Party City Earnings 2021-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

prty-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37344

Party City Holdco Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		46-0539758
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

80 Grasslands Road Elmsford, NY		10523
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code:

(914) 345-2020

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, Par Value: $0.01/share

PRTY

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2021, 111,296,696 shares of the Registrant’s common stock were outstanding.

PARTY CITY HOLDCO INC.

Form 10-Q

March 31, 2021

TABLE OF CONTENTS

		Page

PART I

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets at March 31, 2021, December 31, 2020 and March 31, 2020		3

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and March 31, 2020		4

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and March 31, 2020		5

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and March 31, 2020		6

Notes to Condensed Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures about Market Risk		28

Item 4. Controls and Procedures		28

PART II

Item 1. Legal Proceedings		29

Item 1A. Risk Factors		29

Item 6. Exhibits		30

Signature		31

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	March 31, 2021			December 31, 2020			March 31, 2020
	(Note 2) (Unaudited)			(Note 2)			(Note 2) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	83,806		$	119,532		$	194,433
Accounts receivable, net		81,658			90,879			116,223
Inventories, net		428,316			412,285			629,875
Prepaid expenses and other current assets		47,803			45,905			76,698
Income tax receivable		68,632			57,549			—
Assets held for sale, net		—			83,110			—
Total current assets		710,215			809,260			1,017,229
Property, plant and equipment, net		214,698			209,412			235,577
Operating lease asset		687,214			700,087			773,775
Goodwill		659,865			661,251			665,129
Trade names		383,733			384,428			394,221
Other intangible assets, net		29,912			32,134			41,960
Other assets, net		9,832			9,883			6,904
Total assets	$	2,695,469		$	2,806,455		$	3,134,795
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable	$	142,859		$	175,707		$	381,422
Accounts payable		127,812			118,928			96,383
Accrued expenses		146,742			160,605			154,847
Liabilities held for sale		—			68,492			—
Current portion of operating lease liability		150,860			176,045			153,614
Income taxes payable		—			524			—
Current portion of long-term obligations		1,359			13,576			98,588
Total current liabilities		569,632			713,877			884,854
Long-term obligations, excluding current portion		1,358,495			1,329,808			1,474,854
Long-term portion of operating lease liability		628,217			654,729			707,734
Deferred income tax liabilities, net		31,036			34,705			70,943
Other long-term liabilities		33,195			22,815			16,036
Total liabilities		2,620,575			2,755,934			3,154,421
Commitments and contingencies
Stockholders’ equity:
Common stock (111,258,890, 110,781,613 and 94,491,352 shares outstanding and 122,573,377, 122,061,711 and 121,708,422 shares issued at March 31, 2021, December 31, 2020, March 31, 2020 respectively)		1,383			1,373			1,211
Additional paid-in capital		976,037			971,972			933,174
Accumulated deficit		(579,486	)		(565,457	)		(578,732	)
Accumulated other comprehensive income (loss)		5,134			(29,916	)		(47,947	)
Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury		403,068			377,972			307,706
Less: Common stock held in treasury, at cost (11,314,487, 11,280,098 and 27,217,070 shares at March 31, 2021, December 31, 2020, March 31, 2020, respectively)		(327,388	)		(327,182	)		(327,170	)
Total Party City Holdco Inc. stockholders’ equity		75,680			50,790			(19,464	)
Noncontrolling interests		(786	)		(269	)		(162	)
Total stockholders’ equity		74,894			50,521			(19,626	)
Total liabilities and stockholders’ equity	$	2,695,469		$	2,806,455		$	3,134,795

See accompanying notes to unaudited condensed consolidated financial statements.

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except share and per share data)

	Three Months Ended March 31,
	2021			2020
Net sales*	$	426,807		$	414,043
Cost of sales		274,521			296,757
Gross Profit		152,286			117,286
Wholesale selling expenses		9,116			15,458
Retail operating expenses		88,896			88,166
General and administrative expenses		46,038			65,334
Art and development costs		4,971			5,322
Store impairment and restructuring charges		—			17,728
Loss on disposal of assets in international operations		3,211			—
Goodwill, intangibles and long-lived assets impairment		—			536,648
Income (loss) from operations		54			(611,370	)
Interest expense, net		17,214			25,120
Other expense, net		427			5,676
(Loss) before income taxes		(17,587	)		(642,166	)
Income tax (benefit)		(3,469	)		(100,498	)
Net (loss)		(14,118	)		(541,668	)
Less: Net (loss) attributable to noncontrolling interests		(54	)		(155	)
Net (loss) attributable to common shareholders of Party City Holdco Inc.	$	(14,064	)	$	(541,513	)
Net (loss) per share attributable to common shareholders of Party City Holdco Inc.–Basic	$	(0.13	)	$	(5.80	)
Net (loss) per share attributable to common shareholders of Party City Holdco Inc.–Diluted	$	(0.13	)	$	(5.80	)
Weighted-average number of common shares-Basic		110,917,349			93,395,609
Weighted-average number of common shares-Diluted		110,917,349			93,395,609
Dividends declared per share	$	—		$	—
Comprehensive income (loss)	$	20,937		$	(553,881	)
Less: Comprehensive (loss) attributable to noncontrolling interests		(84	)		(155	)
Comprehensive income (loss) attributable to common shareholders of Party City Holdco Inc.	$	21,021		$	(553,726	)

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

See accompanying notes to unaudited condensed consolidated financial statements.

