GlobeNewswire Inc | May 10, 2021 06:55AM EDT

May 10, 2021

Total Sales increased 3.1% versus prior year; Comparable Sales Increased 35.9% versusprior year and 0.4% versus Q1 2019

GAAP Net Loss per Share of $0.13 versus a Net Loss of $5.80 in Q1 2020; Adjusted EBITDA of $32.4 million vs $11.9 million in Q1 2020

Cash from Operations Improved $25.2 million versus Q1 2020

ELMSFORD, N.Y., May 10, 2021 (GLOBE NEWSWIRE) -- Party City Holdco Inc. (the Company or PRTY; NYSE:PRTY) today announced financial results for the quarter ended March 31, 2021.

Brad Weston, Chief Executive Officer of Party City, stated, We delivered continued strong core category performance and better than expected results in seasonal categories in the first quarter, fueling top and bottom line performance that exceeded expectations. Despite operating in a pandemic impacted environment with fewer in-person celebrations, brand comparable sales increased 0.4% versus 2019. While social gatherings were suppressed for a significant portion of the quarter, we were very encouraged by first quarter results and sales momentum which continued into April. Importantly, we made good progress advancing our strategic building blocks that are improving our relevancy as we continue to inspire joy by making it easy to create unforgettable memories.

Mr. Weston added, As we look to the second quarter, we are confident in our overall positioning heading into the summer and graduation season. We are focused on the right priorities to fortify our industry leadership and are poised to capitalize on the opportunities that lie ahead as life begins to return to normal and celebrations gradually resume.

First Quarter Summary:

-- Total revenues were $426.8 million, an increase of 3.1% on a reported basis and 2.7% on a constant currency basis, compared to the first quarter 2020. As the Company closed the previously disclosed sale of a substantial portion of its international operations at the end of January 2021, first quarter 2021 performance included one month of international results versus three months in the prior year period. -- Total Retail sales increased 10.0% on a reported and constant currency basis driven by a 49.3% comparable sales increase in core categories versus the 13 weeks ended April 4, 2020, partially offset by the divestiture of the international retail business and timing of New Years Eve. -- The total number of corporate Party City stores was 751 as of March 31, 2021 compared to 757 in the prior year period. -- Brand comparable sales increased 35.9% in the first quarter versus the 13 weeks ended April 4, 2020 and increased 0.4% compared to the 13 weeks ended April 6, 2019. -- Net third-party Wholesale revenues decreased 15.8% on a reported basis or 16.8% in constant currency, driven predominately by the divestiture of a significant portion of our international operations. -- Total gross profit margin increased 735 basis points to 35.7% of net sales. Excluding certain items not indicative of core operating performance, gross profit margin improved 200 basis points to 36.0% of net sales mainly due to favorable product mix and fewer retail sales promotions, partially offset by increased costs for helium and delivery service. -- Operating expenses totaled $152.2 million or $576.5 million lower than the first quarter of 2020. Excluding certain items not indicative of core operating performance, operating expenses totaled $138.8 million, or 32.5% of net sales, a 320-basis point improvement versus prior-year period primarily driven by disciplined expense management and leverage on higher sales. -- Interest expense was $17.2 million during the first quarter of 2021, compared to $25.1 million during the first quarter of 2020 mainly due to lower amounts of debt outstanding. -- Reported GAAP net loss was $14.1 million, or a loss of $0.13 per diluted share. -- Adjusted net loss was $5.4 million, or a loss of $0.05 per diluted share, compared to adjusted net loss of $26.4 million, or a loss of $0.28 per share, in the first quarter of 2020. (See Non-GAAP Information) -- Adjusted EBITDA was $32.4 million, versus $11.9 million during the first quarter of 2020. (See Non-GAAP Information)

Balance Sheet and Cash Flow Highlights:

As of the end of the first quarter 2021, the Company had $83.8 million in cash and approximately $129.3 million of availability under the ABL Facility, for total liquidity of $213.1 million.

