NYSE: PRTY Minimum 20 minute delay.
$11.30 +0.20(+1.8%) Volume: 34,285 October 20, 2017
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YOUR DESTINATION FOR
LIFE'S CELEBRATIONS
PARTY CITY IS THE WORLD’S LEADING PARTY GOODS COMPANY
is the world’s leading party goods company

We are the largest, vertically integrated designer, manufacturer, supplier and retailer of consumer party products in the world and the leading player in our category. We continue to grow by expanding our global footprint and reaching new markets. Through a series of strategic acquisitions, we have evolved dramatically since the founding of our legacy wholesale business 69 years ago. Our unique, vertical business model and global scale provide significant competitive advantages and multiple levers of sustainable growth that enhance profitability.

OUR VERTICAL MODEL

We are NOT just a party goods retailer, but rather a global designer, manufacturer, wholesaler and retailer of consumer party products.
Of what we sell in our stores…

DEAR SHAREHOLDERS, CUSTOMERS AND EMPLOYEES

I’m pleased to report that 2016 was another record year for our Company. We delivered our 16th straight year of record adjusted EBITDA and our 7th straight year of record revenues in constant currency. Our ability to drive sustainable growth is reflective of the strength of our vertical model, the diversity of our revenue channels and the multiple levers at our disposal to grow the bottom line. While we are well-known by our Party City brand name, we are so much more! We are all about helping our customers with ‘Life’s Celebrations’, and as the leading consumer party goods company, the full breath of our design, sourcing, manufacturing and retailing capabilities position us well to capitalize on the inherent growth of the category.

“Not only do we offer our customers the deepest breadth of product assortment at compelling values, we strive to offer an easy, positive experience no matter where our customers choose to shop, whether it be in our stores or online.”

Here are some of our many accomplishments in 2016:

  • Revenues grew by 0.5% in constant currency, despite the inherent challenges of an unfavorable calendar shift that negatively impacted our biggest holiday, Halloween;
  • Gross margins increased by 70bps, driven largely by increasing the percentage of product sold in our retail business that flows through our vertical model to 76.6%;
  • Internationally, we experienced a 9% revenue growth in international wholesale in constant currency;
  • Our retail store base grew with the opening of 19 net new stores and the acquisition of 19 franchise locations for a total square footage growth of 10% year over year;
  • E-commerce comp sales increased 10%;
  • Net leverage decreased from 4.6 to 4.1 times;
  • Adjusted EBITDA margin expanded by 50bps, to 17.1%;
  • Added experienced talent to our executive leadership team, further strengthening our management team;
  • Grew adjusted EPS by 14%, to $1.15 per share;
  • Vertically integrated into the manufacture of costumes via the acquisition of Festival in Madagascar

Our proven track record of growth, supported by our ability to execute on our strategic initiatives, has positioned us as the clear market leader in a unique consumer product category that has a consistent, repeat buying pattern.

Our formula for continued success is clear: We maintain a long-term view of our business with a focus on leveraging our capabilities to strengthen our market position while reinforcing the inherent competitive advantages associated with our unique vertical model.

Looking ahead, we have many opportunities to continue growing our top and bottom lines. We will approach each with the discipline and attention to detail that has fueled our success to date. In the United States, we are actively focused on increasing the operational efficiency of our stores while enhancing the overall customer experience. We will continue to leverage our manufacturing capabilities to not only expand our own vertical margins, but also pursue new customers outside of the traditional party channels. Low-risk, highly accretive acquisitions will also remain an important role in not only our financial growth, but also the continued expansion of our product offerings. And we will expand our operations internationally, further deploying both our store-in-store concept as well as expanding our master franchise agreements in key markets.

As the business continues generating substantial cash flow, we will reduce our financial leverage while further reinvesting in the business by pursuing key growth initiatives.

I remain enthusiastic and excited about all of the opportunities in front of us, and look forward to reporting on these in the future. I’d also like to extend my gratitude to our more than 19,000 year-round employees who are dedicated to serving our customers and who have been a critical component of our success over the last twenty-plus years. I am truly grateful for the effort and passion they bring every day.

Finally, I am grateful for the support of you, our shareholders. Please be assured that we are tirelessly committed to continuing to grow the business, and trust that our best years lie ahead.

Sincerely,

James M. Harrison

Chief Executive Officer

“Of course, one of our most valuable assets is the Party City brand name itself. With over 70% unaided brand awareness, we are the top-of-mind destination for planning life’s everyday celebrations.”

