–Basic |
|
$ |
0.27 |
|
|
$ |
(1.39 |
) |
|
$ |
0.14 |
|
|
$ |
(7.19 |
) |
Net income (loss) per share attributable to common shareholders of
Party City Holdco Inc.–Diluted |
|
$ |
0.26 |
|
|
$ |
(1.39 |
) |
|
$ |
0.14 |
|
|
$ |
(7.19 |
) |
Weighted-average number of common shares-Basic |
|
|
111,340,295 |
|
|
|
93,419,078 |
|
|
|
111,128,822 |
|
|
|
93,407,344 |
|
Weighted-average number of common shares-Diluted |
|
|
116,251,151 |
|
|
|
93,419,078 |
|
|
|
115,499,304 |
|
|
|
93,407,344 |
|
Dividends declared per share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Comprehensive income (loss) |
|
$ |
30,761 |
|
|
$ |
(125,961 |
) |
|
$ |
51,742 |
|
|
$ |
(679,842 |
) |
Less: Comprehensive (loss) attributable to noncontrolling
interests |
|
|
— |
|
|
|
(44 |
) |
|
|
(30 |
) |
|
|
(199 |
) |
Comprehensive income (loss) attributable to common shareholders of
Party City Holdco Inc. |
|
$ |
30,761 |
|
|
$ |
(125,917 |
) |
|
$ |
51,772 |
|
|
$ |
(679,643 |
) |
*Includes royalties and franchise fees. Prior year
amounts conformed to current year presentation
PARTY CITY HOLDCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
Cash flows provided by (used in) operating activities: |
|
|
|
|
|
|
Net income (loss) |
|
$ |
15,693 |
|
|
$ |
(671,727 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
34,860 |
|
|
|
40,518 |
|
Amortization of deferred financing costs and original issuance
discounts |
|
|
1,937 |
|
|
|
2,401 |
|
Provision for doubtful accounts |
|
|
1,171 |
|
|
|
4,443 |
|
Deferred income tax expense (benefit) |
|
|
2,622 |
|
|
|
(58,440 |
) |
Change in operating lease liability/asset |
|
|
(52,315 |
) |
|
|
44,803 |
|
Undistributed (income) loss in equity method investments |
|
|
(211 |
) |
|
|
415 |
|
Loss on disposal of assets |
|
|
109 |
|
|
|
93 |
|
Loss on disposal of assets in international operations |
|
|
3,211 |
|
|
|
— |
|
Non-cash adjustment for store impairment and restructuring
charges |
|
|
— |
|
|
|
16,458 |
|
Goodwill, intangibles and long-lived assets impairment |
|
|
— |
|
|
|
536,648 |
|
Non-employee equity-based compensation** |
|
|
— |
|
|
|
1,033 |
|
Stock option expense – time – based |
|
|
217 |
|
|
|
560 |
|
Stock option expense – performance – based |
|
|
— |
|
|
|
7,847 |
|
Restricted stock unit expense – time-based |
|
|
767 |
|
|
|
1,139 |
|
Restricted stock unit – performance-based |
|
|
1,789 |
|
|
|
— |
|
Directors – non-cash compensation |
|
|
114 |
|
|
|
75 |
|
Net loss on debt repayment |
|
|
226 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
(Increase) decrease in accounts receivable |
|
|
(2,395 |
) |
|
|
56,315 |
|
(Increase) decrease in inventories |
|
|
(15,191 |
) |
|
|
20,055 |
|
(Increase) in prepaid expenses and other current assets |
|
|
(31,055 |
) |
|
|
(47,700 |
) |
Increase (decrease) in accounts payable, accrued expenses and
income taxes payable |
|
|
52,228 |
|
|
|
(3,717 |
) |
Net cash provided by (used in) operating
activities |
|
|
13,777 |
|
|
|
(48,781 |
) |
Cash flows (used in) investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(40,452 |
) |
|
|
(18,332 |
) |
Proceeds from disposal of property and equipment |
|
|
— |
|
|
|
7 |
|
Proceeds from sale of international operations, net of cash
disposed |
|
|
20,556 |
|
|
|
— |
|
Net cash (used in) investing activities |
