GlobeNewswire Inc | Nov 9, 2021 06:50AM EST

November 09, 2021

Total Net Sales of $510.2 million; Comparable Sales increased 7.5% versus prior year and 14.2% versus Q32019 driven by strength in core categories

GAAP Net Loss of $2.8 million; Adjusted EBITDA of $42.9 million

Strong October Performance across Core and Halloween

ELMSFORD, N.Y., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Party City Holdco Inc. (the Company or PRTY; NYSE:PRTY) today announced financial results for the quarter ended September 30, 2021.

Brad Weston, Chief Executive Officer of Party City, stated, We are very pleased with our third quarter results that came in at the high end of our expectations. Our performance was again broad based as we continue to be celebration obsessed and take concrete steps to increase relevancy with our customers to ensure we are top of mind when it comes to anything celebratory. To that end, this strong performance continued into October fueled by ongoing strength in our core categories. We are thrilled with our Halloween results driven by the teams excellent execution of our improved Halloween go-to market strategy across all four channels of our business including Party City, Party City.com, Halloween City and Wholesale.

Mr. Weston added, As we look to the final quarter of the year, we feel good about our positioning for the holiday season. We will continue to update and improve our product assortments and inventory position, as we expand our relevancy and elevate our customer experience. Given the still dynamic operating environment, we will remain flexible and agile, with our learnings from this year giving us increased confidence in our inflation mitigation strategies and the trajectory of our business.

Third Quarter Summary:

-- Total net sales were $510.2 million, a decrease of 4.4% compared to the third quarter 2020 primarily driven by the divestiture of a significant portion of our international operations in the first quarter of 2021, partially offset by strong retail sales growth. -- Total retail sales increased 8.9% versus third quarter 2020 driven by a strong comparable sales increase in our core everyday categories. -- The total number of corporate Party City stores was 754 as of September 30, 2021 compared to 739 in the prior year period. -- Brand comparable sales increased 7.5% in the third quarter versus the 13 weeks ended October 3, 2020 and increased 14.2% compared to the 13 weeks ended October 5, 2019. -- Net third-party wholesale sales decreased 33.6% compared to the third quarter of 2020 principally due to the divestiture of a significant portion of our international operations in the first quarter of 2021. Excluding international operations, net third-party wholesale sales increased 7.8%, driven by strong performance at our Anagram balloon division. -- Total gross profit margin increased 270 basis points to 36.0% of net sales. Excluding certain items not indicative of core operating performance, gross profit margin improved approximately 175 basis points to 36.3% of net sales driven primarily by the divestiture of international operations and leverage on retail occupancy costs. -- Operating expenses totaled $163.6 million or $41.4 million lower than the third quarter of 2020 primarily due to impairment of certain indefinite-lived intangible assets recorded in the third quarter of 2020. Excluding certain items not indicative of core operating performance, operating expenses totaled $157.6 million, or 30.9% of net sales, a 230-basis point increase versus prior-year period primarily driven by the divestiture of a significant portion of our international operations. -- Interest expense was $23.9 million during the third quarter of 2021, compared to $13.4 million during the third quarter of 2020. The increase primarily reflects higher cost debt from the debt refinancing in the first quarter of 2021 and the forgiveness of interest as part of the debt refinancing in the third quarter of 2020. -- Reported GAAP net loss was $2.8 million, or loss of $0.02 per diluted share. -- Adjusted net income was $2.9 million, or earnings of $0.02 per diluted share, compared to adjusted net income of $11.0 million, or income of $0.10 per share, in the third quarter of 2020. (See Non-GAAP Information) -- Adjusted EBITDA was $42.9 million, versus $49.2 million during the third quarter of 2020. (See Non-GAAP Information).

Fiscal October 2021 Update:

For fiscal October 2021 (for the Companys retail segment, fiscal October 2021 consisted of the five-week period ended November 6, 2021), the Company reported total revenue of $415.5 million, or 13.9% above the same period of last year. Total Retail revenue increased approximately 19.8%. Brand comparable sales increased 16.0% versus prior year driven by continued strength in core categories and higher Halloween sales. During the month of October 2021, the Company operated 754 total Party City locations vs 739 in the prior year period, and 90 temporary Halloween City stores, compared to 25 in 2020.

