GlobeNewswire Inc | Mar 11, 2021 06:50AM EST

March 11, 2021

Generated Higher Operating Cash Flow in 2020Versus Prior-Year Period Despite COVID-19 Impacts

Fourth Quarter Results Driven by Strength in Core Categories and StrongNew Years Comparable Sales

With Completion of Recent Debt Financing, Company has Significant Runwayto Further Advance Strategic Priorities

ELMSFORD, N.Y., March 11, 2021 (GLOBE NEWSWIRE) -- Party City Holdco Inc. (the Company or PRTY; NYSE:PRTY) today announced financial results for the quarter and year ended December 31, 2020.

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

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

Fourth Quarter Summary:

-- Total revenues were $648.2 million, a decrease of 11.4% on a reported basis and 11.7% on a constant currency basis -- Total Retail sales decreased 8.2% on a reported and 8.3% constant currency basis, impacted by closures related to our store optimization program and the impact of COVID-19, offset partially by the benefit from the 53rd week -- The total number of corporate Party City stores was 746 as of December 31, 2020 compared to 777 a year ago. -- Brand comparable sales for the 14 weeks ended January 2, 2021 versus 14 weeks ended January 4, 2020 decreased 5.9% due to the impact of COVID-19, especially on seasonal celebrations. -- The Companys Retail segment included a 53rd week of operations in the fourth quarter and full year, which contributed approximately $40 million to revenue, approximately $12 million to Adjusted EBITDA and approximately $0.08 to adjusted diluted earnings per share (See "Non-GAAP Financial Information"). -- North American digitally enabled sales increased 27.1% including BOPIS, curbside pickup, and delivery. -- Net third-party Wholesale revenues decreased 23.0% or a decrease of 24.0% in constant currency, driven by lower third-party sales including softer franchise store performance, and the impact of international COVID-related restrictions. -- Total gross profit margin decreased 1,454 basis points to 25.7% of net sales driven primarily by a year-end seasonal inventory disposal of $88.3 million, which aligned inventories to the Companys new seasonal assortment strategy of targeting higher in-season sell-through of merchandise and reducing annual inventory carry-over. Excluding certain items not indicative of core operating performance, gross profit margin decreased 50 basis points to 39.7% of net sales mainly due to deleverage on occupancy costs. -- Operating expenses totaled $281.1 million or $242.4 million lower than the fourth quarter of 2019. Excluding certain items not indicative of core operating performance, operating expenses totaled $200.5 million, or 31.1% of revenue, a reduction of $4.8 million compared to the fourth quarter of 2019, primarily driven by cost management to reflect lower revenues and reduced retail store count. -- Interest expense was $13.1 million during the fourth quarter of 2020, compared to $26.0 million during the fourth quarter of 2019 mainly due to lower amount of debt outstanding. -- Reported GAAP net loss was $96.4 million, or a loss of $(0.88) per diluted share. -- Adjusted net income was $27.5 million, or $0.25 per diluted share, compared to adjusted net income of $47.8 million, or $0.51 per share, in the fourth quarter of 2019. (See Non-GAAP Financial Information) -- Adjusted EBITDA was $77.3 million, versus $119.5 million during the fourth quarter of 2019. (See Non-GAAP Financial Information)

Full Year Summary:

-- Total revenues were $1.851 billion, a decrease of 21.2% on a reported basis and a decrease of 21.3% on a constant currency basis -- Total Retail sales decreased 21.1% on both a reported and constant currency basis, due to the COVID-19 pandemic, with a brand comparable sales decline of 16.5% -- 2nd half 2020 Brand comparable sales decreased 0.5% -- North American digitally enabled sales increased 35.4% including BOPIS, curbside pickup, and delivery -- Net third-party Wholesale revenues decreased 21.6% on a reported basis and 21.7% on a constant currency basis. -- Total gross profit margin decreased 1,017 basis points to 25.7% of net sales. Excluding certain items not indicative of core operating performance, gross profit margin decreased 290 basis points to 34.2% of net sales mainly due to deleverage on occupancy costs. -- Operating expenses totaled $1.358 billion. Excluding certain items not indicative of core operating performance, operating expenses totaled $616.4 million, or 33.4% of revenue, a reduction of $82.0 million compared to 2019, primarily due to lower retail operating expenses as a result of the lower store count, lower Wholesale selling expenses and the temporary benefits from cost cutting related to the pandemic. -- Interest expense was $77.0 million during 2020, compared to $114.9 million during the 2019. -- Reported GAAP net loss was $528.5 million, or $(5.24) per share. -- Adjusted net loss was $49.2 million, or a loss of $0.49 per diluted share compared to adjusted net income of $43.4 million, or $0.46 per share, in 2019. (See Non-GAAP Financial Information) -- Adjusted EBITDA was $95.5 million, versus $269.2 million during 2019. (See Non-GAAP Financial Information)

