Party City Holdco — Investor Presentation (January 2023)
70 slides from Party City Holdco's investor presentation, Jan 18, 2023
Slide 1: Business Presentation January 2023
Exhibit 99.3 Business Presentation January 2023 Private and Confidential.
Slide 2: Today's Presenters
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Todays Presenters Brad Weston has served as Chief Executive Officer and Board Director of Party City Holdings Inc. (PCHI) since April 2020. He joined the Company in July 2019 as the President of PCHI and Chief Executive Offi
Slide 3: Executive Leadership Team
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Executive Leadership Team Brad Weston Chief Executive Officer Todd Vogensen Peter Smith Sean Thompson Guncha Mehta Marc Ehle Denise Kulikowsky Chief Financial Officer Chief Operations Officer President & Chief Information Of
Slide 4: Experienced & progressive management team
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Experienced & progressive management team Joined Relevant Years of Name Position Prior Experience PCHI Experience Brad Weston Chief Executive Officer 2019 35 Sean Thompson President & Chief Commercial Officer 2019 22 Todd Vo
Slide 5: Table of Contents
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Table of Contents Company Overview 01 02 Vision & Strategy 03 Financial Performance & Projections 04 Business Operations & Updates Private and Confidential. 5
Slide 6: Company Overview
01 - COMPANY OVERVIEW Private and Confidential. 6
Slide 7: Our Purpose
Our Purpose… Inspire JOY and make it EASY to create unforgettable memories Private and Confidential. 7
Slide 8: Uniquely positioned within the party goods market
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Uniquely positioned within the party goods market One of the world’s largest party goods manufacturers, distributors and retailers within a growing industry ~4,000 new Product Design products/yr Independents 7 Manufacturing
Slide 9: Company Overview
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Company Overview Vertically integrated model focused on delivering party supplies to end-use consumers via owned retail locations, online franchisees and wholesale partners FY2021: $2.2 billion in worldwide wholesale and ret
Slide 10: Party City supply chain overview
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Party City supply chain overview rd Business model integrates external sourcing and owned manufacturing to supply Party City retail and 3 party retail customers Seasonal + E/Day Anagram ~35% Margin Illustrative Amscan Sales:
Slide 11: Party City supply chain overview (cont.)
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Party City supply chain overview (cont.) rd Business model integrates external sourcing and owned manufacturing to supply Party City retail and 3 party retail customers ~35% Sales Franchise Amscan DC’s Anagram Stores ~35% Ma
Slide 12: Owned manufacturing capabilities allow for differentiation, speed to market
Differentiated To Be Sold PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Owned manufacturing capabilities allow for differentiation, speed to market Benefit from operating excellence driven by end-to-end control over product life cycle and pricing PAPER PLATES & BOWLS FO
Slide 13: The celebration & entertaining shopper is highly valuable
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES The celebration & entertaining shopper is highly valuable The average shopper spends $1,423 annually on party occasions* • Party supplies, food and alcoholic beverage spend per occasion are significant: − Food $71; Alcoholic
Slide 14: Strong brand awareness and a leading Net Promoter Score
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Party City has strong brand awareness and a leading Net Promotor Score (NPS) The brand is well-known and well-liked by consumers STRONG BRAND AWARENESS LEADING NET PROMOTOR SCORE (NPS) Source: BCG/Comparably NPS Study Net Pr
Slide 15: Nationally recognized, trusted brand with substantial store base
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Nationally recognized, trusted brand with substantial store base Stores are well positioned and market opportunities for growth exist Party City (NXTGEN & Legacy) /Franchise Stores 1 16/1 1 2 4 3/1 4 12 21 11 48/10 26 2 27/1
Slide 16: Preliminary store performance segmentation
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Preliminary store performance segmentation Preliminary Store Performance Segmentation (October 2022) Oct '22 LTM Oct '22 LTM Oct '22 YTD (1) 4-Wall EBITDA Sq. Feet Gross Rent # of Stores Sales Comp (2) ($) ($) Total Store Po
Slide 17: How we got here: EBITDA Bridge – 2021 vs 2018
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES How we got here: EBITDA Bridge – 2021 vs 2018 Structural and Business Model changes resulting in new baseline for future performance Structural Headwinds $74M Business Model Changes $26M Input Costs $54M Private and Confiden
Slide 18: Vision & Strategy
02 - VISION & STRATEGY Private and Confidential. 18