Balance Sheet and Cash Flow Highlights:

As of the end of the third quarter 2021, the Company had $60.7 million in cash and approximately $280.3 million of availability under the ABL Facility and approximately $14.6 million of availability under the Anagram ABL Facility, for total liquidity of $355.6 million.

The carrying value of the Company's debt as of September 30, 2021 was $1,539.3 million. The principal balance of debt net of cash on September 30, 2021 was $1,374.5 million versus $1,333.7 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 September 30, 2021 September 30, 2021 Principal Net Net Net(in Thousands) Amount Carrying Carrying Carrying Amount Amount Amount8.75% SeniorSecured First $ 750,000 $ 732,124 - $ 732,124 Lien Notes ?due 20266.125% SeniorNotes ? due 22,924 22,820 - 22,820 20236.625% SeniorNotes ? due 92,254 91,555 - 91,555 2026First LienParty City 161,669 198,076 - 198,076 Notes ? due2025First LienAnagram Notes ? 115,804 - 149,676 149,676 due 2025Second LienAnagram Notes ? 89,155 - 144,665 144,665 due 2026Finance lease 13,267 13,267 - 13,267 obligationsTotal long-term 1,245,073 1,057,842 294,341 1,352,183 obligationsLess: current N/A (1,297 ) - (1,297 ) portionLong-termobligations, 1,245,073 1,056,545 294,341 1,350,886 excludingcurrent portionLoans and notes 190,150 187,084 - 187,084 payable*Less: Cash (60,740 ) (33,050 ) (27,691 ) (60,741 ) Principalbalance net of $ 1,374,483 $ 1,210,579 $ 266,650 $ 1,477,229 cash

*Balance consists of ABL Facility.

Net cash used in operating activities in the first nine months of 2021 was $73.6 million, compared to net cash used in operating activities of $56.8 million in the prior year period. The increase in cash used is primarily attributable to an increase in seasonal inventory and the related freight, as well as the repayment of rents deferred from 2020. Free cash flowa in the first nine months of 2021 was $111.9 million compared to $(13.8) 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 fourth quarter 2021 outlook*. This outlook is subject to potential consumer and marketplace volatility due to the COVID-19 pandemic:

-- Total revenue of $685 to $700 million -- Brand comparable sales percentage increase of high-teens compared to fourth quarter 2020 and low-teens versus fourth quarter 2019 -- GAAP net income of $39 million to $47 million with an assumed Q4 tax rate of 26% -- Adjusted EBITDA of $100 to $110 million

* As previously disclosed, in the fourth quarter of 2020, the 53rd week contributed $40 million in revenue and approximately $12 million in Adjusted EBITDA.

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

Q4 2021 (in thousands) High Low Net Income $ 46,700 $ 38,700 Provision for Income Taxes 16,400 13,600 Interest Expense 23,800 24,200 Depreciation and Amortization Expense 16,800 17,200 EBITDA $ 103,700 $ 93,700 EBITDA Add-Backs 6,300 6,300 Adjusted EBITDA $ 110,000 $ 100,000

Conference Call Information

A conference call to discuss the third quarter 2021 financial results is scheduled for today, November 9, 2021, at 8:30 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 revenues, brand comparable sales, net income, Adjusted EBITDA, Adjusted Net Income, interest expense and capital expenditures. 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 a leading player in its category, vertically integrated and unique in its breadth and depth. The Company designs, manufactures, sources and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery throughout the world. The Companys retail operations include 830 specialty retail party supply stores (including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites, principally through the domain name PartyCity.com.

Source: Party City Holdco Inc.

