Total revenues decreased 1.3% on a reported basis and 0.7% on a constant currency basis.

Retail sales increased 3.2% on a reported basis (3.5% on a constant currency basis), driven primarily by square footage growth from store acquisitions.

Brand comparable sales decreased 1.0% during the third quarter.

Net third-party wholesale revenues decreased 9.4% on a reported basis or 4.8% after adjusting for the impacts of currency and franchise store acquisitions.

Total gross profit margin increased 60 basis points, as higher manufactured share-of-shelf², the benefit of our retail productivity efforts, lower promotional spend and positive sales mix were partially offset by increased freight and distribution costs and increased commodity pressures, including higher helium costs.

Operating expenses totaled $171.7 million and were $6.5 million higher than the third quarter of 2017 as square footage growth and the impact of inflation were partially offset by further realized savings associated with improved productivity and efficiency in our stores.

The reported GAAP results include approximately $5 million, or $0.04 per share, of non-recurring charges related to the Company’s previously announced debt refinancing.

Adjusted EBITDA during the quarter was $59.4 million, compared to $66.1 million during the third quarter of 2017.

Adjusted net income totaled $7.4 million, compared to $15.2 million during the third quarter of 2017. Interest expense was approximately $5 million higher than the corresponding quarter of the prior year.

Adjusted diluted earnings per share totaled $0.08, compared to $0.13 during the prior year quarter.

Total revenue of $2.43 to $2.46 billion

Brand comparable sales flat to slightly down

Adjusted EBITDA of $400 to $410 million

Adjusted net income of $157 to $162 million

Adjusted diluted EPS of $1.60 to $1.65

Net debt leverage³ of approximately 4.2 times by the end of 2018*

GAAP net income of $120 to $125 million

GAAP diluted EPS of $1.22 to $1.27

Excludes any impact from potential share repurchases made by the Company.

“Like for like” sales are defined as the total impact of brand comparable sales and sales per store at temporary Halloween City locations (excluding Toy City sales at such locations) for fiscal October

The percentage of our retail product cost of sales manufactured by our wholesale segment

Defined as debt (net of cash) to adjusted EBITDA

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net

Inventories, net

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Trade names

Other intangible assets, net

Other assets, net

Total assets

LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Loans and notes payable

Accounts payable

Accrued expenses

Income taxes payable

Current portion of long-term obligations

Total current liabilities

Long-term obligations, excluding current portion

Deferred income tax liabilities

Deferred rent and other long-term liabilities

Total liabilities

Redeemable securities

Stockholders’ equity:

Common stock (97,147,907 and 96,380,102 shares outstanding and 120,527,474 and 119,759,669 shares issued at September 30, 2018 and December 31, 2017, respectively)

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury

Less: Common stock held in treasury, at cost (23,379,567 shares at September 30, 2018 and December 31, 2017)

Total Party City Holdco Inc. stockholders’ equity

Noncontrolling interests

Total stockholders’ equity

Total liabilities, redeemable securities and stockholders’ equity

Revenues:

Net sales

Royalties and franchise fees

Total revenues

Expenses:

Cost of sales

Wholesale selling expenses

Retail operating expenses

Franchise expenses

General and administrative expenses

Art and development costs

Development stage expenses

Total expenses

Income from operations

Interest expense, net

Other expense, net

(Loss) Income before income taxes

Income tax expense

Net (loss) income

Add: Net (loss) income attributable to redeemable securities holder

Less: Net loss attributable to noncontrolling interests

Net (loss) income attributable to common shareholders of Party City Holdco Inc.

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Basic

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Diluted

Weighted-average number of common shares-Basic

Weighted-average number of common shares-Diluted

Comprehensive (loss) income

Add: Comprehensive (loss) income attributable to redeemable securities holder

Less: Comprehensive loss attributable to noncontrolling interests

Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.

Net (loss) income

Interest expense, net

Income taxes

Depreciation and amortization

EBITDA

Non-cash purchase accounting adjustments

Restructuring, retention and severance (a)

Deferred rent (b)

Closed store expense (c)

Foreign currency (gains) losses, net

Stock option expense (d)

Restricted stock units expense - time-based (e)

Restricted stock units expense - performance-based (f)

Non-employee equity based compensation (g)

Undistributed (income) loss in unconsolidated joint ventures

Corporate development (h)

Non-recurring consulting charges (i)

Refinancing charges (j)

Other

Adjusted EBITDA

Adjusted EBITDA margin

On March 15, 2017, the Company and its then Chairman of the Board of Directors, Gerald Rittenberg, entered into a Transition and Consulting Agreement under which Mr. Rittenberg’s employment as Executive Chairman of the Company terminated effective March 31, 2017. As a result of the agreement, the Company recorded a $4.3 million severance charge in general and administrative expenses during the first nine months of 2017. Additionally, during the nine months ended September 30, 2017, the Company recorded a $3.2 million severance charge related to the restructuring of its Retail segment. See the 2017 Form 10-K for further discussion. 2018 principally relates to additional senior executive severance and costs incurred while moving one of the Company’s domestic manufacturing facilities to a new location.

