Party City Reports First Quarter 2021 Results and Provides Q2 2021 Business Outlook

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Party City Holdco Inc. (PRTY) reported a 3.1% rise in total sales for Q1 2021, with comparable sales soaring 35.9% year-over-year. While the company faced a net loss of $14.1 million, this is a significant improvement from a loss of $5.80 per share in Q1 2020. Adjusted EBITDA climbed to $32.4 million from $11.9 million last year. The firm’s liquidity stands at $213.1 million, reflecting a reduction in debt from $1,760.4 million to $1,303.0 million. CEO Brad Weston expressed optimism about ongoing sales momentum and strategic progress despite pandemic challenges.

Positive

Total sales increased 3.1% year-over-year.
Comparable sales grew by 35.9% versus the same quarter last year.
Improved GAAP net loss per share of $0.13 compared to $5.80 in Q1 2020.
Adjusted EBITDA rose to $32.4 million, up from $11.9 million in Q1 2020.
Total liquidity at $213.1 million, including $83.8 million in cash.

Negative

Net third-party wholesale revenues decreased by 15.8% due to the divestiture of international operations.
Total number of corporate Party City stores dropped from 757 to 751.

05/10/2021 - 06:55 AM

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

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

Cash from Operations Improved $25.2 million versus Q1 2020

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

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

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

First Quarter Summary:

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

Balance Sheet and Cash Flow Highlights:

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

In addition, the principal balance of debt net of cash on March 31, 2021 was $1,303.0 million versus $1,760.4 million in the prior-year period. The principal balance of debt is used for the purpose of all leverage ratio calculations under our debt agreements. The following table reflects both Principal amounts as well as net carrying amounts of debt across the Company’s debt instruments:

Party City Credit
Group

Anagram
Holdings, LLC

PCHI
Consolidated

March 31, 2021

Principal
Amount

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