Party City Affirms Fourth Quarter Outlook Ahead of Participation at the ICR Conference
January 10 2022 - 6:50AM
Party City Holdco Inc. (NYSE: PRTY) today affirmed its outlook for
total revenue, brand comparable sales, and Adjusted EBITDA for the
fourth quarter fiscal 2021.
The following are the Company’s expectations for
fourth quarter fiscal 2021, which are consistent with the
previously provided guidance ranges:
- Total revenue of $685 million to $700 million
- Brand comparable sales percentage increase of high-teens
compared to fourth quarter fiscal 2020
- Adjusted EBITDA of $100 million to $110 million
Brad Weston, Chief Executive Officer of Party
City, stated, “We are pleased with our fourth quarter performance
with preliminary results that met our expectations. Despite
continued industry headwinds from supply chain constraints and
COVID impacts, during the quarter we capitalized on our in-stock
positioning and executed against our strategies for the
all-important holiday season. Notably, we saw continued strength in
our core categories, which reflects our mission of being customer
obsessed and demonstrates our strides in ensuring we are top of
mind when it comes to anything celebratory.”
Mr. Weston continued, “As we enter 2022, we will
continue to reinforce our position of authority by updating and
improving our product assortments and inventory position as we
expand our relevancy with consumers and elevate their experience
with us. To that end, we will remain focused on our key strategic
priorities of product innovation, improving the in-store
experience, being celebration occasion obsessed and leveraging our
North America vertical model. We look forward to discussing our
fourth quarter results and our 2022 plans to advance our growth
initiatives in more detail on our year-end call.”
Consistent with the strategy of improving the
customer's in-store experience and rationalizing overall SKU
counts, the Company continues to update its assortment to target
higher in-season sell-through of merchandise and reduce annual
inventory carry-over. The Company's product resets and more edited
and curated assortments are expected to improve the customer
experience by making stores easier to shop and product selections
more relevant to consumers, while also improving the efficiency of
inventory management and reducing working capital needs. As a
result, the Company expects to take a disposal charge of
approximately $70 million in the fourth quarter for inventory that
will be discontinued or eliminated.
These updated financial expectations are based
upon the Company’s current estimates and subject to completion of
financial and operating closing procedures as of and for the
quarter ended December 31, 2021.
As previously announced, the Company will be
participating in the ICR Conference. The Company is scheduled to
host a fireside chat on Monday, January 10, 2022, at 1:00 p.m.
Eastern Time. A live audio webcast of the Company’s fireside chat
will be available online at investor.partycity.com. Participants
should log in approximately 10 minutes prior to the start of the
presentation. A replay will also be available.
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
revenues, brand comparable sales, Adjusted EBITDA. 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.
Non-GAAP Information This press
release includes a non-GAAP measure, Adjusted EBITDA. We define
Adjusted EBITDA as net income (loss) before interest expense, net,
income taxes, depreciation and amortization, as further adjusted to
eliminate the impact of certain items that we do not consider
indicative of our core operating performance. We present this
non-GAAP financial measure because we believe it assists 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. In evaluating
this non-GAAP financial measure, 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 made to such non-GAAP measure. The Company's
presentation of the non-GAAP financial measure should not be
construed to imply that its future results will be unaffected by
any such adjustments. Other companies in the Company's industry may
calculate this item differently than we do. This measure is not a
measure of performance under GAAP and should not be considered as a
substitute for the most directly comparable financial measure
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. We are not able to provide a
reconciliation of Adjusted EBITDA outlook for fourth quarter fiscal
2021 to the most directly comparable GAAP financial measure of net
income. Certain items that are excluded from Adjusted EBITDA but
included in net income cannot be reasonably estimated or are not in
our control. In particular, we are unable to forecast the timing or
magnitude of income tax expense, stock-based compensation,
restructuring charges and early lease terminations as well as other
potential items without unreasonable efforts, and these items could
significantly impact, either individually or in the aggregate, the
results reported under GAAP.
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 a 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.
Source: Party City Holdco Inc.
Contacts:
Investor Relations
ICR
Farah Soi and Rachel Schacter
203-682-8200
InvestorRelations@partycity.com
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