Weber IPO was disappointing. Is the interest in outdoor entertaining suddenly waning?
Weber Inc. sold less equity than it had expected at its IPO. The Wall Street Journal cites this as “the latest sign the new-issue market may be cooling after a torrid run.”
That is one way to read it. Another way is more selective. One can infer that the market for the initial public offerings of grill makers has slowed.
Weber Inc., a company based in Palatine, Ill. that has been in the grill business since before Dwight Eisenhower became president, sold fewer than 18 million shares for $14 each in the IPO.
Weber had marketed nearly 47 million shares looking for a price between $15 and $17 per share. If it had sold the shares it wanted at the high end of that range it would have raised $799 million.
The outcome, with its raise of just $252 million, was a disappointment. But it may have been somewhat mitigated by the first day of trading as (NYSE:WEBR). It debuted with a pop, a 21% gain over its IPO price.
There is little doubt that Weber is operationally sound. It reported $963 million in sales for the six month period ending in March 2021. That was a jump of 60% year-on-year. Its net income for that six month period was $73.8 million, from $23.6 million a year before.
The product portfolio includes cutting-edge smart grills, pellet and electrical grills, as well as traditional charcoal and gas grills.
Since 2010, Weber has been majority owned by BDT Capital Partners, an investment firm and merchant bank based in Chicago, Illinois. BDT and its principal, Byron Trott, are listed in Weber’s filings as among its biggest shareholders. Before the sale to BDT, weber was a family owned firm.
Other Grill Makers’ IPOs
Recent months have been a hot time for IPOs for the grill making industry, in general. It is a reasonable to assume that the pandemic has been good for barbecue grilling, because outdoor gatherings of family and friends have been considered vastly preferable to those indoors, around a dinner table and breathing one another’s air.
Since recent months have been good for the industry, they have inspired public listings, as a way for holders of equity to cash in on this growth.
One of Weber’s key industry rivals is Utah-based Traeger Grills, which held its own IPO last month and raised $424 million. Traeger also scored for itself the memorable stock symbol COOK.
Another player in this space is BBQGuys, an e-commerce platform for grills. The two Manning family NFL quarterbacks, Eli and Peyton, back BBQGuys.
BBQGuys went public last month by way of a reverse merger with Velocity Acquisition Corp. The transaction valued the combined entity at $963 million.
So what does the disappointing IPO of Weber mean? It may mean that the trend of grill-maker IPOs no longer has enough red-hot charcoals in play. The pandemic seems to have receded in many places, and people in much of the country, and world, are acting as if the pre-Covid days had returned. This means that families and friends are gathering together in their kitchens indoors again, with a consequent diminution of the boom for grills and grilling.
There are, nonetheless, reasons to be optimistic long term and even medium term about the barbecue grill industry.
It is a space in which there is a lot of room for technological innovation: the recent invention of grills made from foldable fireproof fabrics provides ione example, smart grills provide another. The advances are patentable, and that could make a big difference.