In addition, the principal balance of debt net of cash on March 31, 2021 was $1,303.0 million versus $1,760.4 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 Companys debt instruments:

Party City Anagram PCHI Credit Holdings, Consolidated Group LLC March 31, 2021 Principal Net Net Net Carrying Amount Carrying Carrying Amount Amount Amount8.75% Senior SecuredFirst Lien Notes ? $ 750,000 $ 730,508 $ - $ 730,508 due 20266.125% Senior Notes 22,924 22,792 - 22,792 ? due 20236.625% Senior Notes 92,254 91,483 - 91,483 ? due 2026First Lien PartyCity Notes ? due 161,669 202,657 - 202,657 2025First Lien Anagram 112,979 - 150,568 150,568 Notes ? due 2025Second Lien Anagram 86,981 - 148,159 148,159 Notes ? due 2026Finance lease 13,687 13,687 - 13,687 obligationsTotal long-term 1,240,494 1,061,127 298,727 1,359,854 obligationsLess: current N/A (1,359 ) - (1,359 )portionLong-termobligations, $ 1,240,494 $ 1,059,768 $ 298,727 $ 1,358,495 excluding currentportionLoans and notes 146,275 146,275 - 146,275 payableLess: Cash (83,806 ) (66,796 ) (17,010 ) (83,806 )Principal balance $ 1,302,963 $ 1,139,247 $ 281,717 $ 1,420,964 net of cash

Net cash used in operating activities in the first three months of 2021 was $48.8 million, compared to $74.0 million in the prior-year period, driven primarily by higher net sales, improved operating income and favorable working capital changes. Free cash flowa in the first three months of 2020 was $10.2 million compared to $1.1 million in the prior-year period, driven by higher Adjusted EBITDA, 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 second quarter 2021 outlook. This outlook is subject to potential consumer and marketplace volatility due to the COVID-19 pandemic:

-- Total revenue of $475 to $490 million -- Brand comparable sales increase of 92% to 97% compared to second quarter 2020 -- Brand comparable sales increase of mid to high single digits compared to second quarter 2019 -- GAAP net income of $10 to $20 million with an assumed Q2 tax rate of 27% -- Adjusted EBITDA of $60 to $70 million

The table below sets forth a reconciliation from our second quarter 2021 forecasted GAAP Net Income to our Adjusted EBITDA.

Q2 2021 Q2 2021(in thousands) High LowNet Income $ 19,929 $ 10,439Provision for Income Taxes 7,371 3,861Interest Expense 23,600 24,600Depreciation and Amortization Expense 16,200 17,200EBITDA $ 67,100 $ 56,100EBITDA Add-Backs 2,900 3,900Adjusted EBITDA $ 70,000 $ 60,000



Conference Call Information

A conference call to discuss the second quarter 2021 financial results is scheduled for today, May 10, 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 InformationThis 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 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 833 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.

PARTY CITY HOLDCO INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share data, unaudited)