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

	Common Stock		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury			Common Stock Held In Treasury			Total Party City Holdco Inc. Stockholders’ Equity			Non- Controlling Interests			Total Stockholders’ Equity
Balance at December 31, 2020	$	1,373	$	971,972		$	(565,457	)	$	(29,916	)	$	377,972		$	(327,182	)	$	50,790		$	(269	)	$	50,521
Net loss		—		—			(14,064	)		—			(14,064	)		—			(14,064	)		(54	)		(14,118	)
Stock option expense – time – based		—		113			—			—			113			—			113			—			113
Restricted stock units – time – based		—		352			—			—			352			—			352			—			352
Restricted stock unit expense – performance-based		—		708			—			—			708			—			708			—			708
Director – non-cash compensation		—		57			—			—			57			—			57			—			57
Warrant exercise (see Note 17 – Kazzam, LLC)		4		(4	)		—			—			—			—			—			—			—
Disposed non-controlling interest		—		—			—			—			—			—			—			(487	)		(487	)
Treasury stock purchases		—		—			—			—			—			(206	)		(206	)		—			(206	)
Exercise of stock options		6		2,849			—			—			2,855			—			2,855			—			2,855
Foreign currency adjustments		—		(10	)		35			36,398			36,423			—			36,423			24			36,447
Impact of foreign exchange contracts, net		—		—			—			(1,348	)		(1,348	)		—			(1,348	)		—			(1,348	)
Balance at March 31, 2021	$	1,383	$	976,037		$	(579,486	)	$	5,134		$	403,068		$	(327,388	)	$	75,680		$	(786	)	$	74,894

	Common Stock		Additional Paid-in Capital		Accumulated (Deficit)			Accumulated Other Comprehensive Loss			Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury			Common Stock Held In Treasury			Total Party City Holdco Inc. Stockholders’ Equity			Non- Controlling Interests			Total Stockholders’ Equity
Balance at December 31, 2019	$	1,211	$	928,573	$	(37,219	)	$	(35,734	)	$	856,831		$	(327,086	)	$	529,745		$	(24	)	$	529,721
Net (loss)		—		—		(541,513	)		—			(541,513	)		—			(541,513	)		(155	)		(541,668	)
Stock option expense		—		354		—			—			354			—			354			—			354
Restricted stock units – time-based		—		621		—			—			621			—			621			—			621
Director – non-cash compensation		—		75		—			—			75			—			75			—			75
Warrant expense		—		1,033		—			—			1,033			—			1,033			—			1,033
Acquired non-controlling interest		—		2,518		—			—			2,518			—			2,518			17			2,535
Treasury Stock purchases		—		—

Price	5.64	EPS	-2
Shares	94	P/E	-3
MCap	533	P/FCF	-3
Net Debt	1,543	EBIT	-84
TEV	2,076	TEV/EBIT	-25
TTM 2019-09-30, in MM, except price, ratios

10-Q	2021-03-31	Filed 2021-05-10
10-K	2020-12-31	Filed 2021-03-12
10-Q	2020-09-30	Filed 2020-11-09
10-Q	2020-06-30	Filed 2020-08-07
10-Q	2020-03-31	Filed 2020-06-12
10-K	2019-12-31	Filed 2020-03-12
10-Q	2019-09-30	Filed 2019-11-12
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-03-14
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-03-16
10-Q	2016-09-30	Filed 2016-11-10
10-Q	2016-06-30	Filed 2016-08-09
10-Q	2016-03-31	Filed 2016-05-13
10-K	2015-12-31	Filed 2016-03-14
10-Q	2015-09-30	Filed 2015-11-13
10-Q	2015-06-30	Filed 2015-08-14
10-Q	2015-03-31	Filed 2015-05-15

8-K	2020-11-09
8-K	2020-10-15
8-K	2020-09-30
8-K	2020-09-11
8-K	2020-08-06
8-K	2020-07-30
8-K	2020-07-27
8-K	2020-07-10
8-K	2020-07-02
8-K	2020-06-26
8-K	2020-06-12
8-K	2020-05-28
8-K	2020-05-08
8-K	2020-04-09
8-K	2020-04-08
8-K	2020-03-27
8-K	2020-03-12
8-K	2020-01-09
8-K	2019-12-17
8-K	2019-11-19
8-K	2019-11-12
8-K	2019-11-07
8-K	2019-09-11
8-K	2019-08-08
8-K	2019-07-17
8-K	2019-06-28
8-K	2019-06-24
8-K	2019-06-06
8-K	2019-05-09
8-K	2019-04-12
8-K	2019-04-08
8-K	2019-02-28
8-K	2019-02-01
8-K	2018-11-08
8-K	2018-08-31
8-K	2018-08-09
8-K	2018-08-06
8-K	2018-08-02
8-K	2018-07-26
8-K	2018-07-23
8-K	2018-06-06
8-K	2018-05-15
8-K	2018-05-09
8-K	2018-04-12
8-K	2018-03-09
8-K	2018-02-16
8-K	2018-02-08
8-K	2018-01-09

EX-31.1	prty-ex311_9.htm
EX-31.2	prty-ex312_8.htm
EX-32.1	prty-ex321_7.htm
EX-32.2	prty-ex322_6.htm

PRTY 10Q Quarterly Report

Party City Earnings 2021-03-31