Balance Sheet Highlights:

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

In addition, the principal balance of debt net of cash on December 31, 2020 was $1,253.6 million versus $1,684.8 million in the prior-year period. The principal balance of debt is used for the purpose of all leverage ratio calculations under our debt agreements. The following table shows the bridge from the balance sheet debt to the principal balance of debt:

Party City Anagram PCHI Credit Holdings, Consolidated Group LLC December 31, 2020 Principal Net Net Net Carrying Amount Carrying Carrying Amount Amount AmountTerm Loan Credit $ 694,220 $ 690,165 $ - $ 690,165 Agreement6.125% Senior 22,924 22,779 - 22,779 Notes ? due 20236.625% Senior 107,254 106,315 - 106,315 Notes ? due 2026First Lien Party 161,669 206,775 - 206,775 City NotesFirst Lien Anagram 110,000 - 151,335 151,335 NotesSecond Lien 84,687 - 152,032 152,032 Anagram NotesFinance lease 13,983 13,983 - 13,983 obligationsTotal long-term 1,194,737 1,040,017 303,367 1,343,384 obligationsLess: current N/A (13,576 ) - (13,576 )portionLong-termobligations, $ 1,194,737 $ 1,026,441 $ 303,367 $ 1,329,808 excluding currentportionLoans and notes 178,436 178,436 - 178,436 payableLess: Cash (119,532 ) (95,201 ) (24,331 ) (119,532 )Principal balance $ 1,253,641 $ 1,109,676 $ 279,036 $ 1,388,712 net of cash

Subsequent Events:

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

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

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

Outlook:

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

-- FY 2021 Interest expense of approximately $90 to $100 million -- FY 2021 Capital expenditures of approximately $70 to $80 million -- FY 2021 10 Net new stores (15 new openings and 5 closures)

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

-- Total revenue of $397 to $410 million -- Brand comparable sales increase of 26% to 31% compared to first quarter 2020* -- GAAP net loss of $24 to $16 million with an assumed Q1 tax rate of 25% -- Adjusted EBITDA of $10 to $17 million

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

Conference Call Information

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

Website Information

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

Non-GAAP Information

This press release includes non-GAAP measures including Adjusted EBITDA and Adjusted Net Income/Loss. We present these non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by eliminating items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA: (i) as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our credit facilities use Adjusted EBITDA to measure compliance with certain covenants. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release. We also evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. We also provide net debt leverage, which is calculated by adding Loans and Notes Payable, Current Portion of Long Term Obligations and Long Term Obligations, Excluding Current Portion, subtracting Cash and Cash Equivalents and dividing by Adjusted EBITDA for the trailing twelve month period. We believe providing these non-GAAP measures provides valuable supplemental information regarding our results of operations and leverage, consistent with how we evaluate our performance. In evaluating these non-GAAP financial measures, investors should be aware that in the future the Company may incur expenses or be involved in transactions that are the same as or similar to some of the adjustments in this presentation. The Company's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. The Company has provided this information as a means to evaluate the results of its core operations. Other companies in the Company's industry may calculate these items differently than it does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

Forward-Looking Statements

This press release and the commentary in the conference call to be held today each contains forward-looking statements. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance and include Party Citys 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 managements 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 Citys Annual Report on Form10-Kfor 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 Companys 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) December31, December31, 2020 2019ASSETS Current assets: Cash and cash equivalents $ 119,532 $ 34,917 Accounts receivable, net 90,879 149,109 Inventories, net 412,285 658,419 Prepaid expenses and other current assets 45,905 51,685 Income tax receivable 57,549 ? Assets held for sale, net 83,110 ? Total current assets 809,260 894,130 Property, plant and equipment, net 209,412 243,572 Operating lease asset 700,087 802,634 Goodwill 661,251 1,072,330 Trade names 384,428 530,320 Other intangible assets, net 32,134 45,060 Other assets, net 9,883 7,273 Total assets $ 2,806,455 $ 3,595,319 LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS? EQUITY Current liabilities: Loans and notes payable $ 175,707 $ 128,806 Accounts payable 118,928 152,300 Accrued expenses 160,605 150,921 Liabilities held for sale 68,492 ? Current portion of operating lease liability 176,045 155,471 Income taxes payable 524 35,905 Current portion of long-term obligations 13,576 71,524 Total current liabilities 713,877 694,927 Long-term obligations, excluding current 1,329,808 1,503,987 portionLong-term portion of operating lease liability 654,729 720,735 Deferred income tax liabilities 34,705 126,081 Other long-term liabilities 22,815 16,517 Total liabilities 2,755,934 3,062,247 Redeemable securities ? 3,351 Commitments and contingencies Stockholders? equity: Common stock (110,781,613 and 94,461,576shares outstanding and 122,061,711 and 121,662,540 shares issued 1,373 1,211 at December 31, 2020 and December 31, 2019, respectively)Additional paid-in capital 971,972 928,573 Retained (deficit) earnings (565,457 ) (37,219 )Accumulated other comprehensive loss (29,916 ) (35,734 )Total Party City Holdco Inc. stockholders?equity before common stock 377,972 856,831 held in treasuryLess: Common stock held in treasury, at cost(11,280,098 and 27,200,964 (327,182 ) (327,086 ) shares at December31, 2020 andDecember31, 2019, respectively)Total Party City Holdco Inc. stockholders? 50,790 529,745 equityNoncontrolling interests (269 ) (24 )Total stockholders? equity 50,521 529,721 Total liabilities, redeemable securities and $ 2,806,455 $ 3,595,319 stockholders? equity

