8 William Blair Growth Stock Conference June 2018 5
Disclaimer 8 Forward Looking Statements Disclaimer Some of the statements in this presentation are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. The Company generally identifies forward-looking statements in this presentation using words li ke “believe,” “intend,” “target,” “expect,” “estimate,” “may,” “should,” “plan,” “project,” “contemplate,” “anticipate,” “predict” or similar expressions. You can also identify forw ard-looking statements by discussions of strategy, plans or intentions. These forward- looking statements are based on the Company’s expectations, assumptions, estimates and projections abo ut its business and the industry in which it operates as of the date of this presentation. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and uncertainties include: our ability to compete effectively in a competitive industry; fluctuations in commodity prices; our ability to 5 appropriately respond to changing merchandise trends and consumer preferences; successful implementation of our store growth strategy; decreases in our Halloween sales; disruption to the transportation system or increases in transportation costs; product recalls or product liability; economic slowdown affecting consumer spending and general economic conditions; loss or actions of third party vendors and loss of the right to use licensed material; disruptions at our manufacturing facilities; and the additional risks and uncertainties set forth in “Risk Factors” in the Company’s latest Form 10 -K and in subsequent reports filed with or furnished to the Securities and Exchange Commission. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. You are cautioned not to place undue reliance on these forward-looking statements. Except as may be required by any applicable laws, the Company assumes no obligation to publicly update or revise such forward-looking statements, which are made as of the date hereof or the earlier date specified herein, whether as a result of new information, future developments or otherwise. 2
Agenda 8 Management 5 Daniel J. Sullivan , Ryan T. Vero, EVP, Chief Financial Officer President, Party City Retail Agenda 1 Our Company and the 3 Becoming a World-Class Vertical Model Omni-Channel Retailer Our Business Model and 2 4 Our Growth Platform Financial Results 3
OUR COMPANY AND THE VERTICAL MODEL
Company Overview World’s largest designer, manufacturer and distributor of consumer party products….. 8 Design Manufacturing / Sourcing Distribution Almost 80% of what we sell through >45,000 SKUs sold into 100+ ~200 person design team allows us our retail business is either sourced countries and in over 40,000 retail to introduce over 8,000 new or manufactured through our outlets, including our own stores products each year wholesale business 5 …that also owns the world’s largest retailer of party goods #1 party goods retailer in North America with nationwide footprint of over 940 locations, including ~140 franchise locations #1 party goods global e-commerce platform 5
Investment Thesis 8 UNMATCHED ▪ Consumer Products and Retail MARKET POSITIONS businesses maintain unmatched market positions 5 MULTIPLE ▪ Able to generate revenue growth from LEVERS FOR multiple areas of the business TOPLINE GROWTH ▪ Vertical model delivers unique value UNIQUE proposition with strong cash flow VERTICAL FUELS characteristics BUSINESS MODEL ▪ Business has been successfully HISTORY OF CONSISTENT managed for topline and profit growth GROWTH over the past 20+ years 6
Consumer Products and Retail Category Leadership 8 Party Consumer Goods Technology Athletic Cosmetics Mattresses Toys Consumer Products 5 (Consumer Products) #1 vs. #2 player (1) +4.0x ~1.2x ~1.6x ~2.5x ~1.2x ~1.0x Party Specialty Home Retail Pet Supplies Sporting Goods Improvement Mattresses Toys / Crafts Specialty Retail 1 Represents comparison of global sales of the #1 vs. #2 player 7 Source: Company filings and websites and management estimates
Powered by our Vertical Model Our vertical model and significant, global scale provide unique competitive 8 advantages: / Enhanced profitability by capturing substantial portion of the manufacturing-to-retail margin on a significant portion of the products sold in our retail stores / Maintain greater control of every step from design and production through the sale of our products across channels 5 Increases speed to market Ensures best Cost competitive products and sourcing inventory Design and Enhanced control innovation capabilities of inflation pressures Rapid Enhance design response to changes capabilities via in consumer retail insights preferences 8
Best-in-class Design Capabilities with Unrivaled Product Breadth 8 In-house Design & Innovation Portfolio of Top Tier Licenses Product Assortment / Speed to market - Vertical / Channel exclusivity on a vast / Deepest product assortment in integration allows development majority of licensed product the market, differentiating us 5 team to test new products and from others rapidly respond to changes in / 20% of consumer products / Over 30K SKUs 1 sold in-store consumer preferences business is licensed. 5% direct-to-retail licenses with and 40K SKUs sold online / Avg. lead time from concept to major specialty suppliers delivery of ~10 months 9 1 Includes Seasonal SKUs. Source: Company filings, company data
Unparalleled Global Capabilities Sourcing and manufacturing excellence which fuels our vertical model 8 / ~25% of our retail business is manufactured in-house, focused primarily on high- volume party essentials, Manufacturing Sourcing Distribution generally manufactured 5 through highly automated processes / Manufacturing and distribution capabilities across 4 continents / Labor intensive products, such as banners, favors and centerpieces, are principally sourced from Asia / Extensive sourcing operations across 9 offices drive best-in- class sourcing capabilities / 20+ year relationships with many of our key vendors 10
A History of Highly Accretive Increasing our capabilities and driving growth 8 Acquisition Strategy Global and scalable infrastructure provides a strong platform for highly accretive acquisitions 5 Emphasis on smaller, bolt-on acquisitions that add scale and / or unique capabilities Areas of focus have been: / Broadening and deepening product capabilities / Expanding retail presence , including domestic franchisee buyouts / Expanding international presence Significant synergy potential through leveraging existing distribution, production and marketing capabilities 11
OUR BUSINESS MODEL AND FINANCIAL RESULTS
Performance Defined by Consistency Sustained Topline and EBITDA growth 8 Revenue $2,372 $2,271 $2,295 $2,283 $2,045 $1,914 $1,872 $1,599 $1,560 $1,487 5 $1,247 $1,015 $193 $210 $235 $306 $326 $345 $386 $403 $399 $418 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2 Adjusted EBITDA $362 $380 $390 $409 $321 $275 $292 $231 $187 $192 $152 $122 $71 $72 $72 $67 $57 $59 $55 $46 $40 $38 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: All financials in $ millions. 2016 revenue includes ~$22M of negative FX impact. 13
Core Financial Fundamentals Multiple levers for topline growth Gross Margin expansion 2 1 8 5 4 Strong cash flow characteristics 3 Accelerated EBITDA growth / Solid topline growth and vertical model / Consistent free cash flow generation expansion business model / Strong cost management discipline / Strong free cash flow conversion across the businesses 14
Our Vertical Model Multiple levers to drive margin growth / Gross margin expansion will continue Breakdown of Retail Sales Breakdown of Retail Sales to be driven through our vertical model 20% 20% SINGLES / Will further expand our SOS / Manufactured SOS will more than double in the next 2-5 years DOUBLES 30% based largely on leveraging of existing manufacturing assets 57% / “Doubles” economics will improve ~80% ~80% share of share of as we further drive sourcing shelf shelf savings and focus on product re- 50% engineering / “Triples” economics strengthen TRIPLES 23% through manufacturing efficiencies and productivity gains Today Goal (2-4 years) 15
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