GlobeNewswire Inc | Aug 5, 2021 06:50AM EDT

August 05, 2021

Total Sales increased 110.4% versus prior year; Comparable Sales increased 118.3% versus prior year and 19.1% versus Q2 2019 driven by strength in core categories

GAAP Net Income of $29.8 million versus a Net Loss of $130.0 million in Q2 2020

Adjusted EBITDA of $85.8 million versus a $42.8 million Adjusted EBITDA Loss in Q2 2020

ELMSFORD, N.Y., Aug. 05, 2021 (GLOBE NEWSWIRE) -- 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 Companys debt instruments:

Party City Anagram PCHI Credit Group Holdings, Consolidated LLC June 30, 2021 June 30, 2021 Principal Net Carrying Net Net Carrying(in Thousands) Amount Amount Carrying Amount Amount8.75% SeniorSecured First $ 750,000 731,305 - $ 731,305 Lien Notes ? due20266.125% Senior 22,924 22,806 - 22,806 Notes ? due 20236.625% Senior 92,254 91,519 - 91,519 Notes ? due 2026First Lien PartyCity Notes ? due 161,669 202,588 - 202,588 2025First LienAnagram Notes ? 112,979 - 150,451 150,451 due 2025Second LienAnagram Notes ? 86,981 - 148,114 148,114 due 2026Finance lease 13,398 13,398 - 13,398 obligationsTotal long-term 1,240,205 1,061,616 298,565 1,360,181 obligationsLess: current N/A (1,265 ) - (1,265 )portionLong-termobligations, 1,240,205 1,060,351 298,565 1,358,916 excluding currentportionLoans and notes 103,175 99,933 - 99,933 payable*Less: Cash (84,452 ) (56,130 ) (28,322 ) (84,452 )Principal balance $ 1,258,928 $ 1,104,154 $ 270,243 $ 1,374,397 net of cash

*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 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 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)

June30, December31, June30, 2021 2020 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 68,363 45,905 94,710 current assetsIncome 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, 218,532 209,412 223,433 netOperating 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? EQUITYCurrent 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 136,749 176,045 202,971 lease liabilityIncome taxes payable 2,537 524 ? Current portion of long-term 1,265 13,576 13,810 obligationsTotal current liabilities 560,633 713,877 866,543 Long-term obligations, 1,358,916 1,329,808 1,557,576 excluding current portionLong-term portion of operating 625,157 654,729 685,290 lease liabilityDeferred income tax 37,052 34,705 67,458 liabilities, netOther 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 94,602,386shares outstanding and122,790,983, 122,061,711 and 1,383 1,373 1,211 121,819,456 shares issued atJune30, 2021, December31,2020, and June 30, 2020respectively)Additional paid-in capital 978,167 971,972 941,745 Accumulated deficit (549,693 ) (565,457 ) (708,747 )Accumulated other comprehensive 6,096 (29,916 ) (43,849 )income (loss)Total Party City Holdco Inc.stockholders? equity before 435,953 377,972 190,360 common stock held intreasuryLess: Common stock held intreasury, at cost (11,314,487,11,280,098 and 27,217,070 (327,394 ) (327,182 ) (327,170 )shares at June30, 2021,December31, 2020, and June 30,2020, respectively)Total Party City Holdco Inc. 108,559 50,790 (136,810 )stockholders? equityNoncontrolling interests (786 ) (269 ) (206 ) Total stockholders? 107,773 50,521 (137,016 )equity Total liabilities and $ 2,722,819 $ 2,806,455 $ 3,056,783 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 June30, Six Months Ended June30, 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 7,358 9,707 16,474 25,165 selling expensesRetail operating 97,179 65,236 186,075 153,402 expensesGeneral andadministrative 45,795 63,955 91,833 129,289 expensesArt anddevelopment 5,004 3,516 9,975 8,838 costsStore impairmentand ? 1,164 ? 18,892 restructuringchargesLoss on disposalof assets in ? ? 3,211 ? internationaloperationsGoodwill,intangibles andlong-lived ? ? ? 536,648 assetsimpairmentIncome (loss) 61,836 (126,794 ) 61,890 (738,164 )from operationsInterest 23,116 25,412 40,330 50,532 expense, netOther (income) (1,300 ) 1,484 (873 ) 7,160 expense, netIncome (loss)before income 40,020 (153,690 ) 22,433 (795,856 )taxesIncome taxexpense 10,209 (23,631 ) 6,740 (124,129 )(benefit)Net income 29,811 (130,059 ) 15,693 (671,727 )(loss)Less: Net (loss)attributable to ? (44 ) (54 ) (199 )noncontrollinginterestsNet income(loss)attributable tocommon $ 29,811 $ (130,015 ) $ 15,747 $ (671,528 )shareholders ofParty CityHoldco Inc.Net income(loss) per shareattributable tocommon $ 0.27 $ (1.39 ) $ 0.14 $ (7.19 )shareholders ofParty CityHoldcoInc.?BasicNet income(loss) per shareattributable tocommon $ 0.26 $ (1.39 ) $ 0.14 $ (7.19 )shareholders ofParty CityHoldcoInc.?DilutedWeighted-averagenumber of common 111,340,295 93,419,078 111,128,822 93,407,344 shares-BasicWeighted-averagenumber of common 116,251,151 93,419,078 115,499,304 93,407,344 shares-DilutedDividendsdeclared per $ ? $ ? $ ? $ ? shareComprehensive $ 30,761 $ (125,961 ) $ 51,742 $ (679,842 )income (loss)Less:Comprehensive(loss) ? (44 ) (30 ) (199 )attributable tononcontrollinginterestsComprehensiveincome (loss)attributable tocommon $ 30,761 $ (125,917 ) $ 51,772 $ (679,643 )shareholders ofParty CityHoldco 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)