|
|
(19,896 |
) |
|
|
(18,325 |
) |
Cash flows (used in) provided by financing activities: |
|
|
|
|
|
|
Repayment of loans, notes payable and long-term obligations |
|
|
(836,435 |
) |
|
|
(79,763 |
) |
Proceeds from loans, notes payable and long-term obligations |
|
|
794,750 |
|
|
|
269,874 |
|
Treasury stock purchases |
|
|
(212 |
) |
|
|
(85 |
) |
Exercise of stock options |
|
|
3,322 |
|
|
|
— |
|
Debt issuance costs |
|
|
(21,437 |
) |
|
|
— |
|
Net cash (used in) provided by financing
activities |
|
|
(60,012 |
) |
|
|
190,026 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
274 |
|
|
|
(3,945 |
) |
Net (decrease) increase in cash and cash equivalents
and restricted cash |
|
|
(65,857 |
) |
|
|
118,975 |
|
Change in cash classified within current assets held for sale |
|
|
31,628 |
|
|
|
— |
|
Cash and cash equivalents and restricted cash at beginning of
period |
|
|
119,681 |
|
|
|
35,176 |
|
Cash and cash equivalents and restricted cash at end of
period* |
|
$ |
85,452 |
|
|
$ |
154,151 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid during the period for interest expense |
|
$ |
16,594 |
|
|
$ |
43,402 |
|
Cash paid during the period for income taxes, net of refunds |
|
$ |
3,411 |
|
|
$ |
11,854 |
|
*Includes $1,000 and $18 of restricted cash for
the six months ended June 30, 2021 and 2020. The Company
recorded restricted cash in other assets, net as presented in the
consolidated balance sheet at June 30, 2021 and in prepaid expenses
and other current assets as presented in the consolidated balance
sheets at December 31, 2020 and June 30, 2020.
** See Note 17 – Kazzam, LLC of Item 1, “Condensed
Consolidated Financial Statements (Unaudited)” in the June 30, 2021
Quarterly Report on Form 10-Q 2021.
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
29,811 |
|
|
$ |
(130,059 |
) |
|
$ |
15,693 |
|
|
$ |
(671,727 |
) |
Interest expense, net |
|
|
23,116 |
|
|
|
25,412 |
|
|
|
40,330 |
|
|
|
50,532 |
|
Income tax expense (benefit) |
|
|
10,209 |
|
|
|
(23,631 |
) |
|
|
6,740 |
|
|
|
(124,129 |
) |
Depreciation and amortization |
|
|
16,916 |
|
|
|
22,766 |
|
|
|
34,860 |
|
|
|
40,518 |
|
EBITDA |
|
|
80,052 |
|
|
|
(105,512 |
) |
|
|
97,623 |
|
|
|
(704,806 |
) |
Store impairment and restructuring charges (a) |
|
|
— |
|
|
|
1,761 |
|
|
|
— |
|
|
|
29,522 |
|
Inventory restructuring and early lease terminations (j) |
|
|
3,499 |
|
|
|
— |
|
|
|
6,637 |
|
|
|
— |
|
Other restructuring, retention and severance (b) |
|
|
31 |
|
|
|
5,697 |
|
|
|
2,082 |
|
|
|
8,744 |
|
Goodwill, intangibles and long-lived assets impairment (c) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
536,648 |
|
Deferred rent (d) |
|
|
(398 |
) |
|
|
(1,488 |
) |
|
|
1,128 |
|
|
|
(2,872 |
) |
Closed store expense (e) |
|
|
1,543 |
|
|
|
400 |
|
|
|
3,136 |
|
|
|
1,635 |
|
Foreign currency losses/(gains), net |
|
|
(772 |
) |
|
|
12 |
|
|
|
(1,311 |
) |
|
|
4,267 |
|
Stock option expense – time-based |
|
|
104 |
|
|
|
206 |
|
|
|
217 |
|
|
|
560 |
|
Stock option expense – performance – based |
|
|
— |
|
|
|
7,847 |
|
|
|
— |
|
|
|
7,847 |
|
Restricted stock unit and restricted cash awards expense –
performance-based |
|
|
1,161 |
|
|
|
— |
|
|
|
1,978 |
|
|
|
— |
|
Restricted stock units – time-based |
|
|
415 |
|
|