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

September30, December31, September30, 2021 2020 2020 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 60,740 $ 119,532 $ 170,562 Accounts receivable, net 100,946 90,879 149,825 Inventories, net 520,046 412,285 630,357 Prepaid expenses and other 85,004 45,905 112,038 current assetsIncome tax receivable 56,361 57,549 ? Assets held for sale, net ? 83,110 ? Total current assets 823,097 809,260 1,062,782 Property, plant and 213,959 209,412 206,447 equipment, netOperating lease asset 700,668 700,087 741,524 Goodwill 662,163 661,251 669,564 Trade names 383,733 384,428 383,666 Other intangible assets, 25,821 32,134 34,505 netOther assets, net 27,385 9,883 9,521 Total assets $ 2,836,826 $ 2,806,455 $ 3,108,009 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent liabilities: Loans and notes payable $ 187,084 $ 175,707 $ 303,894 Accounts payable 167,445 118,928 179,938 Accrued expenses 178,155 160,605 202,636 Liabilities held for sale ? 68,492 ? Current portion of 131,653 176,045 194,476 operating lease liabilityIncome taxes payable ? 524 ? Current portion of 1,297 13,576 14,342 long-term obligationsTotal current liabilities 665,634 713,877 895,286 Long-term obligations, 1,350,886 1,329,808 1,334,338 excluding current portionLong-term portion of 639,560 654,729 677,183 operating lease liabilityDeferred income tax 43,537 34,705 49,508 liabilities, netOther long-term 34,718 22,815 15,559 liabilitiesTotal liabilities 2,734,335 2,755,934 2,971,874 Commitments and contingenciesStockholders? equity: Common stock (112,194,330,110,781,613 and110,573,555 sharesoutstanding and123,816,514, 122,061,711 1,384 1,373 1,371 and 121,848,074 sharesissued at September30,2021, December31, 2020,and September 30, 2020,respectively)Additional paid-in capital 980,399 971,972 970,145 Accumulated deficit (552,445 ) (565,457 ) (469,040 )Accumulated othercomprehensive income 3,128 (29,916 ) (38,907 )(loss)Total Party City HoldcoInc. stockholders? equity 432,466 377,972 463,569 before common stock heldintreasuryLess: Common stock held intreasury, at cost(11,622,184, 11,280,098and 11,274,519 shares at (329,975 ) (327,182 ) (327,170 )September30, 2021,December31, 2020, andJune 30, 2020,respectively)Total Party City Holdco 102,491 50,790 136,399 Inc. stockholders? equityNoncontrolling interests ? (269 ) (264 )Total stockholders? equity 102,491 50,521 136,135 Total liabilities and $ 2,836,826 $ 2,806,455 $ 3,108,009 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 Nine Months Ended September30, September30, 2021 2020 2021 2020 Net sales* $ 510,199 $ 533,775 $ 1,472,752 $ 1,202,509 Cost of sales 326,501 355,923 919,596 890,587 Gross profit 183,698 177,852 553,156 311,922 Wholesale 7,503 11,950 23,977 37,115 selling expensesRetail operating 105,206 97,100 291,281 250,502 expensesGeneral andadministrative 45,495 44,986 137,328 174,275 expensesArt anddevelopment 5,440 4,257 15,415 13,095 costsStore impairmentand ? 1,926 ? 20,818 restructuringchargesLoss on disposalof assets in ? ? 3,211 ? internationaloperationsGoodwill,intangibles andlong-lived ? 44,732 ? 581,380 assetsimpairmentIncome (loss) 20,054 (27,099 ) 81,944 (765,263 )from operationsInterest 23,899 13,422 64,229 63,954 expense, netOther (income) (1,444 ) (2,873 ) (2,317 ) 4,287 expense, net(Gain) on debt ? (273,149 ) ? (273,149 )refinancing(Loss) incomebefore income (2,401 ) 235,501 20,032 (560,355 )taxesIncome tax(benefit) 388 (4,164 ) 7,128 (128,293 )expenseNet (loss) (2,789 ) 239,665 12,904 (432,062 )incomeLess: Net (loss)attributable to ? (42 ) (54 ) (241 )noncontrollinginterestsNet (loss)incomeattributable tocommon $ (2,789 ) $ 239,707 $ 12,958 $ (431,821 )shareholders ofParty CityHoldco Inc.Net (loss)income per shareattributable tocommon $ (0.02 ) $ 2.25 $ 0.12 $ (4.41 )shareholders ofParty CityHoldcoInc.?BasicNet (loss)income per shareattributable tocommon $ (0.02 ) $ 2.24 $ 0.11 $ (4.41 )shareholders ofParty CityHoldcoInc.?DilutedWeighted-averagenumber of common 112,037,224 106,709,307 111,431,623 97,872,174 shares-BasicWeighted-averagenumber of common 112,037,224 106,875,631 115,822,121 97,872,174 shares-DilutedDividendsdeclared per $ ? $ ? $ ? $ ? shareComprehensive $ (5,753 ) $ 244,607 $ 45,989 $ (435,235 )(loss) incomeLess:Comprehensive(loss) (24 ) (42 ) (54 ) (241 )attributable tononcontrollinginterestsComprehensive(loss) incomeattributable tocommon $ (5,729 ) $ 244,649 $ 46,043 $ (434,994 )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, unaudited)