PARTY CITY HOLDCO INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(In thousands, except share and per share data, unaudited)

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Revenues: Net sales $ 645,284 $ 728,361 $ 1,843,444 $ 2,339,510 Royalties and 2,897 3,190 7,246 9,279 franchise feesTotal revenues 648,181 731,551 1,850,690 2,348,789 Cost of sales 479,348 435,122 1,369,935 1,500,633 Wholesale 13,006 16,174 50,121 67,103 selling expensesRetail operating 136,896 137,639 387,398 440,395 expensesFranchise 2,921 3,339 12,146 13,152 expensesGeneral andadministrative 48,126 51,175 210,244 177,672 expensesArt anddevelopment 4,543 5,635 17,638 23,203 costsDevelopment ? 2,770 2,932 10,736 stage expensesGain on sale/leaseback ? ? ? (58,381 )transactionStore impairmentand 1,631 3,221 22,449 29,038 restructuringchargesLoss on assets 73,948 ? 73,948 ? held for saleGoodwill,intangibles andlong-lived ? 303,531 581,380 562,631 assetsimpairmentTotal expenses 760,419 958,606 2,728,191 2,766,182 Loss from (112,238 ) (227,055 ) (877,501 ) (417,393 )operationsInterest 13,089 26,042 77,043 114,899 expense, netOther (income) (572 ) (4,772 ) 3,715 1,871 expense, net(Gain) on debt ? ? (273,149 ) ? refinancingLoss before (124,755 ) (248,325 ) (685,110 ) (534,163 )income taxesIncome tax(benefit) (28,360 ) 20,504 (156,653 ) (1,305 )expenseNet (loss) (96,395 ) (268,829 ) (528,457 ) (532,858 )Less: Net income(loss)attributable to 22 (11 ) (219 ) (363 )noncontrollinginterestsNet (loss)attributable tocommon $ (96,417 ) $ (268,818 ) $ (528,238 ) $ (532,495 )shareholders ofParty CityHoldco Inc.Net (loss) pershareattributable tocommon $ (0.88 ) $ (2.88 ) $ (5.24 ) $ (5.71 )shareholders ofParty CityHoldcoInc.?BasicNet (loss) pershareattributable tocommon $ (0.88 ) $ (2.88 ) $ (5.24 ) $ (5.71 )shareholders ofParty CityHoldcoInc.?DilutedWeighted-averagenumber of common 109,603,253 93,372,232 100,804,944 93,295,692 shares-BasicWeighted-averagenumber of common 109,603,253 93,372,232 100,804,944 93,295,692 shares-Diluted