|
518 |
|
|
|
767 |
|
|
|
1,139 |
|
Non-employee equity-based compensation (f) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,033 |
|
Undistributed loss (income) in equity method investments |
|
|
(547 |
) |
|
|
559 |
|
|
|
(211 |
) |
|
|
415 |
|
Corporate development expenses (g) |
|
|
— |
|
|
|
2,643 |
|
|
|
— |
|
|
|
5,612 |
|
Non-recurring legal settlements/costs |
|
|
— |
|
|
|
188 |
|
|
|
— |
|
|
|
6,509 |
|
Gain or loss on sale of property, plant and equipment* |
|
|
— |
|
|
|
83 |
|
|
|
111 |
|
|
|
51 |
|
COVID - 19 (i) |
|
|
655 |
|
|
|
44,200 |
|
|
|
1,270 |
|
|
|
70,380 |
|
Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
3,211 |
|
|
|
— |
|
Net loss on debt repayment |
|
|
— |
|
|
|
— |
|
|
|
226 |
|
|
|
— |
|
Other* |
|
|
90 |
|
|
|
133 |
|
|
|
1,388 |
|
|
|
2,437 |
|
Adjusted EBITDA |
|
$ |
85,833 |
|
|
$ |
(42,753 |
) |
|
$ |
118,252 |
|
|
$ |
(30,879 |
) |
* Prior period amounts have been
reclassified to conform with current period
presentation.
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued
(In thousands, unaudited)
|
|
|
|
|
Three Months Ended June 30, 2021 EBITDA
Adjustments |
|
|
|
|
|
June 30, 2021 GAAP Basis
(as reported) |
|
Inventory restructuring and early lease terminations
(j) |
|
Stock Option Expense/Non-
Employee Equity
Compensation/ Restricted
stock units |
|
Deferred Rent (d) |
|
Other restructuring,
retention and severance (b) |
|
Closed store expense
(e) |
|
COVID- 19 (i) |
|
Foreign currency
gains |
|
Other |
|
June 30, 2021
Non-GAAP basis |
Net sales |
|
$ |
535,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
535,746 |
|
Cost of sales |
|
|
318,574 |
|
|
|
(2,312 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
316,262 |
|
Gross Profit |
|
|
217,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,484 |
|
Wholesale selling expenses |
|
|
7,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,358 |
|
Retail operating expenses |
|
|
97,179 |
|
|
|
(1,187 |
) |
|
|
|
|
|
356 |
|
|
|
|
|
|
(1,516 |
) |
|
|
(463 |
) |
|
|
|
|
|
|
|
|
94,369 |
|
General and administrative expenses |
|
|
45,795 |
|
|
|
|
|
|
(1,680 |
) |
|
|
42 |
|
|
|
(31 |
) |
|
|
(27 |
) |
|
|
(192 |
) |
|
|
|
|
|
(39 |
) |
|
|
43,868 |
|
Art and development costs |
|
|
5,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,004 |
|
Income from operations |
|
|
61,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,885 |
|
Interest expense, net |
|
|
23,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(51 |
) |
|
|
23,065 |
|
Other (income) expense, net |
|
|
(1,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
772 |
|
|
|
547 |
|
|
|
19 |
|
Income (loss) before income taxes |
|
|
40,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,801 |
|
Interest expense, net |
|
|
23,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,116 |
|
Depreciation and amortization |
|
|
16,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,916 |
|
EBITDA |
|
|
80,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,833 |
|
Adjustments to EBITDA |
|
|
5,781 |
|
|
|
(3,499 |
) |
|
|
(1,680 |
) |
|
|
398 |
|
|
|
(31 |
) |
|
|
(1,543 |
) |
|
|
(655 |
) |
|
|
772 |
|
|
|
457 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
85,833 |
|
|
$ |
(3,499 |
) |
|
$ |
(1,680 |
) |
|
$ |
398 |
|
|
$ |
(31 |
) |
|
