IPO Watch – YETI Holdings (YETI)
Set to debut this week with its lead underwriters BAML, Morgan Stanley, and Jefferies, Yeti is a designer, marketer, and distributor of premium products for the outdoor and recreation market. The company’s products are designed for use in a variety of outdoor activities, including recreational and professional pursuits. They target various categories, including hunting, fishing, camping, barbecue, and farm and ranch activities, among others. Some product examples can be found below:
Per its S-1 filings, “We have delivered outstanding sales growth, operating income margin, Pro Forma EBITDA, and return on invested capital. Our net sales increased from $90 million in 2013 to $469 million in 2015, representing a CAGR of 128%, driven primarily by continued demand for our existing products as well as new product introductions. Our operating income increased from $15 million in 2013 to $128 million in 2015, representing a CAGR of 190%. Operating income represented 27% of net sales in 2015. Our Pro Forma EBITDA increased from $23 million in 2013 to $157 million in 2015, representing a CAGR of 162%. Pro Forma EBITDA represented 34% of net sales in 2015. Our “asset-light” business model, which includes outsourced production, distribution, and logistics, has limited our capital expenditure requirements and contributed to a strong return on invested capital.”
Sales Overview
The company sells its products through independent retailers, national accounts, and their direct-to-consumer platform. They carefully select retail partners whose image is consistent with their premium brand and pricing. According to filings, they have relationships with such retailers as Bass Pro Shops, Cabela’s, Academy Sports + Outdoors, Dick’s Sporting Goods (DKS), REI, and West Marine.
Yeti believes their dedicated national sales force provides them with a distinct competitive advantage by directly engaging with their retail partners on product presentation, marketing, and retail merchandising. “We generate the majority of our sales through a diverse national network of approximately 6,000 independent retailers who specialize in selling to participants in hunting, fishing, camping, barbecue, outdoor, and farm and ranch activities, among others. Additionally, these independent retailers provide valuable brand advocacy to our consumers, as they often have significant influence on in-store purchasing behavior.” As stated above, it also sells a steadily increasing percentage of products directly to consumers through YETI.com (one of their key growth strategies) and over the phone via YETI Outfitters customer service group.