PARTY CITY HOLDCO INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

Fiscal Year Ended December31, 2020 2019 2018 Cash flows provided by operating activities:Net (loss) income $ (528,457 ) $ (532,858 ) $ 122,819 Adjustments to reconcile net (loss)income to net cash provided by operatingactivities:Depreciation and amortization 76,506 81,116 78,575 expenseAmortization of deferred financingcosts and original issuance 4,198 4,722 10,989 discountsProvision for doubtful accounts 6,321 2,323 1,213 Deferred income tax (benefit) (95,085 ) (47,366 ) 4,573 expenseDeferred rent ? ? 5,351 Undistributed income in equity 333 (472 ) (369 )method investmentsChange in operating lease liability/ 30,981 (9,942 ) ? assetLoss (gain) on disposal of assets 70 (59,786 ) 3 Loss on assets held for sale 73,948 ? ? Non-cash adjustment for store 17,585 20,236 ? impairment and restructuringGoodwill, intangibles and long-lived 581,380 562,631 ? assets impairmentNon-employee equity basedcompensation (see Note 25 ? Kazzam, 1,033 515 81 LLC)Stock option expense?time?based 796 1,319 1,744 Stock option expense 7,847 ? ? ?performance?basedRestricted stock unit and restrictedcash awards expense ? 1,329 ? ? performance-basedRestricted stock units 2,071 2,033 1,174 expense?time-basedDirectors?non-cash compensation 337 313 196 (Gain) on debt refinancing (273,149 ) ? ? Changes in operating assets andliabilities, net of effects of acquiredbusinesses:Decrease (increase) in accounts 22,396 (2,600 ) (10,431 )receivableDecrease (increase) in inventories 184,924 72,385 (142,866 )(Increase) decrease in prepaidexpenses and other current assets, (66,166 ) 14,741 16,666 net(Increase) decrease in accountspayable, accrued expenses and income 28,002 (65,617 ) 12,138 taxes payableNet cash provided by operating 77,200 43,693 101,856 activitiesCash flows (used in) provided by investing activities:Cash paid in connection with (3,305 ) (20,878 ) (65,301 )acquisitions, net of cash acquiredCapital expenditures (51,128 ) (61,733 ) (85,661 )Proceeds from disposal of property 162 246,286 55 and equipmentNet cash (used in) provided by (54,271 ) 163,675 (150,907 )investing activitiesCash flows provided by (used in) financing activities:Repayment of loans, notes payable (254,438 ) (441,632 ) (547,695 )and long-term obligationsProceeds from loans, notes payable 368,439 203,344 652,087 and long-term obligationsExercise of stock options 147 1,148 2,269 Treasury stock purchases (96 ) (156 ) (40,197 )Debt issuance and modification costs (20,348 ) (414 ) (10,294 )Net cash provided by (used in) 93,704 (237,710 ) 56,170 financing activitiesEffect of exchange rate changes on (500 ) 6,299 (2,308 )cash and cash equivalentsNet increase(decrease) in cash andcash equivalents and 116,133 (24,043 ) 4,811 restricted cashLess: net (decrease) in cashclassified within current assets (31,628 ) ? ? held for saleCash and cash equivalents andrestricted cash at beginning of 35,176 59,219 54,408 periodCash and cash equivalents and $ 119,681 $ 35,176 $ 59,219 restricted cash at end of period*Supplemental disclosure of cash flow information:Cash paid during the period: Interest $ 68,396 $ 108,561 $ 94,472 Income taxes, net of refunds $ 26,867 $ 36,093 $ 59,156

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA, Continued(In thousands, unaudited)

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 (Dollars in thousands) Net (loss) $ (96,395 ) $ (268,829 ) $ (528,457 ) $ (532,858 )Interest expense, net $ 13,089 26,042 77,043 114,899 Income tax (benefit) $ (28,360 ) 20,504 (156,653 ) (1,305 )expenseDepreciation and 18,710 18,736 76,506 81,116 amortizationEBITDA (92,956 ) (203,547 ) (531,561 ) (338,148 )Non-cash purchase ? 243 ? 3,000 accounting adjustmentsStore impairment andrestructuring charges 3,038 3,818 39,323 58,778 (c)Other restructuring,retention and 403 1,212 12,104 6,460 severance (b)Goodwill, intangiblesand long-lived assets ? 303,531 581,380 562,631 impairment (c)Deferred rent (d) (529 ) (754 ) (3,147 ) (1,796 )Closed store expense 976 1,021 3,858 4,445 (e)Foreign currency (2,013 ) (65 ) (1,058 ) 421 (gains) losses, netStock optionexpense?time?based 125 169 796 1,319 (f)Stock option expense?performance?based ? ? 7,847 ? (n)Non-employeeequity-based ? 129 1,033 515 compensation (g)Undistributed (loss)in equity method (356 ) (277 ) ? (472 )investmentsCorporate development 1,004 2,426 7,197 14,208 expenses (h)Refinancing charges ? 36 ? 36 (j)Restricted stock units 503 490 2,071 2,033 ? time-based (i)Restricted stock unitand restricted cash 950 (1,036 ) 1,460 ? awards expense ?performance-basedNon-recurring legal 673 6,753 7,843 8,548 settlements/costs(Gain) on debt ? ? (273,149 ) ? refinancing (j)Gain on sale/leaseback ? ? ? (58,381 )transaction (o)(Gain) loss on sale of ? 5,074 ? 5,074 assets(o)Inventory disposal (c) 88,358 ? 88,358 ? Loss on held for sale 73,948 ? 73,948 (p)COVID - 19 (l) 2,784 ? 73,843 ? Other 354 301 3,388 518 Adjusted EBITDA $ 77,262 $ 119,524 $ 95,534 $ 269,189 Adjusted EBITDA margin 45.8 % 40.3 % 19.9 % 31.7 %

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA, Continued(In thousands, unaudited)