$ |
(1,543 |
) |
|
$ |
(655 |
) |
|
$ |
772 |
|
|
$ |
457 |
|
|
$ |
85,833 |
|
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued
(In thousands, unaudited)
|
|
|
|
|
Three Months Ended June 30, 2020 EBITDA
Adjustments |
|
|
|
|
|
|
June 30, 2020 GAAP Basis
(as reported) |
|
Store impairment
and restructuring charges
(a) |
|
Corporate development
expenses (g) |
|
Legal |
|
Stock Option Expense/Non-
Employee Equity
Compensation/ Restricted
stock units – time-based |
|
Deferred Rent (d) |
|
Other restructuring,
retention and severance (b) |
|
Closed store expense
(e) |
|
COVID- 19 (i) |
|
Foreign currency
losses |
|
Other |
|
June 30, 2020
Non-GAAP basis |
Net sales |
|
$ |
254,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
254,691 |
|
Cost of sales |
|
|
237,907 |
|
|
|
(597 |
) |
|
|
|
|
|
|
|
|
|
|
|
(134 |
) |
|
|
(4,437 |
) |
|
|
|
|
|
(28,376 |
) |
|
|
|
|
|
|
|
|
204,363 |
|
Gross Profit |
|
|
16,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,328 |
|
Wholesale selling expenses |
|
|
9,707 |
|
|
|
|
|
|
(1,104 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(509 |
) |
|
|
|
|
|
|
|
|
8,094 |
|
Retail operating expenses |
|
|
65,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,573 |
|
|
|
|
|
|
(342 |
) |
|
|
(4,389 |
) |
|
|
|
|
|
|
|
|
62,078 |
|
General and administrative expenses |
|
|
63,955 |
|
|
|
|
|
|
(1,003 |
) |
|
|
(188 |
) |
|
|
(8,571 |
) |
|
|
49 |
|
|
|
(1,260 |
) |
|
|
(58 |
) |
|
|
(10,926 |
) |
|
|
|
|
|
|
|
|
41,998 |
|
Art and development costs |
|
|
3,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,516 |
|
Store impairment and restructuring charges |
|
|
1,164 |
|
|
|
(1,164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
(Loss) from operations |
|
|
(126,794 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(65,358 |
) |
Interest expense, net |
|
|
25,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,412 |
|
Other (income) expense, net |
|
|
1,484 |
|
|
|
|
|
|
(536 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
(775 |
) |
|
|
161 |
|
Loss before income taxes |
|
|
(153,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,931 |
) |
Interest expense, net |
|
|
25,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,412 |
|
Depreciation and amortization |
|
|
22,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,766 |
|
EBITDA |
|
|
(105,512 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42,753 |
) |
Adjustments to EBITDA |
|
|
62,759 |
|
|
|
(1,761 |
) |
|
|
(2,643 |
) |
|
|
(188 |
) |
|
|
(8,571 |
) |
|
|
1,488 |
|
|
|
(5,697 |
) |
|
|
(400 |
) |
|
|
(44,200 |
) |
|
|
(12 |
) |
|
|
(775 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(42,753 |
) |
|
$ |
(1,761 |
) |
|
$ |
(2,643 |
) |
|
$ |
(188 |
) |
|
$ |
(8,571 |
) |
|
$ |
1,488 |
|
|
$ |
(5,697 |
) |
|
$ |
(400 |
) |
|
$ |
(44,200 |
) |
|
$ |
(12 |
) |
|
$ |
(775 |
) |
|
$ |
(42,753 |
) |
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued
(In thousands, unaudited)
|
|
|
|
|
Six Months Ended June 30, 2021 EBITDA
Adjustments |
|
|
|
|
|
|
June 30, 2021 GAAP Basis
(as reported) |
|
Inventory restructuring and early lease terminations
(j) |
|
Net loss on debt repayment |
|
Stock Option Expense/Non-
Employee Equity
Compensation/ Restricted
stock units |
|
Deferred Rent (d) |
|