March31, December31, March31, 2021 2020 2020 (Note 2) (Note 2) (Note 2) (Unaudited) (Unaudited)ASSETS Current assets: Cash and cash equivalents $ 83,806 $ 119,532 $ 194,433 Accounts receivable, net 81,658 90,879 116,223 Inventories, net 428,316 412,285 629,875 Prepaid expenses and other 47,803 45,905 76,698 current assetsIncome tax receivable 68,632 57,549 ? Assets held for sale, net ? 83,110 ? Total current assets 710,215 809,260 1,017,229 Property, plant and equipment, 214,698 209,412 235,577 netOperating lease asset 687,214 700,087 773,775 Goodwill 659,865 661,251 665,129 Trade names 383,733 384,428 394,221 Other intangible assets, net 29,912 32,134 41,960 Other assets, net 9,832 9,883 6,904 Total assets $ 2,695,469 $ 2,806,455 $ 3,134,795 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent liabilities: Loans and notes payable $ 142,859 $ 175,707 $ 381,422 Accounts payable 127,812 118,928 96,383 Accrued expenses 146,742 160,605 154,847 Liabilities held for sale ? 68,492 ? Current portion of operating 150,860 176,045 153,614 lease liabilityIncome taxes payable ? 524 ? Current portion of long-term 1,359 13,576 98,588 obligationsTotal current liabilities 569,632 713,877 884,854 Long-term obligations, 1,358,495 1,329,808 1,474,854 excluding current portionLong-term portion of operating 628,217 654,729 707,734 lease liabilityDeferred income tax 31,036 34,705 70,943 liabilities, netOther long-term liabilities 33,195 22,815 16,036 Total liabilities 2,620,575 2,755,934 3,154,421 Commitments and contingencies Stockholders? equity: Common stock (111,258,890,110,781,613 and 94,491,352shares outstanding and122,573,377, 122,061,711 and 1,383 1,373 1,211 121,708,422 shares issued atMarch31, 2021,December31, 2020, March 31,2020 respectively)Additional paid-in capital 976,037 971,972 933,174 Accumulated deficit (579,486 ) (565,457 ) (578,732 )Accumulated other 5,134 (29,916 ) (47,947 )comprehensive income (loss)Total Party City Holdco Inc.stockholders? equity before 403,068 377,972 307,706 common stock held in treasuryLess: Common stock held intreasury, at cost (11,314,487,11,280,098 and27,217,070 shares at March31, (327,388 ) (327,182 ) (327,170 )2021, December31, 2020, March31, 2020,respectively)Total Party City Holdco Inc. 75,680 50,790 (19,464 )stockholders? equityNoncontrolling interests (786 ) (269 ) (162 )Total stockholders? equity 74,894 50,521 (19,626 )Total liabilities and $ 2,695,469 $ 2,806,455 $ 3,134,795 stockholders? equity

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 March31, 2021 2020 Net sales* $ 426,807 $ 414,043 Cost of sales 274,521 296,757 Gross Profit 152,286 117,286 Wholesale selling expenses 9,116 15,458 Retail operating expenses 88,896 88,166 General and administrative expenses 46,038 65,334 Art and development costs 4,971 5,322 Store impairment and restructuring charges ? 17,728 Loss on disposal of assets in international 3,211 ? operationsGoodwill, intangibles and long-lived assets ? 536,648 impairmentIncome (loss) from operations 54 (611,370 )Interest expense, net 17,214 25,120 Other expense, net 427 5,676 (Loss) before income taxes (17,587 ) (642,166 )Income tax (benefit) (3,469 ) (100,498 )Net (loss) (14,118 ) (541,668 )Less: Net (loss) attributable to (54 ) (155 )noncontrolling interestsNet (loss) attributable to common $ (14,064 ) $ (541,513 )shareholders of Party City Holdco Inc.Net (loss) per share attributable to commonshareholders of Party City Holdco $ (0.13 ) $ (5.80 ) Inc.?BasicNet (loss) per share attributable to commonshareholders of Party City Holdco $ (0.13 ) $ (5.80 ) Inc.?DilutedWeighted-average number of common 110,917,349 93,395,609 shares-BasicWeighted-average number of common 110,917,349 93,395,609 shares-DilutedDividends declared per share $ ? $ ? Comprehensive income (loss) $ 20,937 $ (553,881 )Less: Comprehensive (loss) attributable to (84 ) (155 )noncontrolling interestsComprehensive income (loss) attributable tocommon shareholders of Party City Holdco $ 21,021 $ (553,726 )Inc.