Three Months Ended December 31, 2020 EBITDA Adjustments Stock Option December 31, Store Expense/Non- December 2020 impairment Corporate EmployeeEquity Other Closed Foreign 31, GAAP and development Legal Compensation/ Deferred restructuring, store COVID- currency Other (p) 2020 Basis (as restructuring expenses Restricted Rent (d) retention and expense 19 (l) losses Non-GAAP reported) charges (c) (h) stock units ? severance (b) (e) basis time-based (f)(g)(i)(n)Revenues: Net sales $ 645,284 $ 645,284 Royalties and franchise fees 2,897 2,897 Total revenues 648,181 648,181 Cost of sales 479,348 (89,765 ) (506 ) 389,077 Wholesale selling expenses 13,006 13,006 Retail operating expenses 136,896 480 (823 ) (1,956 ) 134,597 Franchise expenses 2,921 2,921 General and administrative 48,126 360 (673 ) (1,578 ) 49 (403 ) (153 ) (322 ) 45,406 expensesArt and development costs 4,543 4,543 Store impairment and 1,631 (1,631 ) ? restructuring chargesLoss on assets held for sale 73,948 (73,948 ) ? Total expenses 760,419 (91,396 ) 360 (673 ) (1,578 ) 529 (403 ) (976 ) (2,784 ) ? (73,948 ) 589,550 (Loss) from operations (112,238 ) 58,631 Interest expense, net 13,089 13,089 Other (income) expense, net (572 ) (1,364 ) 2,013 2 79 (Gain) on debt refinancing ? ? Income (loss) before income (124,755 ) 45,463 taxesInterest expense, net 13,089 13,089 Depreciation and amortization 18,710 18,710 EBITDA (92,956 ) 77,262 Adjustments to EBITDA 170,218 (91,396 ) (1,004 ) (673 ) (1,578 ) 529 (403 ) (976 ) (2,784 ) 2,013 (73,946 ) ? Adjusted EBITDA $ 77,262 $ (91,396 ) $ (1,004 ) $ (673 ) $ (1,578 ) $ 529 $ (403 ) $ (976 ) $ (2,784 ) $ 2,013 $ (73,946 ) $ 77,262

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA, Continued(In thousands, unaudited)

Three Months Ended December 31, 2019 EBITDA Adjustments Goodwill, Stock Option December intangibles Store Gain on Expense/Non- December 31, 2019 and impairment sale/ Corporate EmployeeEquity Other Closed Foreign 31, GAAP long-lived and leaseback development Legal Compensation/ Deferred restructuring, store currency Other 2019 Basis (as assets restructuring transaction expenses Restricted Rent (d) retention and expense gains Non-GAAP reported) impairment charges (a) (o) (h) stock units ? severance (b) (e) basis (c) time-based (f)(g)(i)(m)Revenues: Net sales $ 728,361 $728,361Royalties and 3,190 3,190franchise feesTotal revenues 731,551 731,551Cost of sales 435,122 (597 ) 703 435,228Wholesaleselling 16,174 16,174expensesRetailoperating 137,639 (835 ) 136,804expensesFranchise 3,339 3,339expensesGeneral andadministrative 51,175 (6,753 ) 247 51 (1,212 ) (186 ) 43,322expensesArt anddevelopment 5,635 5,635costsDevelopment 2,770 (2,772 ) (2)stage expensesStoreimpairment and 3,221 (3,221 ) ?restructuringchargesGoodwill,intangiblesand long-lived 303,531 (303,531 ) ?assetsimpairmentTotal expenses 958,606 (303,531 ) (3,818 ) ? (2,772 ) (6,753 ) 247 754 (1,212 ) (1,021 ) ? ? 640,500Income from (227,055 ) 91,051operationsInterest 26,042 26,042expense, netOther expense, (4,772 ) 345 65 (5,375 ) (9,737)netIncome before (248,325 ) 74,746income taxesInterest 26,042 26,042expense, netDepreciationand 18,736 18,736amortizationEBITDA (203,547 ) 119,524Adjustments to 323,071 (303,531 ) (3,818 ) ? (2,427 ) (6,753 ) 247 754 (1,212 ) (1,021 ) 65 (5,375 ) ?EBITDAAdjusted $ 119,524 $ (303,531 ) $ (3,818 ) $ ? $ (2,427 ) $ (6,753 ) $ 247 $ 754 $ (1,212 ) $ (1,021 ) $ 65 $ (5,375 ) $119,524EBITDA

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA, Continued(In thousands, unaudited)

