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Party City Reports Third Quarter 2021 Results; Total Revenue for Fiscal October 2021 and Provides Fourth Quarter 2021 Business Outlook

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  • PRTY

Total Net Sales of $510.2 million; Comparable Sales increased 7.5% versus prior year and 14.2% versus Q3 2019 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 team’s 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 Company’s 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 Company’s debt instruments:

Party City Credit Group

Anagram Holdings, LLC

PCHI Consolidated

September 30, 2021

September 30, 2021

(in Thousands)

Principal Amount

Net Carrying Amount

Net Carrying Amount

Net Carrying Amount

8.75% Senior Secured First Lien Notes – due 2026

$

750,000

$

732,124

-

$

732,124

6.125% Senior Notes – due 2023

22,924

22,820

-

22,820

6.625% Senior Notes – due 2026

92,254

91,555

-

91,555

First Lien Party City Notes – due 2025

161,669

198,076

-

198,076

First Lien Anagram Notes – due 2025

115,804

-

149,676

149,676

Second Lien Anagram Notes – due 2026

89,155

-

144,665

144,665

Finance lease obligations

13,267

13,267

-

13,267

Total long-term obligations

1,245,073

1,057,842

294,341

1,352,183

Less: current portion

N/A

(1,297

)

-

(1,297

)

Long-term obligations, excluding current portion

1,245,073

1,056,545

294,341

1,350,886

Loans and notes payable*

190,150

187,084

-

187,084

Less: Cash

(60,740

)

(33,050

)

(27,691

)

(60,741

)

Principal balance net of cash

$

1,374,483

$

1,210,579

$

266,650

$

1,477,229

*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 City’s 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 management’s good-faith belief and reasonable judgment based on current information, and these statements are qualified by important risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those forecasted or indicated by such forward-looking statements. These risks and uncertainties include: our ability to compete effectively in a competitive industry; fluctuations in commodity prices; our ability to appropriately respond to changing merchandise trends and consumer preferences; successful implementation of our store growth strategy; decreases in our Halloween sales; the impact of COVID-19 on our financial performance; disruption to the transportation system or increases in transportation costs; product recalls or product liability; economic slowdown affecting consumer spending and general economic conditions; loss or actions of third party vendors and loss of the right to use licensed material; disruptions at our manufacturing facilities; and the additional risks and uncertainties set forth in “Risk Factors” in Party City’s Annual Report on Form 10-K for the year ended December 31, 2020 and in subsequent reports filed with or furnished to the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Except as may be required by any applicable laws, Party City assumes no obligation to publicly update or revise such forward-looking statements, which are made as of the date hereof or the earlier date specified herein, whether as a result of new information, future developments or otherwise.

About Party City

Party City Holdco Inc. is the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is a leading player in its category, vertically integrated and unique in its breadth and depth. The Company designs, manufactures, sources and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery throughout the world. The Company’s retail operations include 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)

September 30,
2021

December 31,
2020

September 30,
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 current assets

85,004

45,905

112,038

Income 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 equipment, net

213,959

209,412

206,447

Operating 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, net

25,821

32,134

34,505

Other assets, net

27,385

9,883

9,521

Total assets

$

2,836,826

$

2,806,455

$

3,108,009

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current 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 operating lease liability

131,653

176,045

194,476

Income taxes payable

524

Current portion of long-term obligations

1,297

13,576

14,342

Total current liabilities

665,634

713,877

895,286

Long-term obligations, excluding current portion

1,350,886

1,329,808

1,334,338

Long-term portion of operating lease liability

639,560

654,729

677,183

Deferred income tax liabilities, net

43,537

34,705

49,508

Other long-term liabilities

34,718

22,815

15,559

Total liabilities

2,734,335

2,755,934

2,971,874

Commitments and contingencies

Stockholders’ equity:

Common stock (112,194,330, 110,781,613 and 110,573,555 shares outstanding and 123,816,514, 122,061,711 and 121,848,074 shares issued at September 30, 2021, December 31, 2020, and September 30, 2020, respectively)

1,384

1,373

1,371

Additional paid-in capital

980,399

971,972

970,145

Accumulated deficit

(552,445

)

