Party City Holdco Inc. (Exact Name of Registrant As Specified in Its Charter)
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2020 ANNUAL REPORT PARTYCITY.COM CORPORATE INFO BOARD OF DIRECTORS CORPORATE OFFICES as of April 26, 2021 80 Grasslands Road Elmsford, NY 10523 Norman S. Matthews Jennifer Fleiss Non-Executive Chairman Director ANNUAL MEETING & Director John A. Frascotti The Annual Meeting of Joel Alsfine Director Shareholders of Party City Director Holdco Inc. will be held James M. Harrison on Thursday, June 10, 2021, Steven J. Collins Director & Vice Chairman at 8:30 a.m. (eastern time) Director via an online Virtual 2020 Lisa K. Klinger Shareholder Meeting James G. Conroy Director Director NAVIGATING. TRANSFER AGENT Michelle Millstone-Shroff AND REGISTRAR William S. Creekmuir Director ComputerShare PIVOTING. Director Bradley M. Weston EVOLVING. Sarah Dodds-Brown Chief Executive Officer & Director STOCK Director Since the Company’s initial PRIORITIZING. public offering on April 16, 2015, shares of Party City INNOVATING. EXECUTIVE MANAGEMENT have been quoted on the NYSE, and currently trade ELEVATING. Bradley M. Weston under the symbol “PRTY” Chief Executive Officer & Director INDEPENDENT TRANSFORMING. Todd E. Vogensen REGISTERED PUBLIC Chief Financial Officer ACCOUNTING FIRM Ernst & Young LLP Sean C. Thompson New York, New York Chief Commercial Officer Denise M. Kulikowsky INVESTOR RELATIONS Chief Human Resources Officer [email protected] MAKING JOY EASY. 1 FROM OUR CEO Dear Shareholders, Customers and Employees: Key Financial Highlights of 2020 I write this annual letter after completing my first year as CEO of Party City Holdco. I am very encouraged by all that we have Total revenues decreased accomplished during my first year at the helm and look forward 21.2% on a reported basis to the next phase of our transformation. and 21.3% on a constant currency* basis AT PARTY CITY, OUR PURPOSE IS TO INSPIRE JOY BY MAKING IT EASY TO North American digitally- CREATE UNFORGETTABLE MEMORIES. enabled sales increased by 35.4% when including Despite the pandemic-impacted backdrop in 2020, we remained Buy Online Pick-Up In Store, more committed to this mission than ever. curbside pickup and delivery To that end, I am very pleased with how our organization navigated Adjusted EBITDA* was the year, swiftly pivoting to meet the evolving needs of our customers, $95.5 million and Adjusted all while prioritizing the health and safety of our associates and Loss Per Share* was $0.49 customers during the pandemic. Throughout the year, we made important strides on our strategic initiatives, innovating and elevating Debt was reduced by our customer experience while also significantly improving our $430 million as we successfully financial position and flexibility. completed our debt exchange offering in July 2020 2020 was certainly a year without precedent. Our full-year results reflect the significant impact of the pandemic to the business, The sale of a substantial portion including three months where we operated in a closed store of our Amscan International environment or with limited stores opened. business, reflected a continued rationalization of the business Operationally, we made important progress on our five strategic to narrow our focus on our core priorities of 1) developing a more relevant in-store experience, North American vertical model 2) winning in balloons, 3) addressing value perception in key categories, 4) improving in-store customer engagement, and Despite COVID-19 impacts on 5) building on our omni-channel platform. These strategies are having our business, generated higher a demonstrable impact on our business, and we will build on this operating cash flow in 2020 progress going forward as we continue to stabilize our retail business. versus prior-year period *The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the 2020 Form 10-K We enter 2021 in a substantially stronger position, armed with greater consumer insights and a solid foundation to build upon as we further our mission to deliver The Party Platform. We remain intensely focused on our customer and more effectively operating and leveraging our unique North American vertical model as we continue our transformation and further strengthen our industry leadership position. Our primary operational focus in 2021 will be on advancing our fundamental building blocks of: product innovation, in-store experience, being celebration obsessed and continuing to leverage our vertical model. Additionally, we see continued market expansion opportunities as we further evolve our omni-channel capabilities and extend our leadership position in key categories further and deeper across channels. Financially, we are focused on continuing to enhance our balance sheet position. Subsequent to year-end, in February we completed the refinancing of our term loan that was to mature in 2022 through a new Senior Secured Notes offering, which is another step to strengthen our financial health and flexibility. In closing, I want to express my deepest gratitude to the entire PCHI team for their hard work and contributions throughout the year. I could not be more proud of all that they accomplished in 2020, rising to the challenges presented by the global pandemic and positioning us to win, despite the environment. Their grit and determination allowed us to maintain continuity of our retail and wholesale operations, while continuing to meet the changing needs of our customers who look to continue celebrating in unique and different ways. Finally, on behalf of our board and the entire Party City team, I want to thank you, our shareholders, for your ongoing support as we continue to navigate the current environment and advance our evolution and transformation. STAY SAFE, STAY HEALTHY, AND FIND JOY, EVERY SINGLE DAY. Sincerely, Brad Weston 3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ 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 (I.R.S. Employer Incorporation or Organization) Identification No.) 80 Grasslands Road Elmsford, NY 10523 (Address of Principal Executive Offices) (914) 345-2020 (Registrant’s telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock $0.01 par value PRTY New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☑ 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 a check mark whether the registrant has submitted electronically and posted on its corporate website 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, a smaller reporting company, or an emerging growth company. See the 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ The aggregate market value of common stock held by non-affiliates as of June 30, 2020 was $140,692,691. As of February 26, 2021, there were 110,733,170 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement relating to its 2021 annual meeting of stockholders, to be held on June 10, 2021, are incorporated by reference in Part III. [This page intentionally left blank] FORM 10-K TABLE OF CONTENTS Page PART I Item 1 Business 1 Item 1A Risk Factors 10 Item 1B Unresolved Staff Comments 28 Item 2 Properties