By Charlie Lunan
Yeti Holdings Inc. filed plans for an initial public offering of stock, saying it needs to raise capital to meet demand and replenish its coffers after paying out $451.3 million in a special dividend to its investors.
The filing reveals that the Austin, Texas-based company generated sales of $468.9 million in 2015, up from $89.9 million in 2013, representing a compound annual growth rate of 128 percent. Over the same period, operating income increased from, according to a filing with the Securities and Exchange Commission. The company plans to list its shares under the symbol “YETI” on the New York Stock Exchange.
Brothers Roy and Ryan Seiders created the brand in 2006 after becoming dissatisfied with mass market coolers that failed to keep their beer, food, fish and other stores cold for more than a few hours. The ability of the company’s grizzly-proof-certified, $1,000-plus Tundra coolers to keep contents ice-cold for days on end made them popular with demanding users ranging from offshore fishermen and backcountry hunters to roughnecks and construction crews.
In the last three years, the Seiders launched smaller hard- and soft-sided coolers, a line of stainless steel tumblers, t-shirts and hats and landed an licensing deal with the NCAA that had enabled them to extend into lower price points and beyond its original hard-core users. Today, Yeti’s soft-sided Hopper coolers, $300 to $350, are a common sight at stadium parking lots, suburban backyard parties and soccer games, while Yeti branded caps are appearing alongside those from Patagonia on many college campuses.
Yet products are sold by approximately 6,000 independent retailers, including outdoor specialty, hardware, and farm and ranch supply stores, among others. The brand is carried by Academy Sports+Outdoors, Bass Pro Shops, Cabela’s, Dick’s Sporting Goods, Recreational Equipment Inc., (REI), and West Marine.
“Our retailer partners value our products’ high in-store profitability and credit us with driving increased customer traffic to their stores and websites,” the company states in its registration statement. “According to several of our retailer partners, certain of our products have among the highest performing sales metrics in their stores. We do not sell our products through mass merchandisers, club stores, or discounters.”
Yeti’s did not divulge the amount of the IPO, but investment bank Renaissance Capital speculated the company would seek to raise at least $500 million. Bank of America/Merril Lynch, Morgan Stanley are listed as co-lead underwriters of a syndicate that also includes Baird, Piper Jaffray, Jeffries and William Blair.
Yeti will use some of the proceeds to pay down debt, including a new credit facility entered in May that consists of a $445.0 million five-year term loan, a $105.0 million six-year term loan B, and a $100.0 million five-year undrawn revolving credit facility. Proceeds from those loans have been used as follows:
- $451.3 million to fund a dividend to our stockholders, including $312.1 million to its principal stockholder Cortec Group Fund V, L.P.;
- $69.1 million to repay all amounts owed under the 2012 Credit Facility;
- $10.8 million to pay fees and expenses incurred in connection with the 2016 Credit Facility;
- $10.0 million for contingent consideration paid primarily to our Founders in connection with our acquisition of Coolers in 2012;
- $10.5 million to make payments to option holders, $2.6 million of which was paid at the same time as the Special Dividend in respect of options that were vested at such time, and
- $7.9 million of which will be paid upon future vesting dates in respect of such options.
Photo courtesy Yeti