*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)

Three Months Ended March31, 2021 2020 Cash flows used in operating activities: Net (loss) $ (14,118 ) $ (541,668 )Adjustments to reconcile net (loss) to net cash (used in) operating activities:Depreciation and amortization expense 17,944 17,752 Amortization of deferred financing costs and 863 1,202 original issuance discountsProvision for doubtful accounts 696 1,119 Deferred income tax benefit (3,386 ) (54,991 )Change in operating lease liability/asset (37,556 ) (389 )Undistributed loss (income) in equity method 336 (144 )investmentsLoss on disposal of assets 110 40 Loss on disposal of assets in international 3,211 ? operationsNon-cash adjustment for store impairment and ? 16,277 restructuring chargesGoodwill, intangibles and long-lived assets ? 536,648 impairmentNon-employee equity-based compensation** ? 1,033 Stock option expense?time?based 113 354 Restricted stock unit expense ? time-based 352 621 Restricted stock unit ? performance-based 708 ? Directors ? non-cash compensation 57 75 Net loss on debt repayment 226 ? Changes in operating assets and liabilities: Decrease in accounts receivable 2,952 27,635 (Increase) decrease in inventories (17,565 ) 23,205 (Increase) in prepaid expenses and other current (8,768 ) (26,661 )assetsIncrease (decrease) in accounts payable, accruedexpenses and income taxes 5,014 (76,138 ) payableNet cash (used in) operating activities (48,811 ) (74,030 )Cash flows (used in) investing activities: Capital expenditures (22,184 ) (10,726 )Proceeds from disposal of property and equipment ? 7 Proceeds from sale of international operations, 20,556 ? net of cash disposedNet cash (used in) investing activities (1,628 ) (10,719 )Cash flows (used in) provided by financing activities:Repayment of loans, notes payable and long-term (792,849 ) (3,932 )obligationsProceeds from loans, notes payable and long-term 794,750 253,030 obligationsTreasury stock purchases (206 ) (85 )Exercise of stock options 2,855 ? Debt issuance costs (21,437 ) ? Net cash (used in) provided by financing (16,887 ) 249,013 activitiesEffect of exchange rate changes on cash and cash (177 ) (4,863 )equivalentsNet (decrease) increase in cash and cash (67,503 ) 159,401 equivalents and restricted cashChange in cash classified within current assets 31,628 ? held for saleCash and cash equivalents and restricted cash at 119,681 35,176 beginning of periodCash and cash equivalents and restricted cash at $ 83,806 $ 194,577 end of period*Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 20,309 $ 35,927 Cash paid during the period for income taxes, net $ 127 $ 11,368 of refunds

*Includes $144 of restricted cash for the three months ended March 31, 2020. There was no restricted cash as of March 31, 2021. The Company records restricted cash in prepaid expenses and other current asset as presented in the consolidated balance sheets at December 31, 2020 and March 31, 2020.

** See Note 17 Kazzam, LLC of Item 1, Condensed Consolidated Financial Statements (Unaudited) in the March 31, 2021 Quarterly Report on Form 10-Q 2021.

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED EBITDA(Unaudited)

Three Months Ended March31, 2021 2020 (Dollars in thousands) Net (loss) $ (14,118 ) $ (541,668 )Interest expense, net 17,214 25,120 Income tax (benefit) (3,469 ) (100,498 )Depreciation and amortization 17,944 17,752 EBITDA 17,571 (599,294 )Store impairment and restructuring charges (a) ? 27,761 Early lease terminations 3,138 ? Other restructuring, retention and severance (b) 2,051 3,047 Goodwill, intangibles and long-lived assets ? 536,648 impairment (c)Deferred rent (d) 1,526 (1,384 )Closed store expense (e) 1,593 1,235 Foreign currency losses/(gains), net (539 ) 4,255 Stock option expense?time-based 113 354 Restricted stock unit and restricted cash awards 817 ? expense ? performance-basedRestricted stock units ? time-based 352 621 Non-employee equity-based compensation (f) ? 1,033 Undistributed loss (income) in equity method 336 (144 )investmentsCorporate development expenses (g) ? 2,969 Non-recurring legal settlements/costs ? 6,321 COVID - 19 (l) 615 26,180 Loss on disposal of assets 3,211 ? Net loss on debt repayment 226 ? Other 1,409 2,272 Adjusted EBITDA $ 32,419 $ 11,874

