Party City Holdco (PRTYQ) 8 Nov 222022 Q3 Earnings call transcript

Good morning or good afternoon, and welcome to the Party City 3Q '22 Earnings Call. My name is Adam, and I'll be your operator today. [Operator Instructions] I will now hand over to Ian Heller to begin. Ian, please go ahead when you are ready.

Thank you, operator. thanks us. and everyone, morning, for joining Good This results. released our XXXX financial third quarter morning, we

find copy can at You a investor.partycity.com. our release website on of our press

on executive Now who introduce like our I'd are to here today's call. team

Please have discussion, their before Todd our beliefs performance, and up we the with open Chief Executive actual by regarding management remarks and expectations about or may events these Q&A. future statements start Vogensen, make could These her We'll results it risks and the Weston, prepared company's materially Chief from subject statements. note Officer. future future cause Brad We forward-looking today's Brad differ uncertainties that to call prospects Officer; business that to our statements or in Financial and plans. for are Todd

whether that Although expectations our such expressly are updates to events these reasonable, assurance SEC everyone or contained our the our forward-looking will as factors provide can in release Harbor Safe as otherwise. disclaim information, be statements reflected that provided earnings statements give risk future realized. new review the statements, We urge well to no duty expectations we we believe in We as any result forward-looking filings. the of a to in

both call, and today's the refer non-GAAP and to we results. financial company's GAAP During will financial operating measures of

our measures, regarding measures to the turn release. and Weston. over financial information I'll non-GAAP to please with refer Brad GAAP more the directly call For the reconciliation that, comparable And to most earnings

to good has headwinds despite just and started supporting key and today. prior progress our work against thank transformation faced. the Thank you make you, the continued for We everyone, pandemic industry Ian. to have the our us Good strategic morning, initiatives joining

consumer our across together channels. on all of end business As on our part one all integrated fully focus this focused into the the functions to celebration in PCHI journey, of bringing we of space

has to our improvements unparalleled, easy drive unforgettable improved the to and to is versus work help occasion period. appreciate make and and long over revenue and memories. our joy trajectory pre-transformation market being obsessed the growth we ability performance relevancy our inspire celebration continuing transformation create And term. our and the look forward in position to Our them brand recognize Consumers

For results the we inflationary quarter, were core customer with that achieved our the in expectations third macro broadly against pressures. line that has significant facing our backdrop

the of Halloween. In these addition, we up month October, despite sales XXXX delivered our revenue flat across and a for strong retail a top on challenges, enterprise comp Halloween was performance of the

our to line line $XXX total Overall, we QX, million, of highlights. generating X.X% top during Turning last QX saw results with from in down year. sales largely expectations,

continued margin the margin Inventory These approximately and XX%. quarter. dynamics saw Our QX costs. versus adjusted with million was or $XX.X helium continue pressures headwinds up the EBITDA temporary last in $XXX million at was million $XX was of end Adjusted QX year. to million in EBITDA $X.X we global in gross the by as for our freight QX navigate cost line through impacted increased and negatively We expectations. gross

XX.X% the Importantly, sales comparable markdown with that X.X% or is incremental Drilling an majority risk. decreasing product replenishment or further. X%, brand sales the inventory increase everyday of decreased XXXX. Retail doesn't down of carry versus

in pleased were our very solid points versus performance well QX, Our perform we and with seasonal core our in results patriotic and and to saw basis A categories improved businesses XXX continue summer of pre-pandemic. our sequentially categories. number

up year. were versus X.X% our overall prior seasonal sales quarter, the For

our as very business, our put we the category nearly strategy. particular, emphasis X.X% core Compared in Our comparable to sales categories have in performed key well, XXXX. the on versus XXXX, retail in differentiator XX.X% XXXX, quarter in but up XX% versus declined this up were balloon due to a

sales strong Our we as expenses the innovation seek to to focus offset to and strengthen timeframe. on our higher versus improvements as continues as assortments driving pricing thoughtful performance in quality pre-pandemic well

totaling Our end next-gen average. opened quarter. stores stores continue of on of to as XX QX, a stores stores period XXX in a with a rate XX continue that the sales less each the run of versus stores Next-Gen well. very perform These mid-single-digit We to payback next-gen average than control store delivers months increase on

to deliver achieved store take continue or to again We with XXXX chain. we Customers in XX% continues continue accelerate new sales as within optimization next-gen experience The an to anticipate of we web multiple to new the our our convenience represented to enabled continued XXX customer capabilities options. fulfillment in builder through and of omnichannel a X.X% QX remodels approximately very the retail advantage conversion to XXX strong expect ending to new of Digitally sales with openings We enhanced balloon continue which our momentum. digital platform. offerings. build rate, continue

experience. order customers the average and enjoy improve as to continue Our value increasingly conversion rates