Slide 19: The path to a party platform
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES The path to a party platform A PARTY PLATFORM • One-stop-shop • Dedicated local services & supplies MEMORY MAKERS marketplace & PLANNING EXPERTS • Technology enabled • Inspirational store • End-to-end B2B services environmen
Slide 20: Our Strategy
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Our Strategy PCHI has the unique opportunity to redefine the celebration experience as the authority and destination for all party products and services by leveraging scale across channels and new solutions to “Own the Party
Slide 21: Financial Performance & Projections
03 - FINANCIAL PERFORMANCE & PROJECTIONS Private and Confidential. 21
Slide 22: Summary Financials
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Summary Financials Revenue declines in 2023, driven by anticipated declining macro economic outlook PCHI Consolidated 2019 2021 2022 2023 2024 2025 Revenue ($USD in millions) Actual Actual Act. + Fcst. Forecast Forecast Fore
Slide 23: Capital expenditures
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Capital expenditures Capex increase in ’24 & ’25 to support NXTGEN stores rollout Capex Project Type 2019 2021 2022 2023 2024 2025 • 2023 Capex represents maintenance-level spend plus $'s in millions Actuals Actuals Forecast
Slide 24: Adjusted EBITDA stabilizes and returns to double-digit levels by 2025
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Adjusted EBITDA stabilizes and returns to double-digit levels by 2025 Party City Holdco Inc. Business Plan 2019 2021 2022 2023 2024 2025 ($USD in 000s) Actual Actual Act. + Fcst. Forecast Forecast Forecast Consolidated P&L N
Slide 25: EBITDA bridge – 2021 vs 2022
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES EBITDA bridge – 2021 vs 2022 Transitory input cost headwinds from inflation are estimated at $103M Transitory Input Costs $103M Private and Confidential. 25
Slide 26: EBITDA bridge – 2022 vs 2023
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES EBITDA bridge – 2022 vs 2023 Lower retail sales plan & transitory cost roll forward from ’22, negatively impacting ‘23 Actions taken/transient costs Macro/Volume headwinds Structural costs Private and Confidential. 26
Slide 27: EBITDA bridge – 2023 vs 2024
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES EBITDA bridge – 2023 vs 2024 Retail sales recovery & transitory cost reductions push EBITDA higher Sustained Actions 101 Additional Structural costs NXTGEN Stores taken/transient costs 3% Positive Retail Comp & Normalization
Slide 28: EBITDA bridge – 2024 vs 2025
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES EBITDA bridge – 2024 vs 2025 Retail sales growth, driven by initiatives, returns EBITDA to more normalized levels Lower Forecasted 101 Additional 4% Positive Retail Freight Rates NXTGEN Stores Structural costs Comp & Normali
Slide 29: Revenue
Revenue Private and Confidential. 29
Slide 30: Sales growth drivers – Retail
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Sales growth drivers – Retail Non-Comp Contributors Comp Contributors $1,905 Non-Comp Non-Comp 4.0% Comp Contributors Contributors Comp Contributors Contributors $1,782 -3.0% 3.0% $1,763 2.1% 1.1% 0.8% $1,704 1.9% 0.6% 0.5%
Slide 31: 2023 Retail comp plan by category
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 2023 Retail comp plan by category 76% of sales driven by Everyday categories, ~80% of which is Balloons, Birthday, Solid Tableware & Candy YoY Var 2023 YOY Var Row Labels 2023 Sales Turn (Sales) Margin % (Margin %) Everyday
Slide 32: Sales growth drivers – Wholesale
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Sales growth drivers – Wholesale Intercompany Incremental Intercompany $1,173 Incremental Intercompany $1,119 $1,045 Incremental $858 Base Third Party - Wholesale growth continues to increase in the base business, with slowe
Slide 33: Wholesale revenue details
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Wholesale revenue details 3rd Party revenue grows as new strategic go-to-market approach takes hold Channel ($ in 000s) 2019 2021 2022 2023 2024 2025 Third Party Revenue, excl Anagram 242,349 212,419 237,278 249,968 266,661
Slide 34: Anagram revenue details
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Anagram revenue details Sales rebound as global helium supply shortage recovers A A • Purchases by Party City are expected to be lower in 2023, as inventory is rebalanced and reduced from 2022 levels rd • Growth in new 3 par
Slide 35: Margin
Margin Private and Confidential. 35
Slide 36: Gross Margin overview
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Gross Margin overview Margins rebound as transitory costs roll off beginning in 2024 $s in '000s 2019 Actual 2021 Actual 2022 2023 2024 2025 Sales Margin % of sales Sales Margin % of sales Sales Margin % of sales Sales Margi
Slide 37: Freight has been our biggest margin headwind