Other restructuring,
retention and severance (b) |
|
Closed store expense
(e) |
|
COVID- 19 (i) |
|
Foreign currency
gains |
|
Other |
|
June 30, 2021
Non-GAAP basis |
Net sales |
|
$ |
962,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
962,553 |
|
Cost of sales |
|
|
593,095 |
|
|
|
(3,694 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124 |
|
|
|
589,525 |
|
Gross Profit |
|
|
369,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
373,028 |
|
Wholesale selling expenses |
|
|
16,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,474 |
|
Retail operating expenses |
|
|
186,075 |
|
|
|
(2,943 |
) |
|
|
|
|
|
|
|
|
(1,212 |
) |
|
|
|
|
|
(3,078 |
) |
|
|
(1,053 |
) |
|
|
|
|
|
(718 |
) |
|
|
177,071 |
|
General and administrative expenses |
|
|
91,833 |
|
|
|
|
|
|
|
|
|
(2,962 |
) |
|
|
84 |
|
|
|
(2,082 |
) |
|
|
(58 |
) |
|
|
(217 |
) |
|
|
|
|
|
(689 |
) |
|
|
85,909 |
|
Art and development costs |
|
|
9,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,975 |
|
Loss on disposal of assets in international operations |
|
|
3,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,211 |
) |
|
|
— |
|
Income from operations |
|
|
61,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,599 |
|
Interest expense, net |
|
|
40,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(105 |
) |
|
|
40,225 |
|
Other (income) expense, net |
|
|
(873 |
) |
|
|
|
|
|
(226 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,311 |
|
|
|
100 |
|
|
|
312 |
|
Income before Income Taxes |
|
|
22,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,062 |
|
Interest expense, net |
|
|
40,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,330 |
|
Depreciation and amortization |
|
|
34,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,860 |
|
EBITDA |
|
|
97,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,252 |
|
Adjustments to EBITDA |
|
|
20,629 |
|
|
|
(6,637 |
) |
|
|
(226 |
) |
|
|
(2,962 |
) |
|
|
(1,128 |
) |
|
|
(2,082 |
) |
|
|
(3,136 |
) |
|
|
(1,270 |
) |
|
|
1,311 |
|
|
|
(4,499 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
118,252 |
|
|
$ |
(6,637 |
) |
|
$ |
(226 |
) |
|
$ |
(2,962 |
) |
|
$ |
(1,128 |
) |
|
$ |
(2,082 |
) |
|
$ |
(3,136 |
) |
|
$ |
(1,270 |
) |
|
$ |
1,311 |
|
|
$ |
(4,499 |
) |
|
$ |
118,252 |
|
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED EBITDA, Continued
(In thousands, unaudited)
|
|
|
|
|
Six Months Ended June 30, 2020 EBITDA
Adjustments |
|
|
|
|
|
|
June 30, 2020 GAAP Basis
(as reported) |
|
|
Goodwill, intangibles and long-lived assets impairment
(c) |
|
|
Store impairment
and restructuring charges
(a) |
|
|
Corporate development
expenses (g) |
|
|
Legal |
|
|
Stock Option Expense/Non-
Employee Equity
Compensation/ Restricted
stock units (f)(g) |
|
|
Deferred Rent (d) |
|
|
Other restructuring,
retention and severance (b) |
|
|
Closed store expense
(e) |
|
|
COVID- 19 (i) |
|
|
Foreign currency
loss |
|
|
Other |
|
|
June 30, 2020
Non-GAAP basis |
|
Net sales |
|
$ |
668,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
668,734 |
|
Cost of sales |
|
|
534,664 |
|
|
|
|
|
|
(10,630 |
) |
|
|
|
|
|
|
|
|
|
|
|
(134 |
) |
|
|
(4,437 |
) |
|
|
|
|
|
(41,180 |
) |
|
|
|
|
|
(429 |
) |
|
|
477,854 |
|
Gross Profit |
|
|
134,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,880 |