While business in the in a backdrop helium relatively strength X.X% at Canadian conditions, which further supply offset manages with sales business Tire, will down declines by as wholesale moment. tight the demand address Anagram was I wholesale stable, industry at remains in our continued our QX the

to on October Halloween Moving and performance.

up partially pleased sales in, Halloween XXXX. season positive meaningful the inventory improve comparable environment challenging we're to season. attributed our more continue going versus For October -- to flat immersive to and can Halloween efforts the with were and month the Customers versus create drive be position quality, The results. respond prior The and strong the XX.X% a of to experience. given performance product innovation our are throughout into we October, year

season. This City unique versus entertaining last we costumes number personalized. a into and also on cocktail, truly stores elevated core lighting. costume year, Halloween innovation to year. of including performance. sales We're XXX offered and as the and with translated tableware, make products as categories, and our accessory quality candy Halloween the complete Halloween categories everyday We strong category unique their decor such throughout sought strong XX solid pleased We had focus Our Halloween operated that in baskets decorations, pop-up consumers

experience a the profitability our a remain to immersive this see and better complement great to We the as about City to to stores. pop continue in and and to continue ability for test, sales experience of channel our grow Party and learn deliver customer improve bullish

As we said in supply flow the chain the July, on put product unevenness pressure our EBITDA and short-term in results. has our

product freight the As we last saw we especially continued year. quarter, in expected, Halloween than in elevated brought as earlier costs

freight and well the moderating of terms broader freight prices In spot market, highs. their recent are off

costs in inventory to expect has not turns, increased would given see benefit XXXX. the global supply slower have than as expected. our Helium However, to associated recover been we until how later

see, term, not QX is would well the As for supply returning done helium the meaningfully and discussed as Anagram from rapidly impacting rest base an last diversify stocks in the costs ability tight given quarter, which some our that we Total into sales as have supply however, advantaged higher resulting to is in enter a agreements industry and we multiple we of supplier of long-term partnerships have in revenue EBITDA. out our will source all. for to supply, as and impact the work near This to like perspective, Helio. as improved well as are position helium industry well as supply

a In softer on positive results, with with account and everyday headwind will in including year. core addition third performance are categories, performance positive, takes with our full in outlook the into expectations. updating our in product persist coupled Halloween broadly our year, the our And quarter to months of to updated performance fiscal short it performance, with to these challenges, mix year headwinds Halloween factors in over This resulted to margin. in while in balance date X line our October, in mix that sales our and were inflationary continue expectation we Based fell that October of the results expectation expectations. our remaining

for is Our between $XXX to EBITDA million $XXX million. adjusted updated outlook

Given year. cost begun we costs reductions of efficiencies. cost million, our on drive savings logistics in store of efficiencies, behavior. fully services, is intently increased corporate reducing we've broad which focus that expense fiscal are spending realized $XX raw the what marketing macroeconomic and control expected help retail costs These end, the to including pressures next implementation structural contracts, expenses, intensifying information of consumer landscape, of To materials, company, will are and be operating expense risk annualized targeted areas the reductions and is to offset underway and and various professional our across Worst inflationary operational recessionary technology managing payroll.

