Just in time for summer grilling season, Weber (NYSE: WEBR) is setting the stage for its initial public offering (IPO). In an updated regulatory filing with the Securities and Exchange Commission (SEC) this week, the iconic grill maker provided additional information regarding its plans to go public.
The final date for Weber's debut has yet to be confirmed, but reports suggest the company will price its shares on Wednesday, Aug. 4, and begin trading the next day, according to Barron's, citing "a person familiar with the situation."
Image source: Getty Images.
The IPO basics
Weber is expected to begin trading next week on the New York Stock Exchange using the ticker "WEBR." The company is offering 46,875,000 shares of stock, with an additional allotment of 7,031,250 shares available to underwriters, if there is sufficient demand. Management is currently planning to price the stock in a range of $15 to $17 per share, though that price could change depending on interest from investors.
At the high end of its range and including the additional allotment, the grill maker could raise more than $916 million, valuing the company at nearly $5 billion.
The company
If you've ever done any backyard grilling, it's extremely likely you've come across the Weber brand. The company is the leading provider of grills and accessories in the world. Weber offers a wide range of outdoor cooking products, including traditional charcoal grills, as well as gas grills, smokers, pellet grills, electric grills, and even smart grills.
Weber has products for every price range, from portable charcoal grills that sell for less than $40 to smart gas grills that retail for $1,349, and even models that top $3,000.
According to the company's SEC filing, Weber's founder, George Stephen, Sr., "invented the original charcoal grill nearly 70 years ago," and over the years, the company has "built a loyal and global following of both grilling enthusiasts and barbeque professionals in backyards all around the world." Weber's products were sold in 78 countries last year, and the company has market-leading sales in the largest and most lucrative geographies worldwide.
Impressive customer metrics
Weber is the undisputed global leader in outdoor grilling. The company boasts the No. 1-rated brand in the U.S., Germany, Australia, France, and Canada, commanding market share of 23%, 44%, 30%, 26%, and 24% respectively. All told, Weber controls 24% of the worldwide market.
Not only is Weber the top seller, but customers give its products a hearty thumbs-up when it comes to customer approval. Net Promoter Score (NPS) is a metric that measures customer satisfaction and determines how likely a user is to recommend the product or service to others. Any score above zero is good, 50 or better is considered excellent, and 70 or above is "world class." Weber consistently achieves excellent NPS scores in its largest markets, with 62 in the U.S., 65 in Germany, and 52 to in Australia.
Image source: Getty Images.
Financial results
Weber has a long track record of consistent revenue growth, generating a compound annual growth rate (CAGR) of 10%, going all the way back to 1980.
Spurred on by the lockdowns resulting from the pandemic, many people turned to outdoor grilling in lieu of going to restaurants. For the 2020 fiscal year (ended Sept. 30, 2020), revenue grew 18% to $1.53 billion, while net income jumped 77% to $89 million.
The growth spurt has continued this year. For the six months ended March 31, revenue surged 62% year over year to $963 million, while net income more than tripled to $74 million.
Is Weber a buy?
It's important to note that while Weber has a long track record, it's not without risk. Prior to the pandemic, sales growth had reversed course. In fiscal 2019, sales of $1.3 billion slipped 3% year over year, while net income slumped 56%. While Weber's growth has been nothing short of phenomenal over the past 18 months, it could potentially come to a screeching halt as the economy begins to open back up. The current growth surge will also make for difficult comps in the upcoming quarters.
Additionally, Weber will have a dual-class share structure that will keep control of the company away from investors and firmly in the hands of BDT Capital Partners, which will control more than 70% of the voting rights of the company.
IPOs are inherently more risky than companies with a long public track record. While that may be less of an issue with Weber, investors should be aware that its growth will likely moderate from here.
Those risks notwithstanding, Weber's long history of growth and strong customer loyalty could make this one of the hot IPOs of the summer.