(565,457

)

(469,040

)

Accumulated other comprehensive income (loss)

3,128

(29,916

)

(38,907

)

Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury

432,466

377,972

463,569

Less: Common stock held in treasury, at cost (11,622,184, 11,280,098 and 11,274,519 shares at September 30, 2021, December 31, 2020, and June 30, 2020, respectively)

(329,975

)

(327,182

)

(327,170

)

Total Party City Holdco Inc. stockholders’ equity

102,491

50,790

136,399

Noncontrolling interests

(269

)

(264

)

Total stockholders’ equity

102,491

50,521

136,135

Total liabilities and stockholders’ equity

$

2,836,826

$

2,806,455

$

3,108,009


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 September 30,

Nine Months Ended September 30,

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 selling expenses

7,503

11,950

23,977

37,115

Retail operating expenses

105,206

97,100

291,281

250,502

General and administrative expenses

45,495

44,986

137,328

174,275

Art and development costs

5,440

4,257

15,415

13,095

Store impairment and restructuring charges

1,926

20,818

Loss on disposal of assets in international operations

3,211

Goodwill, intangibles and long-lived assets impairment

44,732

581,380

Income (loss) from operations

20,054

(27,099

)

81,944

(765,263

)

Interest expense, net

23,899

13,422

64,229

63,954

Other (income) expense, net

(1,444

)

(2,873

)

(2,317

)

4,287

(Gain) on debt refinancing

(273,149

)

(273,149

)

(Loss) income before income taxes

(2,401

)

235,501

20,032

(560,355

)

Income tax (benefit) expense

388

(4,164

)

7,128

(128,293

)

Net (loss) income

(2,789

)

239,665

12,904

(432,062

)

Less: Net (loss) attributable to noncontrolling interests

(42

)

(54

)

(241

)

Net (loss) income attributable to common shareholders of Party City Holdco Inc.

$

(2,789

)

$

239,707

$

12,958

$

(431,821

)

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.–Basic

$

(0.02

)

$

2.25

$

0.12

$

(4.41

)

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.–Diluted

$

(0.02

)

$

2.24

$

0.11

$

(4.41

)

Weighted-average number of common shares-Basic

112,037,224

106,709,307

111,431,623

97,872,174

Weighted-average number of common shares-Diluted

112,037,224

106,875,631

115,822,121

97,872,174

Dividends declared per share

$

$

$

$

Comprehensive (loss) income

$

(5,753

)

$

244,607

$

45,989

$

(435,235

)

Less: Comprehensive (loss) attributable to noncontrolling interests

(24

)

(42

)

(54

)

(241

)

Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.

$

(5,729

)

$

244,649

$

46,043

$

(434,994

)

*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 September 30,

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 original issuance discounts

3,257

3,276

Provision 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 investments

(820

)

356

Loss on disposal of assets

2,796

83

Loss on disposal of assets in international operations

3,211

Non-cash adjustment for store impairment and restructuring charges

16,595

Goodwill, intangibles and long-lived assets impairment

581,380

Non-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 assets

(49,570

)

(64,715

)

Increase in accounts payable, accrued expenses and income taxes payable

75,368

61,478

Net cash (used in) operating activities

(73,551

)

(56,827

)

Cash flows (used in) investing activities:

Cash paid in connection with acquisitions, net of cash acquired

(4,405

)

(362

)

Capital expenditures

(49,211

)

(32,095

)

Proceeds from disposal of property and equipment

3

82

Proceeds from sale of international operations, net of cash disposed

20,556

Net cash (used in) investing activities

(33,057

)

(32,375

)

Cash flows provided by financing activities:

Repayment of loans, notes payable and long-term obligations

(844,952

)

(122,373

)

Proceeds from loans, notes payable and long-term obligations

882,500

369,785

Treasury 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 equivalents

100

(2,659

)

Net (decrease) increase in cash and cash equivalents and restricted cash

(89,569

)