several approximately we holes open XX have XX the our by the not backfilled over existing roles workforce months. of been elimination corporate XX%, which Additionally, reduced and that past includes

inflationary pop-up the and selling pace continuing significantly management on to to synergy channel in more upside capabilities, term, store visibility all in expansion our and environment, and reflect are driving wholesale intensified efficiencies This increases the demand-driven initiatives our drive prototype evolve and integrated In greater expand in ways systems, the and processes to closing, inventory forward to manufacturing, our At share. combined a solution to efficient Vice sourcing, optimization was chain number continuing City offset the Carter's compelling with Executive increase strongest streamlining supply supply initiatives This President X near near Commercial offerings of macroeconomic addition, move Chief organizational expenses. of the strategy the we we're focused Thompson, opportunities, Commercial end-to-end moderating Executive Officer, his responsibilities. Officer, the our conversions our becoming including has on President reducing continuing on now. that PCHI product pipeline, to overall market e-commerce line made of current market a President, new Operations inventory building and executing effort strategic of IT to updated strategic near-term that adjustments on our cost and Sean efforts, intensified same increases. more as are simultaneously leadership of leadership Vice we're actions In next-generation To and namely price top ability organization, and to continuing conversions become focus more includes Halloween momentum to businesses store with though the while growth customers our implementing support on with to our we're evaluate environment. Chain; now further continuing time, cost commercial align recently robust and and across We've growth we've and Clothing. including delivering SG&A marketing to the and an enhanced more continuing become capabilities to these adding while efficiency. highlight some medium strategy, means more go-to-market are set hired our the efficiency of Chief term. position we the and most Children's focused build I'll best Officer reduction our to Supply making in prioritizing his navigate Smith in Peter senior to also and Peter Global appointments to progress PCHI our growth chain Chief

phase transformation. well We And I'd enter as growth a third over the efficient focused to October our organization, XXXX, to and our and this our to through value continued quarter, outlook next of leaner, and to on creation Halloween discuss evolution greater more expect driving long-term turn Todd call the as in profitable sharply detail. XXXX now, like as results

highlights then Brad, morning, quarter weeks approaching we're fiscal performance, focus on key of our and our Today, year. Halloween how results and October of last as and discuss as Thanks, well I'll our good the third everyone. I'll the

the to results please headwinds and our For line pre-pandemic strength bottom third Relations on slides, full section versus frames, We by earnings to which accompanying sales our press line continue offset time delivered the are website. our details cost in that refer of release with that regarding quarter including expectations, largely Investor available that results, pressured profitability. the were demonstrate temporary our financial on

period, primarily nature, product the We from For in in prior and wholesale gross chain decreased cost quarter driven margin material to by our Adjusted the pressure sales period, by by pressures, of in XXX many inflationary primarily the XXXX the we and consolidated helium as raw gross revenues supply of approximately increases. continued driven lap transitory basis that versus decreased by third margin points. continued year the strong X.X% these performance approximately points freight, on Anagram, growth rest retail declines impacted negatively year for rate third prior addition estimate quarter, XX which labor, in business. offset driven basis partially are

basis helium point quarter Additionally, prior in the XXX costs year. approximate the an represented versus headwind

sales, $XXX.X As growth. to a prior of to pricing XXX wage of which inflationary million we labor SG&A across business, the rate sizable higher offset XX.X% as versus result net in or costs previously the primarily were increase store as approximately adjust a served mentioned, we expenses the to a basis quarter. continue Adjusted pressures due year the point

As year. of million in share million per income $XX year period. $X.XX year. was in And the operating a to million Adjusted adjusted of compared quarter last of prior loss result, income third per $XX to EBITDA $X.X compared was third quarter adjusted compared share operating a $X.XX in to $XX.X was QX last earnings adjusted loss million the

tax expense, in our of results recorded quarterly of we terms a $XXX tax provision third million. In quarter

abnormally which in we high rate The annual expense the resulted our use in third previously, benefit quarter, to million an reversed quarter, accordance applied third quarter. in in of $XXX apply a As discussed rate $XXX GAAP, tax resulting we the tax income our in income. the with quarterly quarterly an second million to annual the in earnings

negative rate a much tax X.X%, more normalized results. year-to-date is Our

find tax will footnote, with today. after You file quarter we third which can the our market XX-Q in SEC additional close disclosures

sheet to up million flow Inventory our approximately or year-over-year. turning Now $XXX balance metrics. cash and XX% was

are was given positioned we've and continued versus in-stock As to million ahead driven in last inflation and discussed, of approximately million broader that to Halloween higher the rebuild we we receipts. associated well $XX by levels $XX levels strategically year, chain inventory inventory our is brought of approximately challenges, supply early with ensure Halloween the