The deferred rent adjustment reflects the difference between accounting for rent and landlord incentives in accordance with GAAP and the Company’s actual cash outlay for such items.

Principally charges incurred related to closing underperforming stores.

Represents non-cash charges related to stock options.

Non-cash charges for restricted stock units that vest based on service conditions.

Non-cash charges for restricted stock units that vest based on performance conditions.

Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See the 2017 Form 10-K for further discussion.

Primarily represents start-up costs for Kazzam (see the 2017 Form 10-K for further discussion) and third-party costs related to acquisitions (principally legal and diligence expenses).

Primarily non-recurring consulting charges related to the Company’s retail operations.

During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023. As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors. Additionally, during February 2018, the Company amended the Term Loan Credit Agreement. In conjunction with the amendment, the Company wrote-off $0.3 million of capitalized deferred financing costs, original issue discounts and call premiums. Further, in conjunction with the February 2018 amendment, the Company expensed $0.8 million of investment banking and legal fees.

(Loss) Income before income taxes

Intangible asset amortization

Non-cash purchase accounting adjustments

Amortization of deferred financing costs and original issuance discounts (a)

Executive severance (b)

Non-employee equity based compensation (c)

Non-recurring consulting charges (d)

Restructuring (e)

Hurricane-related costs

Stock option expense (f)

Restricted stock units expense - performance-based (g)

Adjusted income before income taxes

Adjusted income tax expense (h)

Adjusted net income

Adjusted net income per common share - diluted

Weighted-average number of common shares-diluted

During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023. As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors. Such amounts are included in “Amortization of Deferred Financing Costs and Original Issuance Discounts” in the “Adjusted Net Income” table above (consistent with the presentation in the Company’s condensed consolidated statement of cash flows).

On March 15, 2017, the Company and its then Chairman of the Board of Directors, Gerald Rittenberg, entered into a Transition and Consulting Agreement under which Mr. Rittenberg’s employment as Executive Chairman of the Company terminated effective March 31, 2017. As a result of the agreement, the Company recorded a $4.3 million severance charge in general and administrative expenses during the first nine months of 2017. Additionally, during the three months ended September 30, 2018, the Company recorded $0.8 million of senior executive severance.

Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See the 2017 Form 10-K for further discussion.

Primarily non-recurring consulting charges related to the Company’s retail operations.

During the three months ended March 31, 2017, the Company recorded a $3.2 million severance charge related to a restructuring of its Retail segment.

Represents non-cash charges related to stock options.

Non-cash charges for restricted stock units that vest based on performance conditions.

Represents income tax expense/benefit after excluding the specific tax impacts for each of the pre-tax adjustments. The tax impacts for each of the adjustments were determined by applying to the pre-tax adjustments the effective income tax rates for the specific legal entities in which the adjustments were recorded.

Net income:

Non-recurring consulting costs, net of tax:

Intangible asset amortization, net of tax:

Amortization of deferred financing costs and original issuance discounts, net of tax:

Non-cash purchase accounting adjustments, net of tax:

Charges for stock options and performance stock units, net of tax:

Executive severance, net of tax:

Adjusted net income:

Net income:

Income taxes:

Interest expense, net:

Depreciation and amortization:

EBITDA:

Corporate development expenses:

Non-recurring consulting costs:

Refinancing charges:

Equity based compensation:

Non-cash purchase accounting adjustments:

Deferred rent:

Closed store expense:

Restructuring, retention and severance:

Adjusted EBITDA:

Total Revenues

Net Sales:

Wholesale

Eliminations

Net wholesale

Retail

Total net sales

Royalties and franchise fees

Total revenues

Total Revenues

Net Sales:

Wholesale

Eliminations

Net wholesale

Retail

Total net sales

Royalties and franchise fees

Total revenues

Total Gross Profit

Retail

Wholesale

Total

Total Gross Profit

Retail

Wholesale

Total

Store Count

Corporate Stores:

Beginning of period

New stores opened

Acquired

Closed

End of period

Franchise Stores:

Beginning of period

Opened

Sold to Party City

Closed

End of period

Grand Total

Wholesale Share of Shelf ^(a)

Manufacturing Share of Shelf ^(b)

Brand comparable sales ^(c)

Wholesale share of shelf represents the percentage of our retail product cost of sales supplied by our wholesale operations.

Manufacturing share of shelf represents the percentage of our retail product cost of sales manufactured by the company.

Party City brand comparable sales include North American e-commerce sales.