|
Wholesale selling expenses |
|
|
25,165 |
|
|
|
|
|
|
|
|
|
(1,840 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(623 |
) |
|
|
|
|
|
|
|
|
22,702 |
|
Retail operating expenses |
|
|
153,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,909 |
|
|
|
|
|
|
(1,508 |
) |
|
|
(14,567 |
) |
|
|
|
|
|
|
|
|
140,236 |
|
General and administrative expenses |
|
|
129,289 |
|
|
|
|
|
|
|
|
|
(3,132 |
) |
|
|
(6,509 |
) |
|
|
(9,546 |
) |
|
|
97 |
|
|
|
(4,307 |
) |
|
|
(127 |
) |
|
|
(14,010 |
) |
|
|
|
|
|
|
|
|
91,755 |
|
Art and development costs |
|
|
8,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,838 |
|
Store impairment and restructuring charges |
|
|
18,892 |
|
|
|
|
|
|
(18,892 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Goodwill, intangibles and long-lived assets impairment |
|
|
536,648 |
|
|
|
(536,648 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
(Loss) from operations |
|
|
(738,164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(72,651 |
) |
Interest expense, net |
|
|
50,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,532 |
|
Other (income) expense, net |
|
|
7,160 |
|
|
|
|
|
|
|
|
|
(640 |
) |
|
|
|
|
|
(1,033 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,267 |
) |
|
|
(2,474 |
) |
|
|
(1,254 |
) |
(Loss) before income taxes |
|
|
(795,856 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(121,929 |
) |
Interest expense, net |
|
|
50,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,532 |
|
Depreciation and amortization |
|
|
40,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,518 |
|
EBITDA |
|
|
(704,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,879 |
) |
Adjustments to EBITDA |
|
|
673,927 |
|
|
|
(536,648 |
) |
|
|
(29,522 |
) |
|
|
(5,612 |
) |
|
|
(6,509 |
) |
|
|
(10,579 |
) |
|
|
2,872 |
|
|
|
(8,744 |
) |
|
|
(1,635 |
) |
|
|
(70,380 |
) |
|
|
(4,267 |
) |
|
|
(2,903 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(30,879 |
) |
|
$ |
(536,648 |
) |
|
$ |
(29,522 |
) |
|
$ |
(5,612 |
) |
|
$ |
(6,509 |
) |
|
$ |
(10,579 |
) |
|
$ |
2,872 |
|
|
$ |
(8,744 |
) |
|
$ |
(1,635 |
) |
|
$ |
(70,380 |
) |
|
$ |
(4,267 |
) |
|
$ |
(2,903 |
) |
|
$ |
(30,879 |
) |
PARTY CITY HOLDCO INC.
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
$ |
40,020 |
|
|
$ |
(153,690 |
) |
|
$ |
22,433 |
|
|
$ |
(795,856 |
) |
Intangible asset amortization |
|
|
2,354 |
|
|
|
2,679 |
|
|
|
4,831 |
|
|
|
5,545 |
|
Amortization of deferred financing costs and original issuance
discounts |
|
|
1,074 |
|
|
|
1,199 |
|
|
|
1,937 |
|
|
|
2,401 |
|
Store impairment and restructuring charges (a) |
|
|
— |
|
|
|
181 |
|
|
|
— |
|
|
|
28,154 |
|
Other restructuring charges (b) |
|
|
31 |
|
|
|
6,595 |
|
|
|
1,967 |
|
|
|
7,517 |
|
Goodwill, intangibles and long-lived assets impairment (c) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
536,648 |
|
Non-employee equity-based compensation (f) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,033 |
|
Non-recurring legal settlements/costs |
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
6,421 |
|
Stock option expense – time-based |
|
|
104 |
|
|
|
561 |
|
|
|
217 |
|
|
|
561 |
|
Stock option expense – performance – based |
|
|
— |
|
|
|
7,493 |
|
|
|
— |
|
|
|
7,847 |
|