and in activities tableware, The was levels higher as We largely categories cash not of any evergreen risk replenishment used $XX our The increase capital operating of $XXX birthday largely well by in used Year-to-date, operating to in in in in about result. continue increases cash as the driven meaningful which a good cash the versus as in decline are carry results. everyday nature as quality do are balloons, was kids feel all net year million net working markdown activities an the inventory. million period. consoled usage operating such prior or largest

comments my Halloween October Now performance, to positive operating When Results flat end let encouraging at me our the challenging backdrop, were for lower the turn Anagram, original our current combined but we environment of prudent to and expectations. guidance, update with short outlook. the XXXX QX believe of guidance. our at while the results given it's

variants, any disruptions. reminder, our a predict any situations instability such as guidance increasing other impact not geopolitical As does reasonably certainty, assume or with from we macro COVID can't

so of with the does outlook our along the that we've far measures macro terms However, put include backdrop, what place. seen mitigation in we've into

For expect to brand versus $XXX negative fiscal negative billion GAAP approximately $XXX $XXX $XXX of approximately change negative EBITDA approximately net loss of XXXX, approximately million positive and million. we adjusted X% And to to now in to million billion range net $X.XX or of X%. XXXX. X% sales X% to the of $X.XX of million a comp

improvement capital new In of expect XX in $XXX to tenant And XX next-generation spend allowances. million in complete of expect net million now to XXXX to we terms between $XX stores expenditures, $XX the to our million XXXX. we or to $XX approximately range million be lastly,

$XX material inclusive assumes freight into XXXX expense, million. of combined million incremental supply of headwinds of Mirage costs levels million $XXX headwind a and costs higher costs, input guidance all for in helium $XX XXXX higher from Our incremental against cost chain

our Please embedded still backdrop we've with like until in these While cost choppy related note be And transitory, an freight well items consumer cost inflationary the core when from environment XXXX inventory into our anticipation, in outlined. as costs freight near-term underlying we that XXXX sold. in a certain many alleviate. pressures they of even difficult macro included inventories. if cost will are it Brad expectation will to pressures XXXX elevated into for the is inventory, the believe current -- headwind in underlying of predict head current is meaning actions the the costs make will a makes earlier headwinds facing we Combined declined, as of are demand taken each these and that are that the

$XX now balance $X.XX of $XXX cash total comprised At of Let $XX ended we We principal of had liquidity, a me million revolver in and liquidity. quarter to turn with billion. of million debt of net quarter million the in end, availability. cash

will environment million as liquidity we challenging XXXX. navigate position approximately actions what a annualized cost Our drive our in could be improving in savings, $XX macro

in align to we're as significant relevancy our with to the is in pleased environment. and feeling This, largely with So execute challenging as start We're I we this environment ability pressures. the headwinds structure inflationary navigate The our and our confidence continue remains us against and for expectations which we turn the to the we consumer transformation with in taking strategic and summary, combined the solid things persisting operating quarter our environment. were cost actions our growth were drive our able October over the performance effects third Q&A Halloween continue results, in to cost inflationary streamline of our call temporary to but gives line that, celebratory. to with that With position session. to organization to the will ourselves operator strategy initiatives, increase all current difficult

America. question [Operator Instructions] first comes Bank Reuter William And from our of from today

priced further The greater ability discuss increases. I and feel which in you guess potentially you strategic you first maybe some discussed how increases? additional your items prepared that to can price may is, price taking you you're remarks, take currently have

reaction Yes. very dynamic. is to Consumer prices

we're this at pricing. SKU good do well encouraged being also So been understanding we really by pricing we're in competition so price as enough have of imagine, and as our as constantly power. elasticity environment. we've and the you we And level testing that a price can judicious But category

take the future. in -- willing and to continue now price we we're So actions

that price have view and priced very elasticity. are number unique competitively impact, is elasticity we we to demonstrates would a Often, the experience where we took where comes consumers. positive to least dollar through we a fact, focus differentiate there it in a where able marketplace recently like to In because profitability of provide the is where our where that we're

would will here. you said then, persistent out were when it's you transitory these go Todd, to transitory -- going basis it. to and away. discussing I Got you I And you from referred But model And away you whether $XXX guess Do later, year? points. margin, help for any any that minimum, think gross of challenges that XXX to some us but then a early something now. a figure mentioned of with next then costs that difficult at be our or have sense when be gone I maybe expect estimate have these to of will year an that kind next could start for try the to and of half

Sure.