GLOBAL PRESENCE

NORTH AMERICA
CORPORATE HEADQUARTERS
ELMSFORD, NY
RETAIL HEADQUARTERS
ROCKAWAY, NJ
PARTY CITY CANADA HEADQUARTERS
ONTARIO, CANADA
DISTRIBUTION
BROOKLYN, NY CHESTER, NY NAPERVILLE, IL EAST PROVIDENCE, RI EDINA, MN LOUISVILLE, KY
MANUFACTURING
ALBUQUERQUE, NM EDEN PRAIRIE, MN, HARRIMAN, NY NEWBURGH, NY EAST PROVIDENCE, RI EDINA, MN LOUISVILLE, KY
RETAIL STORES
UNITED STATES, CANADA, AND PUERTO RICO
EUROPE
COSTUME
DESIGN/SOURCING
BERKHAMSTED (ENGLAND) BARNSLEY (ENGLAND)
DISTRIBUTION
KIRCHEIM UNTER TECK (GERMANY) MILTON KEYNES (ENGLAND) MANCHESTER (ENGLAND)
EUROPEAN E-COMMERCE
MANCHESTER (ENGLAND)
RETAIL STORES
UNITED KINGDOM
LATIN AMERICA
MANUFACTURING/
DISTRIBUTION
GUADALAJARA (MEXICO) TIJUANA (MEXICO)
RETAIL STORES
MEXICO
AFRICA
MANUFACTURING/
ANTANANARIVO, MADAGASCAR
ASIA/PACIFIC
COSTUME
DESIGN/SOURCING
HONG KONG, CHINA
DISTRIBUTION
BAULKHAM HILLS (AUSTRALIA) BRISBANE (AUSTRALIA)
DISTRIBUTION/SOURCING
& SOURCING FACILITIES
Delhi (INDIA) HO CHI MINH (VIETNAM) HONG KONG (CHINA) JAKARTA (INDONESIA) NANJING (CHINA) PANYU (CHINA) QINGDAO (CHINA) SHANTOU (CHINA) YIWU (CHINA)
MANUFACTURING/
DISTRIBUTION
MELAKA (MALAYSIA)

OUR ENGINES FOR GROWTH

RETAIL
STORE EXPANSION

Our customers love to shop in our stores so there’s a strong demand for expanding our footprint. Through a combination of new store openings and franchise and independent acquisitions, we see the opportunity to grow our company-owned store base to ~1,200 locations in the next 10 years.

DRIVE GROWTH & PRODUCTIVITY FROM EXISTING STORES

While we are fortunate to operate in a category that has a repeatable buying pattern, we have several ongoing initiatives to further enhance our customers’ shopping experience in order to help drive traffic and grow basket size. We are also working to increase labor productivity and improve overall operational efficiency.

GROW OUR DIGITAL PLATFORM

Our online comp sales grew 10% in 2016, driven by the investments we made to optimize our digital presence. We strive to offer our customers an online shopping experience that’s as close as possible to being in our stores, while offering an “endless aisle” of possibilities and helping them plan for their parties with entertaining ideas and suggestions for related products.

Multiple levers for sustainable growth
WHOLESALE
LEVERAGE OUR CAPABILITIES

We will continue to expand our consumer products business, leveraging our capabilities to drive product innovation and growth outside of the traditional party channel. These efforts will allow us to broaden our access to alternative channels such as theme parks, zoos, sports and entertainment venues and the broader promotional products market.

EXPAND INTERNATIONAL PRESENCE

We are well-positioned to capitalize on broader opportunities in attractive and underdeveloped markets. We will accomplish this through a combination of expanding our store-in-store strategy with major retailers in markets like the U.K., Europe and Australia, and further deploying our master franchisee strategy in markets like Mexico.

PURSUE ACCRETIVE ACQUISITIONS TO DEEPEN OUR VERTICAL MODEL

By continuing to seek attractive, tuck-in acquisitions to enhance our manufacturing capabilities, we will get closer to our goal of making at least half of what we sell in our stores. We will continue to enhance our gross margins while supporting multiple levers for top-line growth.

Multiple levers for sustainable growth

OUR RESULTS

Solid Top Line Growth

Revenue ($mm)1

1As reported. In 2017, revenues increased 0.5% in constant currency

Sustainable Profit Growth

Delivering Profit growth for 19 of the past 20 years

Adjusted EBITDA3 ($mm)

3See SEC filings for reconciliation to GAAP measures
Number of Party City Stores
Adjusted EBITDA margin + share of shelf
$308 M
in Free Cash Flow2
14%
INCREASE in Adjusted EPS3
%
GLOBAL MARKET SHARE
of Metallic Balloons
OVER 1/3 PROFITS Generated by 3rd Party Wholesale Customers
94%
or Self-Manufactured Product Made in the USA

2Defined as Adjusted EBITDA less Capital Expenditures
3See SEC filings for reconciliation to GAAP measures

SUPPORTING OUR COMMUNITIES

Thanks to our customers we have raised over

million
since 2011

Our charitable initiatives have supported these organizations:

CORPORATE INFORMATION

BOARD OF DIRECTORS

Gerald C. Rittenberg
Director and Non-Executive Chairman

James M. Harrison
Director and Chief Executive Officer

Todd M. Abbrecht
Director

Jefferson M. Case
Director

Steven J. Collins
Director

William S. Creekmuir
Director

Uttam K. Jain
Director

Lisa K. Klinger
Director

Norman S. Matthews
Director

Joshua M. Nelson
Director

Morry J. Weiss
Director

Executive ManAgement

James M. Harrison
Director and Chief Executive Officer

Daniel J. Sullivan
EVP, Chief Financial Officer

Michael A. Correale
Chief Accounting Officer

Gregg A. Melnick
President – PCHI

Ryan T. Vero
EVP, President – Retail

CORPORATE OFFICES

80 Grasslands Road
Elmsford, NY 10523

Annual Meeting

The Annual Meeting of Shareholders of Party City Holdco Inc. will be held June 7, 2017 at 10:00 a.m local time at 100 Grasslands Road, Elmsford, NY 10523

Transfer Agent
and Registrar

ComputerShare

STOCK

Since the Company’s initial public offering on April 16, 2015, shares of Party City have been quoted on the NYSE, and currently trade under the symbol “PRTY”.

Independent Registered Public Accounting Firm

Ernst & Young LLP New York, New York

Investor Relations

InvestorRelations@partycity.com