BBQ grill manufacturer Weber-Stephen Products LLC, the maker of Weber grills, is planning an initial public offering (IPO) in the coming weeks. Weber shares will be available to the public on the New York Stock Exchange, under the ticker symbol “WEBR”.
Weber filed an S-1 form with the Securities and Exchange Commission (SEC) on July 12, 2021.
It plans to go public under the company name Weber Inc. But it has not yet declared how many shares it plans to sell or the price it hopes to fetch. However, speculative estimates of its market valuation range between $4 billion and $6 billion.
How Weber Makes Money
Weber makes money selling BBQ grills, fuel, and outdoor cooking accessories.
The company reported net income of $73.8 million for the half-year ended March 31. It brought in revenue of $963.3 million during this period.
That’s a 212% rise in net income year-over-year and a 61% increase in revenue.
For full-year 2020, to the end of September 2020, annual revenue came in at $1.5 billion. Meanwhile, net income grew 77% over FY19, while revenue rose 15%.
According to Market research consulting firm Frost & Sullivan, Weber’s Total Addressable Market (TAM) is estimated to come in at $49 billion globally and $9 billion in the United States.
While its Serviceable Addressable Market (SAM) is around $15 billion globally and $7 billion in the US.
Between 2015 and 2020, Weber’s SAM grew at a 3.0% CAGR and is projected to grow at a 4.5% CAGR from 2020 to 2025.
Weber accounts for a whopping 44% share of the German barbecue market, where it’s a coveted brand.
In the US, it’s believed to have around 23% market share and 24% globally.
Who is backing the IPO?
The Weber IPO has attracted big names, with eight major underwriters named in its S-1 filing.
These include Goldman Sachs (NYSE: GS), Bank of America Securities (NYSE: BAC), and JP Morgan (NYSE: JPM).
The company is based in Illinois and was founded in 1952 by George Stephen. Since 2010, it’s been majority controlled by BDT Capital Partners, Byron Trott’s private equity firm based in Chicago.
Billionaire investor Warren Buffett has previously called Trott the only banker he trusts.
Weber’s success is dependent on maintaining and strengthening its brand, and reputation as a producer of high-quality goods.
Like all retailers it faces various risks to its business, which shareholders should consider before investing.
Negative publicity, poor product design, defects, or counterfeit products would all impact its share price and value. As could rising competition or a loss of market share.
Considering BBQ grilling tends to be weather dependent, poor weather conditions may affect quarterly results of operations. Meanwhile, extreme weather events could impact net sales, operations, or its supply chain.
There’s also the environmental concern that consumers may shift demand away from gas, charcoal, or pellet-fueled grills to more sustainable cooking alternatives.
Covid-19 also continues to pose a risk to growth, such as penetrating new markets and making acquisitions. But the pandemic-induced lockdowns did increase BBQ activity and thus sales.
Battle of the Grills
The battle of the grill makers is hotting up with Weber’s rival Traeger also planning on going public.
While Weber is bigger and more affordable, Traeger is touted as the superior product with an upmarket following.
TGPX Holdings owns Traeger Grills and filed for an IPO on July 6.
Traeger shares will also be available to the public on the New York Stock Exchange, under the ticker symbol “COOK”.
Meanwhile, retailer BBQGuys and Texas fire-pit maker Solo Stove are also rumored to be throwing their hats in the IPO ring.
Outdoor living retailer BBQGuys plans to go public via SPAC Velocity Acquisition (NASDAQ: VELO), with a combined value of $900 million.
According to Bloomberg, Solo Stove is seeking a $1 billion valuation but details so far are vague.
Should I invest in the Weber IPO?
Before buying Weber shares, investors need to consider what is Weber worth?
Using other outdoor brands as a benchmark (Newell Brands (NASDAQ: NWL), Yeti Holdings (NYSE: YETI), and Thor Industries (NYSE: THO) it could look to price around 3X this year’s estimated sales.
According to Reuters, this could pitch it around a $7.5 billion value.