So a lot got think those are costs our point in the inventory that I of you now. embedded

cost are underlying provide it, the as necessarily immediately to So the don't of good on market out, which to probably can out. But have months up favorable can to X they the good that or market top that fairly roll where freight been, ago. we the things of be would transportation roll when spot we rolls look We're come to depending inventory relief, already to to freight chunk in likely off it most the roll a at rates seeing category, call XX take list. the are X

just point. the The to rest cost bit actions little a of this frankly so predict at encouraging. are that's And difficult

the work make to kind of and progress. have those as measure we beginning through year next we'll So of

for lastly then And Okay. me.

up inventory million. Your was $XXX

over markdowns of write-down, end then year you not In is us that this questions year? had And feel X the two, said been component about giving of year? have expect Number the to due you your we were you My should there next inflation. about in down -- inventory one, past in here. some was there the how think come years us helpful can numbers help you good You guess, anything where or I that what to may the inventory.

Sure.

have any not is we have large So inventory a ugly of is on fresh inventory. we key hand This the this -- first do write-down you're items. that year. inventory right, intention The having

$XX inflation is just Halloween again. expect pure had Some is just of Any inventory million not It's items is we that key next units. the carried related was costs, going to over would that's costs Halloween year. that to and that $XX be to we pure cover million

really tableware, meaningful just result. about increases feeling of we're largely, Largest in risk that solid nature in it a markdown So like categories as quality balloons, the and inventory. our a good are largely birthday evergreen carry doesn't

as implemented have inventory which management around have get our not call. seasonal end for the want talking we'll net that this expect, year, into is be of has is challenges we source that would product. fundamental we inventory, practice probably more to don't And work past do us through at is seasonal XXXX this write-offs we the write-downs our going do as go given successfully and we a guidance we this as with working operating So is that our ensure we cash about very change product deal year. the be those liquidate next any now how normal much or next our different something on do team inventory been we of earnings all of to capital forward into carry payments, to a

Feldman comes Joe Telsey from from The next question Advisory Group.

for A of questions you. couple quick

you slowed regards but driving you relative core gathering why what it parties the to the just So slowdown? and the having year? I wondering kind think kids do economy, why of to loyal -- slower. like birthday aren't with is I mean has have get I'm last the business, been think still

period. pandemic did the categories think is out a of see in we No, those XXXX biggest issue significant surge in coming everyday the I

is celebrations are or XX%. to drivers keep of them you categories categories core or are in everyday our prepandemic core over XXXX compare if up -- So XXXX, levels key our thing mind to

And time period. versus strong so that very

key as items positions improve to has continue in-stocks us up inventory better. our improved, sets Our has on and the come which in

consumer demand parties -- good around around always balance the celebrating change they is and how in our there's people have think nicely. and their our bit of categories a back news are come seasonal I celebrate quite behavior little

I And impression we helium guess under to that there? on guess can then, deeper what's guys like have supplier said, buying as you much you I have was into understanding very dive -- you spot you these like wells at the and days. I supply what can it. Got good good And Because partnerships wouldn't costs, because partnered a -- little be the backups. regard you with with too to you've my price going was the have

So maybe you other there. also know now. could what's I'm worldwide what I impact? going impacting share devices seeing thought just a little like that's it's that's more medical shortage things. on the And driving and you're curious

take questions. those we about to a bit little But Yes. holistic view can helium

as broader as of rapidly resulting for For industry but operations to immune at the supply. supply the as costs in easy experienced due tight well running, our graduation, a would year, in ample the but the plant supply the QX start-up was third that The we a up like, QX to in last and is through have we taken supply improved Party mall then. we're supply bit not being last product and explosion cutter position Russia, the will stores, the in from helium to returning purchase has a total about an we although supply for had now that had a after production as of off-line has market impact higher the and that fortunately did brief would not out cost the maintenance stated the or a transition which And have facility the are which improved standpoint, where as in Management expected increase our that resumed global up of have because year, since and first XXXX be market the it supply good September last we part or Bureau and it a And we spot has and bought of spot supply X back the there of than quarter, relatively things in year, for Land as beginning of global in the while U.S., potential in significant supply Gazprom of unfortunately, have commission. year running. pricing. all -- is And after would supply does start those that tighter of not is from and -- out discussed from impact had facility view coming Karnes supply U.S. global production fire an roughly to from of higher in City City and the industry, a plants and in impact not for a is supply a QX not factory. that do a necessarily stocks And some when that facility and rest be on to countries year.