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

Three Months Ended March 31, 2021 EBITDA Adjustments March 31, Stock Option 2021 Net loss Expense/Non- Other Closed Foreign March 31, GAAP Early lease on EmployeeEquity Deferred restructuring, store COVID- currency Other 2021 Basis (as terminations debt Compensation/ Rent (d) retention and expense 19 (l) losses Non-GAAP reported) repayment Restricted severance (b) (e) basis stock unitsNet sales $ 426,807 $ 426,807 Cost of sales 274,521 (1,382 ) 124 273,263 Gross Profit 152,286 153,544 Wholesale selling expenses 9,116 9,116 Retail operating expenses 88,896 (1,756 ) (1,568 ) (1,562 ) (590 ) (718 ) 82,703 General and administrative expenses 46,038 (1,282 ) 42 (2,052 ) (31 ) (25 ) (650 ) 42,041 Art and development costs 4,971 4,971 Loss on disposal of assets in 3,211 (3,211 ) ? international operationsIncome from operations 54 14,713 Interest expense, net 17,214 (54 ) 17,160 Other expense, net 427 (226 ) 539 (449 ) 292 (Loss) before Income Taxes (17,587 ) (2,739 )Interest expense, net 17,214 17,214 Depreciation and amortization 17,944 17,944 EBITDA 17,571 32,419 Adjustments to EBITDA 14,848 (3,138 ) (226 ) (1,282 ) (1,526 ) (2,052 ) (1,593 ) (615 ) 539 (4,957 ) (0 )Adjusted EBITDA $ 32,419 $ (3,138 ) $ (226 ) $ (1,282 ) $ (1,526 ) $ (2,052 ) $ (1,593 ) $ (615 ) $ 539 $ (4,957 ) $ 32,419

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

Three Months Ended March 31, 2020 EBITDA Adjustments Goodwill, Stock Option March 31, intangibles Store Corporate Expense/Non- Other Closed March 31, 2020 and long- impairment development EmployeeEquity Deferred restructuring, store COVID- Foreign 2020 GAAP lived assets and expenses Legal Compensation/ Rent (d) retention and expense 19 (l) currency Other Non-GAAP Basis (as impairment restructuring (h) Restricted severance (b) (e) gains basis reported) (c) charges (a) stock units (f)(g)(i)(m)Net sales $ 414,043 $414,043Cost of sales 296,757 (10,033 ) (12,804 ) (429 ) 273,491Gross Profit 117,286 140,552Wholesale selling expenses 15,458 (736 ) (114 ) 14,608Retail operating expenses 88,166 1,336 (1,166 ) (10,178 ) 78,158General and administrative expenses 65,334 (2,129 ) (6,321 ) (975 ) 48 (3,047 ) (69 ) (3,084 ) 49,757Art and development costs 5,322 5,322Store impairment and restructuring 17,728 (17,728 ) ?chargesGoodwill, intangibles and long-lived 536,648 (536,648 ) ?assets impairment(Loss) from operations (611,370 ) (7,293)Interest expense, net 25,120 25,120Other expense, net 5,676 (104 ) (1,033 ) (4,255 ) (1,699 ) (1,415)(Loss) before income taxes (642,166 ) (30,998)Interest expense, net 25,120 25,120Depreciation and amortization 17,752 17,752EBITDA (599,294 ) 11,874Adjustments to EBITDA 611,168 (536,648 ) (27,761 ) (2,969 ) (6,321 ) (2,008 ) 1,384 (3,047 ) (1,235 ) (26,180 ) (4,255 ) (2,128 ) ?Adjusted EBITDA $ 11,874 $ (536,648 ) $ (27,761 ) $ (2,969 ) $ (6,321 ) $ (2,008 ) $ 1,384 $ (3,047 ) $ (1,235 ) $ (26,180 ) $ (4,255 ) $ (2,128 ) $11,874

Note: Due to rounding, certain numbers may not add up precisely to the totals provided.