Twelve Months Ended December 31, 2020 EBITDA Adjustments Store Stock Option impairment Expense/Non- December Goodwill, and Gain on Corporate Employee Other Closed Other (p) 31, 2020 intangibles and restructuring debt development Equity Deferred restructuring, store COVID- Foreign December 31, GAAP long-lived charges , refinancing expenses Legal(k) Compensation Rent (d) retention and expense 19 (q) currency 2020 Basis (as assets including (i) (e) / severance (b) (e)(f) losses Non-GAAP reported) impairment (c) inventory Restricted basis disposal (c) stock units (g)(h)(i)(n)Revenues: Net sales $ 1,843,444 $1,843,444Royalties and 7,246 7,246franchise feesTotal revenues 1,850,690 1,850,690Cost of sales 1,369,935 (105,232 ) (214 ) (4,437 ) (42,952 ) (3,388) 1,213,712Wholesaleselling 50,121 (1,840 ) (623 ) 47,658expensesRetailoperating 387,398 3,165 (3,556 ) (18,268 ) 368,739expensesFranchise 12,146 (672 ) 11,474expensesGeneral andadministrative 210,244 (210 ) (7,843 ) (12,174 ) 196 (7,667 ) (302 ) (11,328 ) 170,916expensesArt anddevelopment 17,638 17,638costsDevelopment 2,932 (2,932 ) ?stage expensesStoreimpairment and 22,449 (22,449 ) ?restructuringchargesLoss on assets 73,948 (73,948)?held for saleGoodwill,intangiblesand long-lived 581,380 (581,380 ) ?assetsimpairmentTotal expense 2,728,191 (581,380 ) (127,681 ) ? (4,982 ) (7,843 ) (12,174 ) 3,147 (12,104 ) (3,858 ) (73,843 ) ? (77,336) 1,830,137(Loss) incomefrom (877,501 ) 20,553operationsInterest 77,043 77,043expense, netOther expense, 3,715 (2,215 ) (1,033 ) 1,058 1,525net(Gain) on debt (273,149 ) 273,149 ?refinancing(Loss) before (685,110 ) (58,015)income taxesInterest 77,043 77,043expense, netDepreciationand 76,506 76,506amortizationEBITDA (531,561 ) 95,534Adjustments to 627,095 (581,380 ) (127,681 ) 273,149 (7,197 ) (7,843 ) (13,207 ) 3,147 (12,104 ) (3,858 ) (73,843 ) 1,058 (77,336)?EBITDAAdjusted $ 95,534 $ (581,380 ) $ (127,681 ) $ 273,149 $ (7,197 ) $ (7,843 ) $ (13,207 ) $ 3,147 $ (12,104 ) $ (3,858 ) $ (73,843 ) $ 1,058 $(77,336)EBITDA $95,534

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA, Continued(In thousands, unaudited)

Twelve Months Ended December 31, 2019 EBITDA Adjustments Stock Option December Store Expense/Non- Other (r)(s) 31, 2019 Goodwill, intangibles impairment Gain on sale/ Corporate Employee Other Closed Non-Cash Foreign December 31, GAAP and long-lived assets and leaseback development Legal(k) Equity Deferred restructuring, store Purchase currency 2019 Basis (as impairment (o) restructuring transaction expenses Compensation Rent (d) retention and expense Accounting gains Non-GAAP reported) charges (c) (a) (e) /Restricted severance (b) (f) Adjustments basis stock units (g)(h)(i)(m)Revenues: Net sales $ 2,339,510 $2,339,510Royalties and franchise $ 9,279 9,279feesTotal revenues 2,348,789 2,348,789Cost of sales 1,500,633 (29,740 ) 1,534 1,472,427Wholesale selling expenses 67,103 67,103Retail operating expenses 440,395 (31 ) (3,946 ) 436,418Franchise expenses 13,152 13,152General and administrative 177,672 (8,548 ) (3,867 ) 262 (6,429 ) (500 ) 158,590expensesArt and development costs 23,203 23,203Development stage expenses 10,736 (10,736 ) ?Gain on sale/leaseback (58,381 ) 58,381 ?transactionStore impairment and 29,038 (29,038 ) ?restructuring chargesGoodwill, intangibles andlong-lived assets 562,631 (562,631 ) ?impairmentTotal expenses 2,766,182 (562,631 ) (58,778 ) 58,381 (10,736 ) (8,548 ) (3,867 ) 1,796 (6,460 ) (4,446 ) ? ? ?2,170,893(Loss) income from (417,393 ) 177,896operationsInterest expense, net 114,899 114,899Other expense, net 1,871 (3,471 ) (3,001 ) (421 ) (5,155) (10,177)(Loss) income before income (534,163 ) 73,174taxesInterest expense, net 114,899 114,899Depreciation and 81,116 81,116amortizationEBITDA (338,148 ) 269,189Adjustments to EBITDA 607,337 (562,631 ) (58,778 ) 58,381 (14,207 ) (8,548 ) (3,867 ) 1,796 (6,460 ) (4,446 ) (3,001 ) (421 ) (5,155)?Adjusted EBITDA $ 269,189 $ (562,631 ) $ (58,778 ) $ 58,381 $ (14,207 ) $ (8,548 ) $ (3,867 ) $ 1,796 $ (6,460 ) $ (4,446 ) $ (3,001 ) $ (421 ) $(5,155) $269,189