Six Months Ended June30, 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 1,937 2,401 original issuance discountsProvision 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 (211 ) 415 investmentsLoss on disposal of assets 109 93 Loss on disposal of assets in international 3,211 ? operationsNon-cash adjustment for store impairment and ? 16,458 restructuring chargesGoodwill, intangibles and long-lived assets ? 536,648 impairmentNon-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 (31,055 ) (47,700 )assetsIncrease (decrease) in accounts payable, accruedexpenses and income taxes 52,228 (3,717 )payable Net cash provided by (used in) operating 13,777 (48,781 )activitiesCash 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, 20,556 ? net of cash disposed 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 (836,435 ) (79,763 )obligationsProceeds from loans, notes payable and long-term 794,750 269,874 obligationsTreasury stock purchases (212 ) (85 )Exercise of stock options 3,322 ? Debt issuance costs (21,437 ) ? Net cash (used in) provided by financing (60,012 ) 190,026 activitiesEffect of exchange rate changes on cash and cash 274 (3,945 )equivalents Net (decrease) increase in cash and cash (65,857 ) 118,975 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 $ 85,452 $ 154,151 end of period*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 $ 3,411 $ 11,854 of refunds

*Includes $1,000 and $18 of restricted cash for the six months ended June30, 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 Six months ended June30, June30, 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 10,209 (23,631 ) 6,740 (124,129 )(benefit)Depreciation and 16,916 22,766 34,860 40,518 amortizationEBITDA 80,052 (105,512 ) 97,623 (704,806 )Store impairment andrestructuring charges ? 1,761 ? 29,522 (a)Inventoryrestructuring and 3,499 ? 6,637 ? early leaseterminations (j)Other restructuring,retention and 31 5,697 2,082 8,744 severance (b)Goodwill, intangiblesand long-lived assets ? ? ? 536,648 impairment (c)Deferred rent (d) (398 ) (1,488 ) 1,128 (2,872 )Closed store expense 1,543 400 3,136 1,635 (e)Foreign currency (772 ) 12 (1,311 ) 4,267 losses/(gains), netStock option 104 206 217 560 expense?time-basedStock option expense ? 7,847 ? 7,847 ?performance?basedRestricted stock unitand restricted cash 1,161 ? 1,978 ? awards expense ?performance-basedRestricted stock units 415 518 767 1,139 ? time-basedNon-employeeequity-based ? ? ? 1,033 compensation (f)Undistributed loss(income) in equity (547 ) 559 (211 ) 415 methodinvestmentsCorporate development ? 2,643 ? 5,612 expenses (g)Non-recurring legal ? 188 ? 6,509 settlements/costsGain or loss on saleof property, plant and ? 83 111 51 equipment*COVID - 19 (i) 655 44,200 1,270 70,380 Loss on disposal of ? ? 3,211 ? assetsNet loss on debt ? ? 226 ? repaymentOther* 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, Inventory Stock Option 2021 restructuring Expense/Non- Other Closed Foreign June 30, GAAP and early EmployeeEquity Deferred restructuring, store COVID- currency Other 2021 Basis (as lease Compensation/ Rent (d) retention and expense 19 (i) gains Non-GAAP reported) terminations Restricted severance (b) (e) basis (j) stock unitsNet sales $ 535,746 $ 535,746 Cost of sales 318,574 (2,312 ) 316,262 Gross Profit 217,172 219,484 Wholesaleselling 7,358 7,358 expensesRetailoperating 97,179 (1,187 ) 356 (1,516 ) (463 ) 94,369 expensesGeneral andadministrative 45,795 (1,680 ) 42 (31 ) (27 ) (192 ) (39 ) 43,868 expensesArt anddevelopment 5,004 5,004 costsIncome from 61,836 68,885 operationsInterest 23,116 (51 ) 23,065 expense, netOther (income) (1,300 ) 772 547 19 expense, netIncome (loss)before income 40,020 45,801 taxesInterest 23,116 23,116 expense, netDepreciationand 16,916 16,916 amortizationEBITDA 80,052 85,833 Adjustments to 5,781 (3,499 ) (1,680 ) 398 (31 ) (1,543 ) (655 ) 772 457 ? EBITDAAdjusted $ 85,833 $ (3,499 ) $ (1,680 ) $ 398 $ (31 ) $ (1,543 ) $ (655 ) $ 772 $ 457 $ 85,833 EBITDA