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Freight has been our biggest margin headwind We are forecasting a 55% decline in Rate per Cubic Foot in 2023 vs 2022 • 2023 Cost per Container assumed at $6K Ocean + $1.5K Drayage/Other • Cash Impact in 2023 – Benefit of ~$8
Slide 38: Retail Gross Margin
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Retail Gross Margin Margin growth driven by favorable product mix, price actions and strategic shift in promotions $s in '000s 2019 2021 2022 2023 2024 2025 Actual $ % Sls Actual $ % Sls Forecast $ % Sls Forecast $ % Sls For
Slide 39: Wholesale/Distribution Gross Margin
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Wholesale/Distribution Gross Margin Margins improve as transitory costs and order volumes normalize in 2024 and beyond Private and Confidential. 39
Slide 40: Operating Expenses
Operating Expenses Private and Confidential. 40
Slide 41: Expense overview
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Expense overview Cost optimization work drives cost reductions along with increased operating disciplines Expense Group 2019 2021 2022 2023 2024 2025 Retail Operating $440,395 $432,507 $441,329 $424,824 $428,187 $452,557 Who
Slide 42: Cost optimization work to deliver $26M - $33M in savings
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Cost optimization work to deliver $26M - $33M in savings Savings of $19M included in 2023 operating plan • 13 Projects closed, yielding estimated annualized savings of $12.4M • 10+ Projects in-flight, expected to deliver $9M
Slide 43: Business Operations & Updates
04 – BUSINESS OPERATIONS & UPDATES Private and Confidential. 43
Slide 44: Party City overview & key strategies
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Party City overview & key strategies Customer focus and being celebration occasion obsessed drives the strategy Party City Retail Strategy Average Sales Per Store $2,400 Modernize store fleet via NXTGEN conversions 1 $2,300
Slide 45: Modernize the fleet via NXTGEN conversions
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 1 Modernize the fleet via NXTGEN conversions NXTGEN stores drive sales increases by inspiring customers and removing friction Focal Elements of our NXTGEN Store Format Balloons as epicenter to create theater and remove frict
Slide 46: NXTGEN produces mid-single digit sales comps & payback within 30 months
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 1 Modernize the fleet via NXTGEN conversions NXTGEN produces mid-single digit sales comps & payback within 30 months As of 2022, NXTGEN represents 24% of fleet, with Key Performance Metrics Key Performance Metrics potential
Slide 47: NXTGEN proformas highlight healthy returns
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 1 Modernize the fleet via NXTGEN conversions NXTGEN proformas highlight healthy returns for new stores, relocations, and remodels RELO - YEAR 1 REMODEL - YEAR 1 Current NXT Current NXT Average GEN - 6% Average GEN - 6% Store
Slide 48: Upgrade our product assortment
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Upgrade our product assortment 2 Historical assortment was over-SKU’d and lacked quality & differentiation Thoughtful SKU reduction has driven sales, turn and Product quality upgrades drive sales and provide better GMROI whi
Slide 49: Upgrade our product assortment
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 2 Upgrade our product assortment Combination of improving quality and reducing SKUs drives category and total store financial improvement Example: April 2021 Girls Birthday Reset Results Key Resets Statistics: • Resets & pro
Slide 50: Leverage delivery as a strategic differentiator
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 3 Leverage delivery as a strategic differentiator Store-fulfilled delivery provides customers increased speed while removing friction and driving sales Delivery sales have reached ~5% of total sales with 62% of US households
Slide 51: Win with balloons
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Win with balloons 4 Balloon sales have accelerated, driven by innovation, expanded usage occasions and new selling techniques Party City Balloon Sales $500 $450 $400 $350 $300 $250 $200 $150 $100 2016 2017 2018 2019 2020 202
Slide 52: Regain Halloween authority
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Regain Halloween authority 5 Stabilization of retail sales, coupled with wholesale growth and scaling Halloween City format will drive predictable growth Future Halloween growth driven by three initiatives Historical and pro
Slide 53: Drive digital conversion & reduce online friction
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Drive digital conversion & reduce online friction 6 New omni-channel capabilities and focus on delivery experience increases relevancy Strategic Focus on Growing Digital Sales Penetration from Most 2022 Sales by Channel Prof
Slide 54: Strategic investments in Delivery & Omni Experiences