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED NET INCOME(In thousands, except share and per share data, unaudited) Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 (Dollars in thousands)(Loss) before $ (124,755 ) $ (248,325 ) $ (685,110 ) $ (534,163 )income taxesIntangible asset 2,918 3,572 11,362 14,100 amortization (l)Non-cash purchaseaccounting ? 2 ? 4,202 adjustmentsAmortization ofdeferred financingcosts and original 922 1,211 4,198 4,722 issuance discounts(m)Store impairmentand restructuring 1,338 3,818 30,813 58,778 charges (c)Goodwill andintangibles ? 303,531 581,380 562,631 impairment (o)Refinancing charges ? ? ? 36 Stock option 125 169 8,643 1,319 expense (g)Restricted stockunits 1,460 (1,036 ) 1,460 ? expense?performance based (i)Non-employee equitybased compensation ? 129 1,033 515 (h)(Gain) on ? ? ? (58,381 )sale-leaseback (a)(Gain) on debt ? ? 273,149 ? refinancing (j)Other restructuring ? 389 10,139 3,211 charges (b)(Gain) on sale ofCanada retail ? (2,873 ) ? (2,873 )assets (r)Non-recurring legal 68 6,500 7,094 6,500 settlements/costsLoss on assets held 73,948 ? 73,948 ? for sale (p)Inventory disposal 88,358 ? 88,358 ? (c)COVID ? 19 (q) 2,548 ? 73,661 ? Adjusted income(loss) before $ 46,930 $ 67,087 $ (66,170 ) $ 60,597 income taxesAdjusted income tax(benefit) expense 19,476 19,300 (16,940 ) 17,183 (n)Adjusted net income $ 27,454 $ 47,787 $ (49,230 ) $ 43,414 (loss)Adjusted net income(loss) per common $ 0.25 $ 0.51 (0.49 ) $ 0.46 share - dilutedWeighted-averagenumber of common 111,298,379 93,372,232 100,804,944 93,604,794 shares-diluted

During June 2019, the Company reported a $58.4 million gain from the sale and leaseback of its main distribution center in Chester, New York and its(a) metallic balloons manufacturing facility in Eden Prairie, Minnesota. The aggregate sale price for the three properties was $128.0 million. Simultaneous with the sale, the Company entered into twenty-year leases for each of the facilities Amounts expensed during 2020 principally related to severance due to(b) 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 During the years ended December 31, 2020 and 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (?store optimization program?) and, after careful consideration and evaluation of the store locations, the Company made the decision to accelerate the optimization of its store portfolio. In 2019, 55 stores were identified for closure, out of which 35 stores were closed in 2019 and 20 stores were closed in January 2020. In 2020, 21 stores identified for closure in the first quarter of 2020 and were closed in the third quarter. These closings should provide the Company with(c) capital flexibility to expand into underserved markets. In addition, the Company evaluated the recoverability of long-lived assets at the open stores and recorded an impairment charge associated with the operating lease asset and property, plant and equipment for open stores where sales were affected due to the outbreak of, and local, state and federal governmental responses to, COVID-19. In conjunction with the store optimization program and store impairment, during the years ended December 31, 2020 and 2019, the Company recorded charges as detailed in Note 3 ? Store Impairment and Restructuring Charges, of Item 8, ?Financial Statements and Supplementary Data? in this Annual Report on Form 10-K. As indicated in Note 7 ? Inventories, Net, of Item 8, ?Financial Statements and Supplementary Data,? during the fourth quarter of 2020, the Company continued to make progress in improving inventory levels across its stores and distribution network. Consistent with the strategy of rationalizing in-store SKU count and improving working capital velocity, the Company has updated its seasonal assortment strategy to target higher in-season sell-through of merchandise and reduce annual inventory carry-over. The more edited and curated assortments are expected to improve the customer experience by making stores easier to shop and product selections more relevant to consumers, while also improving the efficiency of inventory management and reducing working capital needs. As a result, the Company disposed of $88,358 in inventory during the fourth quarter of 2020 that will not be required in future seasons The deferred rent adjustment reflects the difference between accounting for(d) rent and landlord incentives in accordance with GAAP and the Company?s actual cash outlay for such items. Principally represents third-party costs related to acquisitions (primarily legal expenses and diligence fees). Such costs are excluded from the definition of ?Consolidated Adjusted EBITDA? that is utilized for certain(e) covenants in the Company?s credit agreements. Additionally, 2019 and 2020 include start-up costs for Kazzam (see Note 25, Kazzam LLC., of Item 8, ?Financial Statements and Supplementary Data? in this Annual Report on Form 10-K for further discussion)(f) Principally charges incurred related to closing underperforming stores(g) Represents non-cash charges related to stock options Principally represents shares of Kazzam awarded to Ampology as compensation(h) for Ampology?s services. See Note 25, Kazzam LLC., of Item 8, ?Financial Statements and Supplementary Data? in this Annual Report on Form 10-K for further discussion Non-cash charges for restricted stock units that vest based on service(i) conditions and performance restricted stock units that vest based on service and performance conditions As described in Note 12 ? Long-Term Obligations of Item 8, ?Financial(j) Statements and Supplementary Data? in this Annual Report on Form 10-K, the Company recognized a gain of $273,149 on debt refinancing transactions(k) Non-recurring legal settlements/costs(l) Represents the non-cash amortization of intangible assets. Includes the non-cash amortization of deferred financing costs, original(m) issuance discounts and capitalized call premiums. Additionally, certain years include charges related to debt refinancings. See note (c) 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(n) 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. As a result of a sustained decline in market capitalization, the Company recognized a non-cash pre-tax goodwill and intangibles impairment charges(o) during the year ended December 31, 2019 and December 31, 2020, respectively. (see Note 4, Goodwill, of Item 8, ?Financial Statements and Supplementary Data? in this Annual Report on Form 10-K for further discussion) Note 6 ? Disposition of Assets and Assets and Liabilities Held for Sale, the Company closed the previously disclosed sale of a substantial portion(p) of its international operations. As of December 31, 2020, the Company reported the assets and liabilities of the international operations as held for sale and recorded a loss reserve of $73,948 against the net assets Represents COVID-19 expenses for employees on temporary furlough for whom(q) the Company provides health benefits; non-payroll expenses including advertising, occupancy and other store expenses The Company recorded a $2.9 million gain on sale of its Canadian-based(r) Party City stores, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income Represents a loss on sale of ownership interest in Punchbowl (see Note 21, Fair Value Measurements, of Item 8, ?Financial Statements and Supplementary(s) Data? in this Annual Report on Form 10-K for further discussion) and certain property, plant and equipment, and a write-off of goodwill related to the Company?s sale of its Canadian-based Party City stores