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

Three Months Ended June 30, 2020 EBITDA Adjustments Stock Option June 30, Store Corporate Expense/Non- Other Closed June 30, 2020 impairment development EmployeeEquity Deferred restructuring, store COVID- Foreign 2020 GAAP and expenses Legal Compensation/ Rent (d) retention and expense 19 (i) currency Other Non-GAAP Basis (as restructuring (g) Restricted severance (b) (e) losses basis reported) charges (a) stock units ? time-basedNet 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 63,955 (1,003 ) (188 ) (8,571 ) 49 (1,260 ) (58 ) (10,926 ) 41,998 expensesArt and development costs 3,516 3,516 Store impairment and 1,164 (1,164 ) ? restructuring charges(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 22,766 22,766 amortizationEBITDA (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, Inventory Stock Option 2021 restructuring Net loss Expense/Non- Other Closed Foreign June 30, GAAP and early on debt EmployeeEquity Deferred restructuring, store COVID- currency Other 2021 Basis (as lease repayment Compensation/ Rent (d) retention and expense 19 (i) gains Non-GAAP reported) terminations Restricted severance (b) (e) basis (j) stock unitsNet sales $ 962,553 $ 962,553 Cost of sales 593,095 (3,694 ) 124 589,525 Gross Profit 369,458 373,028 Wholesaleselling 16,474 16,474 expensesRetailoperating 186,075 (2,943 ) (1,212 ) (3,078 ) (1,053 ) (718 ) 177,071 expensesGeneral andadministrative 91,833 (2,962 ) 84 (2,082 ) (58 ) (217 ) (689 ) 85,909 expensesArt anddevelopment 9,975 9,975 costsLoss ondisposal ofassets in 3,211 (3,211 ) ? internationaloperationsIncome from 61,890 83,599 operationsInterest 40,330 (105 ) 40,225 expense, netOther (income) (873 ) (226 ) 1,311 100 312 expense, netIncome before 22,433 43,062 Income TaxesInterest 40,330 40,330 expense, netDepreciationand 34,860 34,860 amortizationEBITDA 97,623 118,252 Adjustments to 20,629 (6,637 ) (226 ) (2,962 ) (1,128 ) (2,082 ) (3,136 ) (1,270 ) 1,311 (4,499 ) ? EBITDAAdjusted $ 118,252 $ (6,637 ) $ (226 ) $ (2,962 ) $ (1,128 ) $ (2,082 ) $ (3,136 ) $ (1,270 ) $ 1,311 $ (4,499 ) $ 118,252 EBITDA