Nine Months Ended September30, 2021 2020 Cash flows (used in) operating activities: Net income (loss) $ 12,904 $ (432,062 )Adjustments to reconcile net income (loss) to net cash (used in) operating activities:Depreciation and amortization expense 50,293 57,796 Amortization of deferred financing costs and 3,257 3,276 original issuance discountsProvision for doubtful accounts 1,610 5,746 Deferred income tax expense (benefit) 9,116 (76,833 )Change in operating lease liability/asset (58,875 ) 32,121 Undistributed (income) loss in equity method (820 ) 356 investmentsLoss on disposal of assets 2,796 83 Loss on disposal of assets in international 3,211 ? operationsNon-cash adjustment for store impairment and ? 16,595 restructuring chargesGoodwill, intangibles and long-lived assets ? 581,380 impairmentNon-employee equity-based compensation** ? 1,033 Stock option expense?time?based 310 671 Stock option expense ?performance?based ? 7,847 Restricted stock unit expense ? time-based 1,643 1,568 Restricted stock unit ? performance-based 2,706 510 Directors ? non-cash compensation 171 75 Gain on debt refinancing (1,105 ) (273,149 )Changes in operating assets and liabilities: (Increase) in accounts receivable (17,339 ) (8,562 )(Increase) decrease in inventories (109,227 ) 27,959 (Increase) in prepaid expenses and other current (49,570 ) (64,715 )assetsIncrease in accounts payable, accrued expenses 75,368 61,478 and income taxes payableNet cash (used in) operating activities (73,551 ) (56,827 )Cash flows (used in) investing activities: Cash paid in connection with acquisitions, net of (4,405 ) (362 )cash acquiredCapital expenditures (49,211 ) (32,095 )Proceeds from disposal of property and equipment 3 82 Proceeds from sale of international operations, 20,556 ? net of cash disposedNet cash (used in) investing activities (33,057 ) (32,375 )Cash flows provided by financing activities: Repayment of loans, notes payable and long-term (844,952 ) (122,373 )obligationsProceeds from loans, notes payable and long-term 882,500 369,785 obligationsTreasury stock purchases (2,793 ) (85 )Exercise of stock options 3,621 ? Debt issuance costs (21,437 ) (19,955 )Net cash provided by financing activities 16,939 227,372 Effect of exchange rate changes on cash and cash 100 (2,659 )equivalentsNet (decrease) increase in cash and cash (89,569 ) 135,511 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 $ 61,740 $ 170,687 end of period*Supplemental disclosure of cash flow information: Cash paid during the period for interest expense $ 56,748 $ 55,999 Cash paid during the period for income taxes, net $ 5,303 $ 24,421 of refunds

*Includes $1,000 and $125 of restricted cash for the nine months ended September30, 2021 and 2020. The Company recorded restricted cash in other assets, net as presented in the consolidated balance sheet at September 30, 2021 and in prepaid expenses and other current assets as presented in the consolidated balance sheets at December 31, 2020 and September 30, 2020.