Restricted stock unit expense – performance-based |
|
|
1,154 |
|
|
|
— |
|
|
|
1,971 |
|
|
|
— |
|
COVID - 19 (i) |
|
|
655 |
|
|
|
44,200 |
|
|
|
1,270 |
|
|
|
70,380 |
|
Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
3,211 |
|
|
|
— |
|
Inventory disposals |
|
|
162 |
|
|
|
— |
|
|
|
926 |
|
|
|
— |
|
Adjusted income (loss) before income taxes |
|
|
45,554 |
|
|
|
(90,682 |
) |
|
|
38,763 |
|
|
|
(129,349 |
) |
Adjusted income tax (benefit) (h) |
|
|
11,446 |
|
|
|
(29,366 |
) |
|
|
10,064 |
|
|
|
(41,650 |
) |
Adjusted net income (loss) |
|
$ |
34,108 |
|
|
$ |
(61,316 |
) |
|
$ |
28,699 |
|
|
$ |
(87,699 |
) |
Adjusted net income (loss) per common share –
diluted |
|
$ |
0.29 |
|
|
$ |
(0.66 |
) |
|
$ |
0.25 |
|
|
$ |
(0.94 |
) |
Weighted-average number of common shares-diluted |
|
|
116,251,151 |
|
|
|
93,419,078 |
|
|
|
115,499,304 |
|
|
|
93,407,344 |
|
- The Company performed a comprehensive review of its store
locations aimed at improving the overall productivity of such
locations (“store optimization program”). After careful
consideration and evaluation of the store locations, the Company
made the decision to accelerate the optimization of its store
portfolio with the closure of stores, which are primarily located
in close proximity to other Party City stores. For further detail,
refer to Note 3 – Store Impairment and Restructuring Charges of
Item 1, “Condensed Consolidated Financial Statements (Unaudited)”
in this Quarterly Report on Form 10-Q 2021.
- Amounts expensed principally relate to severance due to
organizational changes.
- As a result of a sustained decline in market capitalization,
the Company recognized a non-cash pre-tax goodwill and intangibles
impairment charge at March 31, 2020.
- 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.
- Charges incurred related to closing and relocating stores in
the ordinary course of business.
- The acquisition of Ampology’s interest in Kazzam, LLC in an
equity transaction. See Note 17 – Kazzam, LLC of Item 1 in the June
30, 2021 Quarterly Report on Form 10-Q.
- Primarily represents costs for Kazzam (See Note 17 – Kazzam,
LLC of Item 1 in the June 30, 2021 Quarterly Report on Form 10-Q
for further discussion).
- 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.
- 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.
- Costs incurred for early lease terminations and a merchandise
transformation project to transition and optimize stores to the
reduced SKU assortment levels.
PARTY CITY HOLDCO INC.
SEGMENT INFORMATION (In thousands, except
percentages, unaudited)
|
|
Three Months Ended June 30, |
|
|
2021 |
|
2020 |
|
|
Dollars in Thousands |
|
|
Percentage of Total Revenues |
|
Dollars in Thousands |
|
|
Percentage of Total Revenues |
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
230,961 |
|
|
|
43.1 |
|
% |
|
$ |
131,296 |
|
|
|
51.6 |
|
% |
Eliminations |
|
|
(139,027 |
) |
|
|
(26.0 |
) |
|
|
|
(62,387 |
) |
|
|
(24.5 |
) |
|
Net wholesale |
|
|
91,934 |
|
|
|
17.2 |
|
|
|
|
68,909 |
|
|
|
27.1 |
|
|
Retail* |
|
|
443,812 |
|
|
|
82.8 |
|
|
|
|
185,782 |
|
|
|
72.9 |
|
|
Total revenues |
|
$ |
535,746 |
|
|
|
100.0 |
|
% |
|
$ |
254,691 |
|
|
|
100.0 |
|
% |
*Retail revenues include royalties and franchise
fees. Prior year amount conformed to current year presentation.