PARTY CITY HOLDCO INC.RECONCILIATION OF ADJUSTED NET INCOME(Unaudited)

Three Months Ended March31, 2021 2020 (Dollars in thousands, except per share amounts)(Loss) before income taxes $ (17,587 ) $ (642,166 )Intangible asset amortization 2,477 2,866 Amortization of deferred financing costs andoriginal 863 1,202 issuance discountsStore impairment and restructuring charges (a) ? 27,973 Other restructuring charges (b) 1,936 922 Goodwill, intangibles and long-lived assets ? 536,648 impairment (c)Non-employee equity-based compensation (f) ? 1,033 Non-recurring legal settlements/costs ? 6,321 Stock option expense?time-based 113 354 Restricted stock unit expense ? 817 ? performance-basedCOVID - 19 (l) 615 26,180 Loss on disposal of assets 3,211 ? Inventory disposals 764 ? Adjusted (loss) before income taxes (6,791 ) (38,667 )Adjusted income tax (benefit) (h) (1,382 ) (12,284 )Adjusted net (loss) $ (5,409 ) $ (26,383 )Adjusted net (loss) per common share ? diluted $ (0.05 ) $ (0.28 )Weighted-average number of common 110,917,349 93,395,609 shares-diluted

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(a) 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.(b) Amounts expensed principally relate to severance due to organizational changes. As a result of a sustained decline in market capitalization, the Company(c) recognized a non-cash pre-tax goodwill and intangibles impairment charge at March 31, 2020. The ?deferred rent? adjustment reflects the difference between accounting(d) for rent and landlord incentives in accordance with GAAP and the Company?s actual cash outlay.(e) Charges incurred related to closing and relocating stores in the ordinary course of business.(f) The acquisition of Ampology?s interest in Kazzam, LLC in an equity transaction. See Note 17 ? Kazzam, LLC in Item 1 for further discussion.(g) Primarily represents costs for Kazzam (see Note 17 ? Kazzam, LLC in Item 1 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(h) the adjustments were determined by applying to the pre-taxadjustments 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(l) the Company provides health benefits; non-payroll expenses including advertising, occupancy and other store expenses.

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

Three Months Ended March31, 2021 2020 Dollars in Percentage of Dollars in Percentage of Thousands Total Revenues Thousands Total RevenuesNet Sales: Wholesale $ 212,137 49.7 % $ 214,798 51.9 %Eliminations (118,612 ) (27.8 ) (103,731 ) (25.1 ) Net wholesale 93,525 21.9 111,067 26.8 Retail* 333,282 78.1 302,976 73.2 Total $ 426,807 100.0 % $ 414,043 100.0 %revenues

Three Months Ended March31, 2021 2020 Dollars in Percentage Dollars in Percentage Thousands of Thousands of Net Sales Net SalesRetailGross $ 123,178 37.0 % $ 95,943 31.7 %ProfitWholesaleGross 29,108 31.1 21,343 19.2 ProfitTotalGross $ 152,286 35.7 % $ 117,286 28.3 %Profit

*Includes royalties and franchise fees. Prior year amount conformed to current year presentation.

PARTY CITY HOLDCO INC.OPERATING METRICS

Three Months Ended March31, LTM 2021 2020 2021 Store Count Corporate Stores: Beginning of period 746 777 757 New stores opened 5 ? 10 Acquired ? ? 6 Closed ? (20 ) (22 )End of period 751 757 751 Franchise Stores Beginning of period 85 98 98 New stores opened ? ? ? Sold to Party City ? ? (6 )Closed (3 ) (1 ) (9 )End of period 82 97 83 Grand Total 833 854 834

Three Months Ended March31, 2021 2020 Wholesale Share of Shelf (a) 81.5% 81.3% Manufacturing Share of Shelf (b) 33.0% 29.0%

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

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