** See Note 17 Kazzam, LLC of Item 1, Condensed Consolidated Financial Statements (Unaudited) in the September 30, 2021 Quarterly Report on Form 10-Q 2021.

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

Three Months Ended Nine months ended September30, September30, 2021 2020 2021 2020 (Dollars in thousands) Net (loss) income $ (2,789 ) $ 239,665 $ 12,904 $ (432,062 )Interest expense, net 23,899 13,422 64,229 63,954 Income tax expense 388 (4,164 ) 7,128 (128,293 )(benefit)Depreciation and 15,433 17,278 50,293 57,796 amortizationEBITDA 36,931 266,201 134,554 (438,605 )Store impairment andrestructuring charges ? 6,763 ? 36,285 (a)Inventoryrestructuring and 520 ? 7,157 ? early leaseterminations (j)Other restructuring,retention and ? 2,957 2,082 11,701 severance (b)Goodwill, intangiblesand long-lived assets ? 44,732 ? 581,380 impairment (c)Deferred rent (d) 904 254 2,032 (2,618 )Closed store expense 603 1,247 3,739 2,882 (e)Foreign currency 343 (3,312 ) (968 ) 955 losses/(gains), netStock option 93 111 310 671 expense?time-basedStock option expense ? ? ? 7,847 ?performance?basedRestricted stock unitand restricted cash 923 510 2,901 510 awards expense ?performance-basedRestricted stock units 876 429 1,643 1,568 ? time-basedNon-employeeequity-based ? ? ? 1,033 compensation (f)Undistributed loss(income) in equity (609 ) (59 ) (820 ) 356 methodinvestmentsCorporate development 5 581 5 6,193 expenses (g)Non-recurring legal ? 661 ? 7,170 settlements/costsLoss on sale ofproperty, plant and 2,687 ? 2,798 ? equipment*COVID - 19 (i) ? 679 1,270 71,059 Loss on sale of ? ? 3,211 ? business(Gain) on debtrepayment/refinancing (1,332 ) (273,149 ) (1,106 ) (273,149 )(k)Other* 943 546 2,331 3,034 Adjusted EBITDA $ 42,887 $ 49,151 $ 161,139 $ 18,272

* 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 September 30, 2021 EBITDA Adjustments September Stock Option September 30, 2021 Inventory Net gain Corporate Expense/Non- Other Closed Foreign 30, GAAP restructuring and on debt development EmployeeEquity Deferred restructuring, store COVID- currency Other 2021 Basis (as early lease repayment expenses Compensation/ Rent (d) retention and expense 19 (i) gains Non-GAAP reported) terminations (j) (k) (g) Restricted severance (b) (e) basis stock unitsNet sales $ 510,199 $ 510,199 Cost of sales 326,501 (520 ) (945 ) 325,036 Gross profit 183,698 185,163 Wholesale selling 7,503 7,503 expensesRetail operating 105,206 (612 ) (908 ) 103,686 expensesGeneral andadministrative 45,495 (1,892 ) 41 9 (2,639 ) 41,014 expensesArt and development 5,440 5,440 costsIncome from 20,054 27,520 operationsInterest expense, 23,899 (33 ) 23,866 netOther (income) (1,444 ) 1,332 (5 ) (343 ) 559 99 expense, net(Loss) income (2,401 ) 3,555 before income taxesInterest expense, 23,899 23,899 netDepreciation and 15,433 15,433 amortizationEBITDA 36,931 42,887 Adjustments to 5,956 (520 ) 1,332 (5 ) (1,892 ) (904 ) ? (603 ) ? (343 ) (3,021 ) ? EBITDAAdjusted EBITDA $ 42,887 $ (520 ) $ 1,332 $ (5 ) $ (1,892 ) $ (904 ) $ ? $ (603 ) $ ? $ (343 ) $ (3,021 ) $ 42,887