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

Six Months Ended June 30, 2020 EBITDA Adjustments Goodwill, Stock Option June 30, intangibles Store Corporate Expense/Non- Other Closed June 30, 2020 and impairment development EmployeeEquity Deferred restructuring, store COVID- Foreign 2020 GAAP long-lived and expenses Legal Compensation/ Rent (d) retention and expense 19 (i) currency Other Non-GAAP Basis (as assets restructuring (g) Restricted severance (b) (e) loss basis reported) impairment charges (a) stock units (c) (f)(g)Net sales $ 668,734 $668,734Cost of sales 534,664 (10,630 ) (134 ) (4,437 ) (41,180 ) (429 ) 477,854Gross Profit 134,070 190,880Wholesaleselling 25,165 (1,840 ) (623 ) 22,702expensesRetailoperating 153,402 2,909 (1,508 ) (14,567 ) 140,236expensesGeneral andadministrative 129,289 (3,132 ) (6,509 ) (9,546 ) 97 (4,307 ) (127 ) (14,010 ) 91,755expensesArt anddevelopment 8,838 8,838costsStoreimpairment and 18,892 (18,892 ) ?restructuringchargesGoodwill,intangiblesand long-lived 536,648 (536,648 ) ?assetsimpairment(Loss) from (738,164 ) (72,651)operationsInterest 50,532 50,532expense, netOther (income) 7,160 (640 ) (1,033 ) (4,267 ) (2,474 ) (1,254)expense, net(Loss) before (795,856 ) income taxes (121,929)Interest 50,532 50,532expense, netDepreciationand 40,518 40,518amortizationEBITDA (704,806 ) (30,879)Adjustments to 673,927 (536,648 ) (29,522 ) (5,612 ) (6,509 ) (10,579 ) 2,872 (8,744 ) (1,635 ) (70,380 ) (4,267 ) (2,903 ) ?EBITDAAdjusted $ (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)EBITDA

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

Three Months Ended June30, Six months ended June30, 2021 2020 2021 2020 (Dollars inthousands, except per share amounts)Income (loss) before $ 40,020 $ (153,690 ) $ 22,433 $ (795,856 )income taxesIntangible asset 2,354 2,679 4,831 5,545 amortizationAmortization ofdeferred financing 1,074 1,199 1,937 2,401 costs and originalissuance discountsStore impairment andrestructuring charges ? 181 ? 28,154 (a)Other restructuring 31 6,595 1,967 7,517 charges (b)Goodwill, intangiblesand long-lived assets ? ? ? 536,648 impairment (c)Non-employeeequity-based ? ? ? 1,033 compensation (f)Non-recurring legal ? 100 ? 6,421 settlements/costsStock option 104 561 217 561 expense?time-basedStock option expense ? 7,493 ? 7,847 ?performance?basedRestricted stock unitexpense ? 1,154 ? 1,971 ? performance-basedCOVID - 19 (i) 655 44,200 1,270 70,380 Loss on disposal of ? ? 3,211 ? assetsInventory disposals 162 ? 926 ? Adjusted income(loss) before income 45,554 (90,682 ) 38,763 (129,349 )taxesAdjusted income tax 11,446 (29,366 ) 10,064 (41,650 )(benefit) (h)Adjusted net income $ 34,108 $ (61,316 ) $ 28,699 $ (87,699 )(loss)Adjusted net income(loss) per common $ 0.29 $ (0.66 ) $ 0.25 $ (0.94 )share ? dilutedWeighted-averagenumber of common 116,251,151 93,419,078 115,499,304 93,407,344 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 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 Companys actual cash outlay. -- Charges incurred related to closing and relocating stores in the ordinary course of business. -- The acquisition of Ampologys 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 June30, 2021 2020 Dollars in Percentage of Dollars in Percentage of Thousands Total Revenues Thousands Total RevenuesNet 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 $ 535,746 100.0 % $ 254,691 100.0 %revenues

*Retail revenues include royalties and franchise fees. Prior year amount conformed to current year presentation.

Six months ended June30, 2021 2020 Dollars in Percentage of Dollars in Percentageof Thousands Total Revenues Thousands TotalRevenuesNet 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 $ 962,553 100.0 % $ 668,734 100.0 %revenues

*Retail revenues include royalties and franchise fees. Prior year amount conformed to current year presentation.

Three Months Ended June30, 2021 2020 Dollars in Percentage Dollars in Percentage Thousands ofNet Thousands ofNet Sales SalesRetailGross $ 193,565 43.6 % $ 29,902 16.1 %Profit*WholesaleGross 23,607 25.7 (13,118 ) (19.0 ) ProfitTotalGross $ 217,172 40.5 % $ 16,784 6.6 %Profit

*Retail Gross Profit include royalties and franchise fees. Prior year amount conformed to current year presentation.

Six months ended June30, 2021 2020 Dollars in Percentage Dollars in Percentage Thousands of Net Thousands of Net Sales SalesRetail Gross $ 316,743 40.8 % $ 125,845 25.7 %Profit*Wholesale 52,715 28.4 8,225 4.6 Gross ProfitTotal Gross $ 369,458 38.4 % $ 134,070 20.0 %Profit

*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 June30, 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 Six months ended June30, June30, 2021 2020 2021 2020 Wholesale Share of Shelf 81.0 % 82.3 % 81.2 % 81.7 %(a)Manufacturing Share of 30.7 % 33.5 % 31.4 % 30.7 %Shelf (b) Three months ended Six months ended June30, June30, 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.