135,511

Change in cash classified within current assets held for sale

31,628

Cash and cash equivalents and restricted cash at beginning of period

119,681

35,176

Cash and cash equivalents and restricted cash at end of period*

$

61,740

$

170,687

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 of refunds

$

5,303

$

24,421

*Includes $1,000 and $125 of restricted cash for the nine months ended September 30, 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 September 30,

Nine months ended September 30,

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 (benefit)

388

(4,164

)

7,128

(128,293

)

Depreciation and amortization

15,433

17,278

50,293

57,796

EBITDA

36,931

266,201

134,554

(438,605

)

Store impairment and restructuring charges (a)

6,763

36,285

Inventory restructuring and early lease terminations (j)

520

7,157

Other restructuring, retention and severance (b)

2,957

2,082

11,701

Goodwill, intangibles and long-lived assets impairment (c)

44,732

581,380

Deferred rent (d)

904

254

2,032

(2,618

)

Closed store expense (e)

603

1,247

3,739

2,882

Foreign currency losses/(gains), net

343

(3,312

)

(968

)

955

Stock option expense – time-based

93

111

310

671

Stock option expense – performance – based

7,847

Restricted stock unit and restricted cash awards expense – performance-based

923

510

2,901

510

Restricted stock units – time-based

876

429

1,643

1,568

Non-employee equity-based compensation (f)

1,033

Undistributed loss (income) in equity method investments

(609

)

(59

)

(820

)

356

Corporate development expenses (g)

5

581

5

6,193

Non-recurring legal settlements/costs

661

7,170

Loss on sale of property, plant and equipment*

2,687

2,798

COVID - 19 (i)

679

1,270

71,059

Loss on sale of business

3,211

(Gain) on debt repayment/refinancing (k)

(1,332

)

(273,149

)

(1,106

)

(273,149

)

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 30, 2021
GAAP
Basis (as
reported)

Inventory restructuring and early lease terminations (j)

Net gain on debt repayment (k)

Corporate
development
expenses (g)

Stock Option
Expense/Non-
Employee Equity
Compensation/
Restricted
stock units

Deferred
Rent (d)

Other
restructuring,
retention and
severance (b)

Closed
store
expense (e)

COVID-
19 (i)

Foreign
currency
gains

Other

September 30,
2021
Non-GAAP
basis

Net sales

$

510,199

$

510,199

Cost of sales

326,501

(520

)

(945

)

325,036

Gross profit

183,698

185,163

Wholesale selling expenses

7,503

7,503

Retail operating expenses

105,206

(612

)

(908

)

103,686

General and administrative expenses

45,495

(1,892

)

41

9

(2,639

)

41,014

Art and development costs

5,440

5,440

Income from operations

20,054

27,520

Interest expense, net

23,899

(33

)

23,866

Other (income) expense, net

(1,444

)

1,332

(5

)

(343

)

559

99

(Loss) income before income taxes

(2,401

)

3,555

Interest expense, net

23,899

23,899

Depreciation and amortization

15,433

15,433

EBITDA

36,931

42,887

Adjustments to EBITDA

5,956

(520

)

1,332

(5

)

(1,892

)

(904

)

(603

)

(343

)

(3,021

)

Adjusted 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

September 30, 2020
GAAP
Basis (as
reported)

Goodwill, intangibles and long-lived assets impairment (c)

Store
impairment
and
restructuring
charges (a)

Gain on debt refinancing (k)

Corporate
development
expenses (g)

Legal

Stock Option
Expense/Non-
Employee Equity
Compensation/
Restricted
stock units –
time-based

Deferred
Rent (d)

Other
restructuring,
retention and
severance (b)

Closed
store
expense (e)

COVID-
19 (i)

Foreign
currency
losses

Other

September 30,
2020
Non-GAAP
basis

Net sales

$

533,775

$

533,775

Cost of sales

355,923

(4,837

)

(80

)

(1,266

)

(469

)

349,271

Gross profit

177,852

184,504

Wholesale selling expenses

11,950

11,950

Retail operating expenses

97,100

(224

)

(1,225

)

(1,745

)

93,906

General and administrative expenses

44,986

(370

)

(661

)

(1,050

)

50

(2,957

)

(22

)

2,332

42,308

Art and development costs

4,257