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

Three Months Ended September 30, 2020 EBITDA Adjustments Stock Option September Store Gain on Corporate Expense/Non- Other Closed OtherSeptember 30, 2020 Goodwill, intangibles impairment debt development EmployeeEquity Deferred restructuring, store COVID- Foreign 30, GAAP and long-lived assets and refinancing expenses Legal Compensation/ Rent (d) retention and expense 19 (i) currency 2020 Basis (as impairment (c) restructuring (k) (g) Restricted severance (b) (e) losses Non-GAAP reported) charges (a) stock units ? basis time-basedNet sales $ 533,775 $533,775Cost of sales 355,923 (4,837 ) (80 ) (1,266 ) (469)349,271Gross profit 177,852 184,504Wholesale selling expenses 11,950 11,950Retail operating expenses 97,100 (224 ) (1,225 ) (1,745 ) 93,906General and administrative 44,986 (370 ) (661 ) (1,050 ) 50 (2,957 ) (22 ) 2,332 42,308expensesArt and development costs 4,257 4,257Store impairment and 1,926 (1,926 ) ?restructuring chargesGoodwill, intangibles andlong-lived assets 44,732 (44,732 ) ?impairment(Loss) from operations (27,099 ) 32,083Interest expense, net 13,422 13,422Other (income) expense, (2,873 ) (211 ) 3,312 (18)210net(Gain) on debt refinancing (273,149 ) 273,149 ?Income (loss) before 235,501 18,451income taxesInterest expense, net 13,422 13,422Depreciation and 17,278 17,278amortizationEBITDA 266,201 49,151Adjustments to EBITDA (217,050 ) (44,732 ) (6,763 ) 273,149 (581 ) (661 ) (1,050 ) (254 ) (2,957 ) (1,247 ) (679 ) 3,312 (487)?Adjusted EBITDA $ 49,151 $ (44,732 ) $ (6,763 ) $ 273,149 $ (581 ) $ (661 ) $ (1,050 ) $ (254 ) $ (2,957 ) $ (1,247 ) $ (679 ) $ 3,312 $(487)$49,151

PARTY CITY HOLDCO INCRECONCILIATION OF ADJUSTED EBITDA, Continued (In thousands, unaudited)

Nine Months Ended September 30, 2021 EBITDA Adjustments September Inventory Stock Option September 30, 2021 restructuring Net gain Corporate Expense/Non- Other Closed Foreign 30, GAAP and early on debt development EmployeeEquity Deferred restructuring, store COVID- currency Other 2021 Basis (as lease repayment expenses Compensation/ Rent (d) retention and expense 19 (i) gains Non-GAAP reported) terminations (k) (g) Restricted severance (b) (e) basis (j) stock unitsNet sales $ 1,472,752 $ 1,472,752 Cost of sales 919,596 (4,214 ) (945 ) 124 914,561 Gross profit 553,156 558,191 Wholesaleselling 23,977 23,977 expensesRetailoperating 291,281 (2,943 ) (1,212 ) (3,690 ) (1,053 ) (1,626 ) 280,757 expensesGeneral andadministrative 137,328 (4,854 ) 125 (2,082 ) (49 ) (217 ) (3,328 ) 126,923 expensesArt anddevelopment 15,415 15,415 costsLoss ondisposal ofassets in 3,211 (3,211 ) ? internationaloperationsIncome from 81,944 111,119 operationsInterest 64,229 (138 ) 64,091 expense, netOther (income) (2,317 ) 1,106 (5 ) 968 659 411 expense, netIncome before 20,032 46,617 Income TaxesInterest 64,229 64,229 expense, netDepreciationand 50,293 50,293 amortizationEBITDA 134,554 161,139 Adjustments to 26,585 (7,157 ) 1,106 (5 ) (4,854 ) (2,032 ) (2,082 ) (3,739 ) (1,270 ) 968 (7,520 ) ? EBITDAAdjusted $ 161,139 $ (7,157 ) $ 1,106 $ (5 ) $ (4,854 ) $ (2,032 ) $ (2,082 ) $ (3,739 ) $ (1,270 ) $ 968 $ (7,520 ) $ 161,139 EBITDA