PARTY CITY HOLDCO INC.SEGMENT INFORMATION(In thousands, except percentages, unaudited)

Three Months Ended December31, 2020 2019 Dollarsin Percentage of Dollarsin Percentage of Thousands Total Thousands Total Revenues RevenuesNet Sales: Wholesale $ 247,513 38.2 % $ 277,233 37.9 %Eliminations (126,697 ) (19.5 ) (120,231 ) (16.4 )Net 120,816 18.6 157,002 21.5 wholesaleRetail 524,467 80.8 571,359 78.1 Total net 645,283 99.6 728,361 99.6 salesRoyaltiesand 2,898 0.4 3,190 0.4 franchisefeesTotal $ 648,181 100.0 % $ 731,551 100.0 %revenues

Fiscal Year Ended December31, 2020 2019 Dollarsin Percentage Dollarsin Percentage Thousands of Total Thousands of Total Revenues RevenuesNet Sales: Wholesale $ 940,228 50.8 % $ 1,240,026 52.8 %Eliminations (471,863 ) (25.5 ) (642,652 ) (27.4 )Net 468,365 25.3 597,374 25.4 wholesaleRetail 1,375,079 74.3 1,742,136 74.2 Total net 1,843,444 99.6 2,339,510 99.6 salesRoyaltiesand 7,246 0.4 9,279 0.4 franchisefeesTotal $ 1,850,690 100.0 % $ 2,348,789 100.0 %revenues

Three Months Ended December31, 2020 2019 Dollarsin Percentage Dollarsin Percentage Thousands of Thousands of Net Sales Net SalesRetail $ 143,702 27.4 % $ 259,678 45.4 %Wholesale 23,717 19.6 33,561 21.4 Total gross $ 167,420 25.7 % $ 293,239 40.3 %profit

Fiscal Year Ended December31, 2020 2019 Dollarsin Percentage Dollarsin Percentage Thousands of Thousands of Net Sales Net SalesRetail $ 400,738 29.1 % $ 696,439 40.0 %Wholesale 74,256 15.9 142,438 23.8 Total gross $ 474,994 25.7 % $ 838,877 35.9 %profit

PARTY CITY HOLDCO INC.OPERATING METRICS

Three Months Ended December31, LTM 2020 2019 2020 Store Count Corporate Stores: Beginning of period 739 778 777 New stores opened 3 ? 5 Acquired 4 ? 6 Closed ? (1 ) (42 )End of period 746 777 746 Franchise Stores Beginning of period 90 98 98 New stores opened ? ? ? Sold to Party City ? ? (2 )Closed (5 ) ? (11 )End of period 85 98 85 Grand Total 831 875 831

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Wholesale Share of 83.1 % 82.8 % 82.1 % 79.6 % Shelf (a)Manufacturing Share of 19.6 % 17.2 % 26.0 % 23.5 % Shelf (b) Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Brand comparable sales -5.9 % -5.1 % -16.5 % -3.0 % (c)

(a) Wholesale share of shelf represents the percentage of our retail product cost of sales supplied by our wholesale operations.(b) Manufacturing share of shelf represents the percentage of our retail product cost of sales manufactured by the company.(c) Party city brand comparable sales include North American e-commerce sales.

Contact:ICRFarah Soi and Rachel Schacter203-682-8200InvestorRelations@partycity.com

Source: Party City Holdco Inc.