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Drive digital conversion & reduce online friction 6 Strategic investments in Delivery & Omni Experiences will fuel long-term digital growth Six Key Digital Priorities to Improve Conversion 80 bps and Remove Friction • Abilit
Slide 55: Wholesale overview & key strategies
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Wholesale overview & key strategies New go-to-market solution selling strategy adds wholesale relevancy Wholesale Strategic Drivers 1. Lead the market in shopper 1 insights and category leadership 2. Create and sell category
Slide 56: Lead the market in category and customer insights
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 1 Lead the market in category and customer insights First of its kind insights in the party channel created and deployed to cement category leadership with key accounts Insight capabilities are driving new business acquisiti
Slide 57: Create and sell category solutions
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 2 Create and sell category solutions New insights-driven selling strategy & branded solutions uniquely position PCHI with four key brands Historical go to market focused New go to market focused on category leadership throug
Slide 58: Party Impressions and go brightly brands
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 2 Create and sell category solutions Party Impressions and go brightly brands are driving new customer acquisition Party Impressions driving shipper/display orders go brightly brand solution has resonated with retailers • Pr
Slide 59: Ginger Ray and Amscan branded solutions
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 2 Create and sell category solutions Ginger Ray and Amscan branded solutions expected to drive incremental revenue Party Impressions driving shipper/display orders New Amscan product set launching 04/23 • Ginger Ray brand is
Slide 60: Grow existing customer base
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES 3 Grow existing customer base Strategic category management expertise leveraged to drive increases with existing customers “Customer A” “Customer B” 2021 2022 2023 2021 2022 2023 $ Revenue $22M $19M $21M $ Revenue $33M $47.0
Slide 61: Anagram
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES ANAGRAM Private and Confidential. 61
Slide 62: Party City and Anagram organizational structure
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Party City and Anagram organizational structure Anagram was designated as an unrestricted subsidiary, separate from Party City credit group, as part of an exchange transaction in July 2020, while remaining a wholly owned sub
Slide 63: Anagram is the market leader in foil balloons
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Anagram is the market leader in foil balloons Anagram’s market positioning creates a critical differentiator for PCHI retail and wholesale businesses in our core balloon category 1 THE GLOBAL FOIL BALLOON MARKET ANAGRAM’S GL
Slide 64: Uniquely positioned in the balloon landscape
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Uniquely positioned in the balloon landscape Anagram’s global footprint, impressive manufacturing capabilities and established licensing relationships distinguishes them from their competitors COMPETITIVE LANDSCAPE Vertical
Slide 65: License agreements are a key differentiator
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES License agreements are a key differentiator Anagram benefits from a competitive advantage as the licensee of popular characters and novelty features through licenses, which accounted for $40mm of 2021 sales KEY LICENSES Priv
Slide 66: Anagram – Sales by channel
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Anagram – Sales by channel Sales ($) $100 $89 76 $80 $70 $69 $61 60 56 56 56 $60 $39 35 $40 26 25 26 25 22 22 19 18 17 17 17 16 $20 14 11 9 8 8 6 4 $- 2018 2019 2020 2021 Sep YTD 2022 Affiliate -Party City Domestic Distribut
Slide 67: Helium
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES HELIUM Private and Confidential. 67
Slide 68: Known global helium reserves
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Known global helium reserves At current and expected growth in global demand, there is enough known reserves to last nearly 300 hundred years • US known and probable helium reserves are in excess of 744 billion cubic feet* -
Slide 69: Global demand vs global production
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES Global demand vs global production Global production expected to peak in 2029 at ~8.1 Billion cuft 9,000.00 8,000.00 • Global demand expected to rise to 7,000.00 7 billion cuft by 2030 6,000.00 − Gazprom expected to add to g
Slide 70: PCHI is well positioned to continue to supply Party City stores
PROVIDED SUBJECT TO FRE 408 AND ANALOGOUS STATE LAW FOR SETTLEMENT PURPOSES PCHI is well positioned to continue to supply Party City stores % of Stores • Strong and Diverse Helium Supply Chain 17 4 - Primary suppliers are Linde, American Gas 43 Products, American Compressed Gas, Air Gas 10 - Indepen
Party City Holdco — Investor Presentation (January 2023) on 6ix