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

Nine Months Ended September 30, 2020 EBITDA Adjustments Stock Option September Store Gain on Corporate Expense/Non- Other Closed OtherSeptember 30, 2020 Goodwill, intangibles and impairment debt development EmployeeEquity Deferred restructuring, store COVID- Foreign 30, GAAP long-lived assets and refinancing expenses Legal Compensation/ Rent (d) retention and expense 19 (i) currency 2020 Basis (as impairment (c) restructuring (k) (g) Restricted severance (b) (e) loss Non-GAAP reported) charges (a) stock units basis (f)(g)Net sales $ 1,202,509 $1,202,509Cost of sales 890,587 (15,467 ) (214 ) (4,437 ) (42,446 ) (898)827,125Gross profit 311,922 375,384Wholesale selling expenses 37,115 (1,840 ) (623 ) 34,652Retail operating expenses 250,502 2,685 (2,733 ) (16,312 ) 234,142General and administrative 174,275 (3,502 ) (7,170 ) (10,596 ) 147 (7,264 ) (149 ) (11,678 ) 134,063expensesArt and development costs 13,095 13,095Store impairment and 20,818 (20,818 ) ?restructuring chargesGoodwill, intangibles andlong-lived assets 581,380 (581,380 ) ?impairment(Loss) from operations (765,263 ) (40,568)Interest expense, net 63,954 63,954Other (income) expense, net 4,287 (851 ) (1,033 ) (955 ) (2,492) (1,044)(Gain) on debt refinancing (273,149 ) 273,149 ?(Loss) before income taxes (560,355 ) (103,478)Interest expense, net 63,954 63,954Depreciation and 57,796 57,796amortizationEBITDA (438,605 ) 18,272Adjustments to EBITDA 456,877 (581,380 ) (36,285 ) 273,149 (6,193 ) (7,170 ) (11,629 ) 2,618 (11,701 ) (2,882 ) (71,059 ) (955 ) (3,390)?Adjusted EBITDA $ 18,272 $ (581,380 ) $ (36,285 ) $ 273,149 $ (6,193 ) $ (7,170 ) $ (11,629 ) $ 2,618 $ (11,701 ) $ (2,882 ) $ (71,059 ) $ (955 ) $(3,390) $18,272

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

Three Months Ended Nine months ended September30, September30, 2021 2020 2021 2020 (Dollars inthousands, except per share amounts)(Loss) income before $ (2,401 ) $ 235,501 $ 20,032 $ (560,355 )income taxesIntangible asset 2,177 2,899 7,008 8,444 amortizationAmortization ofdeferred financingcosts and 1,320 875 3,257 3,276 originalissuancediscountsStore impairment andrestructuring charges ? 1,321 ? 29,475 (a)Other restructuring ? 2,622 1,967 10,139 charges (b)Goodwill, intangiblesand long-lived assets ? 44,732 ? 581,380 impairment (c)Non-employeeequity-based ? ? ? 1,033 compensation (f)Non-recurring legal ? 605 ? 7,026 settlements/costsStock option 93 110 310 671 expense?time-basedStock option expense ? ? ? 7,847 ?performance?basedLoss on sale of 2,642 ? 2,642 ? assets(Gain) on debtrepayment/refinancing ? (273,149 ) ? (273,149 )(k)Restricted stock unitand restricted cash 930 ? 2,901 ? awards expense ?performance-basedCOVID - 19 (i) ? 733 1,270 71,113 Loss on sale of ? ? 3,211 ? businessInventory disposals ? ? 926 ? Adjusted income(loss) before income 4,761 16,249 43,524 (113,100 )taxesAdjusted income tax 1,902 5,234 11,966 (36,416 )expense (benefit) (h)Adjusted net income $ 2,859 $ 11,015 $ 31,558 $ (76,684 )(loss)Adjusted net income(loss) per common $ 0.02 $ 0.10 $ 0.27 $ (0.78 )share ? dilutedWeighted-averagenumber of common 116,467,755 106,875,631 115,822,121 97,872,174 shares-diluted

(a)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 the September 30, 2021 Quarterly Report on Form 10-Q 2021.