take mean, I presumably, that. then, you able advantage are And Okay. guys to of

did is party and the okay You demand sounds have core down? Or at city like the supply just It that is I balloons your hear right? balloon or not business for stores.

done diversify enter to long-term supply our to in and advantaged We of we've we that the number in a an helium base supplier well given are and work agreements. really, have position, partnerships

So elicit through that's meaningfully challenge ability in stores. our really source to the market. The is elsewhere

And one last maybe for me. Okay. then, one

competitive Just a low was little it it guys I the out just end? broadly standpoint. was more saw disappointed Or curious at from guys expectations? what a Was were came with you just regard Halloween Halloween, you to below

selling don't lacklustre. looks costume to to a particularly somewhat from yes, purchase this early, positive promotional generally last to last easy shop, speaking, with similar continue we have looked consistent the to to to was experience, easy do the the year, relatively in way competition, an bag and costumes point, accessories on it's relatively But read to they anywhere and looked still see heard competitors total a rounding We've pretty improve We around online out manner. activity competition, year. up

we've mixed heard very so And results.

luck it. Good guys this Got quarter.

Thanks.

comes Karru from Martinson from Jefferies. question next The

up is That's delta you at look $XX cost $XX we're last if quarter, So, looking guidance headwinds the about $XXX that but I the What's to of the I rest that wonder million $XX total. that in million. had that miss? down at million from million for

sales Yes, it's driven. really

and prepandemic definitely and going maybe we combination the expectations, the or of things with went a end have than at positive in was XXXX. than lower around to we averages the better Halloween last on go sales of historical to City, Halloween our lower we year. particularly in as It back than for lower QX though sales expectations back So front City franchise came expectations even it's where performing times in

so general, that. being pulm bit then bottom is flows little balloons and for the And a in pressure just for anagram very shortfall being line is at we're the a creates reflecting what living facility, to it through demand quickly manufacturing Anagram. any with a the And that Anagram in sales market of how in supply

this mean Okay. the revision have where This over much $XXX quarter are year? elements control of this with you you how million, have the of I feel dependent guidance that in business do and And you to are X go forces? $XXX year? what confidence kind target is outside the visibility you that on third in and -- million

Yes.

And this has from I think certainly, a unpredictable. you've that heard demand of overall been lot I year retailers. think

where so would the have what of beyond we've this forecasted. just has some chain come initially ending a exactly addition, supply that in. created where pressures the overall should way and in difficulty we in And seen lot probably But guidance --

benefit are into quarter Now only months QX, have having in currently. we left is know X built what going the increases is cost into inventory our the we

done. the have point, of nearly XX% the majority of ability that then with comfort. is at to level So we some forecast quarter the And this

are October a visibility top into how going confidence perspective from million up that in in that full does And significant a where volume us -- now for So a us lot and year. $XXX that we're give more to months. gives more we're the lot that million $XXX end to through we line

$XX the liquidity $XXX end at feel coming of And quarter, we liquidity, Okay. million working with we maturity kind the lastly, And today the you the about of when today million are just X how of do 'XX those look the where up? Halloween release? in capital with at notes or

Yes.

did terms of sell-through. Halloween have actually to manage reasonable inventory, the we in So a

So last the than years extraordinarily was XXXX Halloween. tight would we're better been have in in prior -- and we really year position in for

inventory chain Halloween of good in a expect we supply on particular, But ended than aside, category, kind everyday carry item saleability. up an in really As key seasonal in has taking everyday anomaly to that that there have the can actually a that position in a were year's would assortment. better where if of you It's historically seen and just you recall, we next items we've they're better lot is disruptions. inventory

levers I we that, So next we And capital year pull benefit our as at look to think, have of work inventory. as positive. generally, continue is some be a of a a to us that number our we liquidity, we will through Working

in million run we and a announced savings. We cost CapEx to then manage And most efficiently. continue expense. to how business that focused have you've are we on capital today some $XX clearly discipline the ability the heard things We around our

so And us seen at opportunities past cost provides And continue then, and in from looking the we're us on financing. to open alternatives you've we the for side. to and that be actively

levers lot we proactively. do to out so continue a there, manage of we have levers those and And

Thank you guys. much, Appreciate very it.