|
|
Six months ended June 30, |
|
|
2021 |
|
|
2020 |
|
|
Dollars in Thousands |
|
|
Percentage of Total Revenues |
|
Dollars in Thousands |
|
|
Percentage ofTotal Revenues |
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
443,098 |
|
|
|
46.0 |
|
% |
|
$ |
346,094 |
|
|
|
51.8 |
|
% |
Eliminations |
|
|
(257,639 |
) |
|
|
(26.8 |
) |
|
|
|
(166,118 |
) |
|
|
(24.8 |
) |
|
Net wholesale |
|
|
185,459 |
|
|
|
19.3 |
|
|
|
|
179,976 |
|
|
|
26.9 |
|
|
Retail* |
|
|
777,094 |
|
|
|
80.7 |
|
|
|
|
488,758 |
|
|
|
73.1 |
|
|
Total revenues |
|
$ |
962,553 |
|
|
|
100.0 |
|
% |
|
$ |
668,734 |
|
|
|
100.0 |
|
% |
*Retail revenues include royalties and franchise
fees. Prior year amount conformed to current year presentation.
|
|
Three Months Ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
Dollars in Thousands |
|
|
Percentage of Net Sales |
|
|
|
Dollars in Thousands |
|
|
Percentage of Net Sales |
|
|
Retail Gross Profit* |
|
$ |
193,565 |
|
|
|
43.6 |
|
% |
|
$ |
29,902 |
|
|
|
16.1 |
|
% |
Wholesale Gross Profit |
|
|
23,607 |
|
|
|
25.7 |
|
|
|
|
(13,118 |
) |
|
|
(19.0 |
) |
|
Total Gross Profit |
|
$ |
217,172 |
|
|
|
40.5 |
|
% |
|
$ |
16,784 |
|
|
|
6.6 |
|
% |
*Retail Gross Profit include royalties and
franchise fees. Prior year amount conformed to current year
presentation.
|
|
Six months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
Dollars inThousands |
|
|
Percentageof Net Sales |
|
|
|
Dollars inThousands |
|
|
Percentageof Net Sales |
|
|
Retail Gross Profit* |
|
$ |
316,743 |
|
|
|
40.8 |
|
% |
|
$ |
125,845 |
|
|
|
25.7 |
|
% |
Wholesale Gross Profit |
|
|
52,715 |
|
|
|
28.4 |
|
|
|
|
8,225 |
|
|
|
4.6 |
|
|
Total Gross Profit |
|
$ |
369,458 |
|
|
|
38.4 |
|
% |
|
$ |
134,070 |
|
|
|
20.0 |
|
% |
*Retail Gross Profit include royalties and
franchise fees. Prior year amount conformed to current year
presentation.
PARTY CITY HOLDCO INC.
OPERATING METRICS
|
|
Three months ended June 30, |
|
LTM |
|
|
2021 |
|
2020 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
Store Count |
|
|
|
|
|
|
|
|
|
Corporate Stores: |
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
746 |
|
|
|
757 |
|
|
|
757 |
|
New stores opened |
|
|
5 |
|
|
|
1 |
|
|
|
10 |
|
Acquired |
|
— |
|
|
|
— |
|
|
|
5 |
|
Closed |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(23 |
) |
End of period |
|
|
749 |
|
|
|
757 |
|
|
|
749 |
|
Franchise Stores |
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
85 |
|
|
|
97 |
|
|
|
96 |
|
Sold to Party City |
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Closed |
|
|
(3 |
) |
|
|
— |
|
|
|
(9 |
) |
End of period |
|
|
82 |
|
|
|
97 |
|
|
|
82 |
|
Grand Total |
|
|
831 |
|
|
|
854 |
|
|
|
831 |
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
Wholesale Share of Shelf (a) |
|
81.0 |
% |
|
82.3 |
% |
|
81.2 |
% |
|
81.7 |
% |
Manufacturing Share of Shelf (b) |
|
30.7 |
% |
|
33.5 |
% |
|
31.4 |
% |
|
30.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
Brand comparable sales (c) |
|
118.3 |
% |
|
-52.4 |
% |
|
73.4 |
% |
|
-35.6 |
% |
(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.
Party City Holdco (NYSE:PRTY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Party City Holdco (NYSE:PRTY)
Historical Stock Chart
From Jul 2023 to Jul 2024