(b)Amounts expensed principally relate to severance due to organizational changes.

(c)As a result of a sustained decline in market capitalization and reduced fair value of certain intangibles and long-lived assets, the Company recognized non-cash pre-tax goodwill and intangibles impairment charges.

(d)The deferred rent adjustment reflects the difference between accounting for rent and landlord incentives in accordance with GAAP and the Companys actual cash outlay.

(e)Charges incurred related to closing and relocating stores in the ordinary course of business.

(f)The acquisition of Ampologys interest in Kazzam, LLC in an equity transaction. See Note 17 Kazzam, LLC of Item 1 in the September 30, 2021 Quarterly Report on Form 10-Q.

(g)Primarily represents costs for Kazzam (See Note 17 Kazzam, LLC of Item 1 in the September 30, 2021 Quarterly Report on Form 10-Q for further discussion).

(h)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.

(i)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.

(j)Costs incurred for early lease terminations and a merchandise transformation project to transition and optimize stores to the reduced SKU assortment levels.

(k)The Company recognized net gain on debt repayment in 2021. The Company recognized a gain on debt refinancing transactions in 2020.

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

Three Months Ended September30, 2021 2020 Dollars in Percentage of Dollars in Percentage of Thousands Net sales Thousands Net salesNet sales: Wholesale $ 279,634 54.8 % $ 346,621 64.9 %Eliminations (168,308 ) (33.0 ) (179,049 ) (33.5 ) Net wholesale 111,326 21.8 167,572 31.4 Retail* 398,873 78.2 366,203 68.6 Total net $ 510,199 100.0 % $ 533,775 100.0 %sales

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

Nine months ended September30, 2021 2020 Dollars in Percentage of Dollars in Percentage of Thousands Net sales Thousands Net salesNet sales: Wholesale $ 722,732 49.1 % $ 692,715 57.6 %Eliminations (425,947 ) (28.9 ) (345,167 ) (28.7 ) Net wholesale 296,785 20.2 347,548 28.9 Retail* 1,175,967 79.8 854,961 71.1 Total net $ 1,472,752 100.0 % $ 1,202,509 100.0 %sales

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

Three Months Ended September30, 2021 2020 Dollars in Percentage Dollars in Percentage Thousands ofNet Thousands ofNet Sales SalesRetailgross $ 161,822 40.6 % $ 135,539 37.0 %profit*Wholesalegross 21,876 19.7 42,313 25.3 profitTotalgross $ 183,698 36.0 % $ 177,852 33.3 %profit

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

Nine months ended September30, 2021 2020 Dollars in Percentage Dollars in Percentage Thousands of Net Thousands of Net Sales SalesRetailgross $ 478,565 40.7 % $ 257,035 30.1 %profit*Wholesalegross 74,591 25.1 50,538 14.5 profitTotalgross $ 553,156 37.6 % $ 307,573 25.6 %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 September30, LTM 2021 2020 2021 Store Count Corporate Stores: Beginning of period 749 757 739 New stores opened 4 1 12 Acquired 6 2 10 Closed (5 ) (21 ) (7 )End of period 754 739 754 Franchise Stores Beginning of period 82 96 90 New stores opened ? ? ? Sold to Party City (6 ) (1 ) (10 )Closed ? (5 ) (4 )End of period 76 90 76 Grand Total 830 829 830

Three months ended Nine months ended September30, September30, 2021 2020 2021 2020 Wholesale Share of 80.2 % 81.1 % 80.9 % 81.4 %Shelf (a)Manufacturing Share of 28.2 % 29.6 % 30.3 % 30.2 %Shelf (b) Three months ended Nine months ended September30, September30, 2021 2020 2021 2020 Brand comparable sales 7.5 % 8.3 % 43.7 % -21.8 %(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