Carla question JPMorgan. The Casella next from comes from

Karl. is This Mike on for

that a had you city any there one guess, that the generically versus, of earlier your was questions, of Is like ones sounded of party good said it your granogram-type we pretty cilium stores was supply the position. I differentiation One customers? in

our So contracts us. similar rely things helium helium and acquire but customers that I individual City of benefited retail that network all bit embedded previous a overall answer those. a how yes, on manage have to are good of in Party contracts, our Anagram we've done in the ensure stores in fashion, different in supply our different we arrangements that supply think, a is different

their more ability So have products sell who globally, which to conditions greatly healing. customers by to and lacked their challenging the those consumers has to pressure supply on customers the industry been or impacted put have across

you. Got

guys you of percentage And party? disclosed Anagram actually into I City Okay. those like guess, have cells versus, stores what third then Party go

XX% past sales. is generally antigrams the have in total to said XX% Party of the in that City We

a of business does third-party underground the amount have So there. significant

is of XXXX? And as we healing versus the guys you and kind looks today kind cost saw of of pre-pandemic in spike said what like pre

higher. is certainly It

levels, And or for the rates to helium. pre-XXXX coming now the -- the even type more pretty with XXXX, a significant under amount in then are So industry pressure. of and helium saw XXXX we step-up in price shortage the rates contracted spot for

and cost would in for about we're able good cost that the to position have those we of year of that mentioned supply million earlier that we through indeed saw terms some flowing on And a costs $XX gone from to in in in the are put pressures previously, the XXXX. a decision ourselves overall Helio. has versus seen is pressure having by cost what up that be Someone

you. Got

last notes? the any box first you from about sorry, one raise out the second Anagram to refinancing thought And those at guys us. Have lien debt and ability and

-- probably it's It's out a appropriate be to not hypothesis might what there. about

what have active an we to any too specifics. in think but want are about to talking have that options that we we're far at listen, I wouldn't of and looking to in continue terms open I get shown

question final Our comes Holden from Hale from Barclays. today

I questions. had X

year stores is that for was The much were lower. what the NextGen versus be number thinking implied plans. wondering you would or one the prior that I next first back pulling on And how we're you of

capital given macro volatility the for macro next-gen the broader the disciplined expenditures really light remodels, and environment pace be challenges. in we'll openings of moderate with store Will in

within and lift a performance too delivering We be is tell increases continue to performance. remain over to and The what the to previous year. it's to early control a next-gen next perspective that's in store. mid-single-digit so discussed on quarters, XX really with cost early next-gen pleased payback we And tell -- the for in that continuing from stores. or to too store is we'll where But we provide stores exactly months come average across similar

driven? Anagram there buys? helium supply decline it baskets is was helium the my potentially and consumer sort consumer-driven partners for retail is second question Great. on your And all that it Is or impression you Or for that lower of into. sell

based on business a our positioned. at a retail and at very overall our slowdown it's mainstay stores, least But helium is based differentiator for also to robust pre-pandemic realize driver, our that the and that of well levels in continues Party balloon market our we're of Integra perspective versus to traffic -- type more believe and everyday is we in that's it our on be City category us So which it's our stores. City is on lack Party customers availability any demand those of than the on perspective performance, based a

Okay, it. much. thank you appreciate very I

session. Q&A today's concludes This

Brad Weston So I'll for to hand now remarks. concluding back

most of control. been of I the recognize our to who Have the the which a they Thank environment, I past volatility has incredibly our created the team beyond to work business of over rapidly the entire to PCHI They the by am day. you, few hard a operator. continue as teams proud market shifting business. managed years. and in challenges our of rise their great dedicated are resilience customers through success

your This concludes very you today's for call. attendance. Thank much

now may You your disconnect lines.