YETI going public

They better do it quickly before competition makes them lower their price through testing brand loyalty.

Thank you for sending the S-1.

So this year Yeti took on a $550MM loan that was used to resolve all outstanding debt. However, only $69.1MM went to paying off the debt and $451.3MM went to the current shareholders (founders, and about $300MM of that $451.3MM went to their largest shareholder "Cortec").

That is a really bad signal for Yeti because Cortec took about $300MM in cash to reduce their position from owning more than 50% of Yeti to less than 5%. This tells me that either (1) Cortec didn't believe in the company (2) Yeti wanted management to own the company and since they made a mistake by giving up more than 50% of their company to "Cortec" at one point in their history they are now going to have to use cash from the business to pay back that $550MM loan (as well as the associated interest) before the loan matures in 2021.

No it's not. Cortec is a PE fund. They performed a dividend recapitalization in order to lock in profits before an IPO (and the subsequent restrictions on exiting the position of a publicly traded company).

This is pretty typical.

My biggest concern is that their gross margin is a lot lower than I thought it would be. I was expecting it to be closer to 70%. I can't believe that a $400 retail cooler has a $100 COGS to Yeti.

Also, their SG&A doesn't make it look like they're really growing their R&D spend.

Probably have to factor in that the $400 retail is a $200 wholesale product.

It isn't very typical to put $550MM (about half of total revenue) worth of debt on the companies balance sheet

I was thinking $200 wholesale and $60 cost. $100 cost seems really high.

But by all means, invest!! I'm just saying how bad of a negative light this puts the company under (especially bc a normal dividend recap keeps the PE firm with a substantial equity stake but their S-1 shows that this PE firm will now be owning less than 5%)

My opinion is that the decision to IPO likely means that the company expects growth to slow materially within the next year. This allows early investors to exit while the company can still tell a growth story.

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My biggest concern is that their gross margin is a lot lower than I thought it would be. I was expecting it to be closer to 70%. I can't believe that a $400 retail cooler has a $100 COGS to Yeti.

Also, their SG&A doesn't make it look like they're really growing their R&D spend.

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Holy crap. I figured it would have at least a an 75-80% margin.

Any idea what the contribution margin for a cooler is? That cogs might be so high due to some crazy fix costs like molding or what not.

I'd also be curious to see the numbers for the mugs and other lower priced status items.

My initial feeling on this stock is they hit big out of the gate and become the next go pro or Fitbit.

I don't think they become the next underarmor.

No way they win any kind of suit against the competition, no way kids in 5 years are still buying thier coolers hoping it will get them laid.

If they can position themselves as the "white trash with cash" outdoor apparel and recreation company, they might have legs. But if they try to stay the "gotta have" cooler company they will be a flash in the pan.

15 minutes is almost up for yeti.

I've never understood all of the butthurt over Yeti on this site, seems like everyone is just pissed they didn't think of it first.

I would not touch their IPO with a ten foot pole. You know that you are probably trending down when every truck has a Yeti sticker.

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I've never understood all of the butthurt over Yeti on this site, seems like everyone is just pissed they didn't think of it first.

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Not understanding the appeal of a $400 cooler, is not being butt hurt. I didn't understand the pet rock or chia pet when I was a kid but I sure as hell respected the guy that did it.

Same here. I don't understand why anyone would need, much less want a $400 cooler but I sure as hell respect the guys that started it.

I wish I had the vision to see a market that is content with a $30 product and "I bet I could sell one for 10x the cost and people will fight for them"

They will also suffer from the same problem that impacted technics turntables...they are too durable.

There isn't a lot of planned obsolescence that can be engineered into a cooler. These are something you buy once and that is it.

But often need replacement due to theft...

I totally get the appeal of durable coolers, ice chests and insulated products. There price point is just too high imho.

When I first heard about the Yeti brand and their products with the price point they were selling at I assumed they were trying to be a luxury brand.

I never imagined they would try to market to every Tom, Jose and Harry. Who can actually afford a $400 ice chest? And to buy multiple when they never wear out?

I know they have other products, but they are overpriced. Now that they have several competitors selling extremely similar products for less than half the price, how do they expect to continue growth?

I purchased one of their competitor's similar cups for less than half the price and I am perfectly happy.
I eventually will want an ice chest but I will choose a lower priced product.

It's not that I won't spend $400 on a product, but an ice chest doesn't make sense for me. I know I'm not their target audience.

I just don't see many more who can afford their products and as you mention they aren't consumable. They have no planned obsolescence like with an iPhone or electronic device. When you can find them at Hallmark and Bucc-ees how many more options for market share do you have?

I figured YETI was done for when I saw Buc-ees selling knock offs of their drinkware for about $20 cheaper and to my untrained eye I couldn't tell the difference between them.

They are trying to sell a commodity at niche luxury pricing. This can work if the company stays small, hell im amazed they could even find enough buyers of $400 coolers to support 300 employees. I saw these in a hardware store once and I laughed $400? Luxury niche, status symbol now of coolers, great for the owners and employees, and customers but I don't think it makes a good traded company. Do they have a moat? No. Are they a commodity? Yes.

At the plant I'm working at right now, this has been a fun recent conversation.

One theory I like is that they are the expensive purses for guys. Guys can't compare Gucci vs coach, but you can say "I have a yeti".

Went to academy the other dai ava didn't know they made a $1,400 cooler. Dead serious.

I'm mad because I thought of it before, but never did anything. Their drink cups were invented in 1800. I think they just cashed in on the idea, after cashing the coolers.

~egon

You mean the idea of "overinsulating" basically?

Or guys can just buy the car decal and put it on their jacked up 4x4.

It's like a Rolex but for guys woi can't afford/don't want a watch

It's a bad investment (probably) because so many competitors are rushing to the market.

This looks like a cash out for all early investors right now.

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Only on texags...

"bad investment. too many people buy their high quality, high priced products and their brand loyalty is way too high. "

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if they can expand to be an outdoor brand with tents, grills, backpacks, maybe even jackets, etc then there is some potential.

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if they can expand to be an outdoor brand with tents, grills, backpacks, maybe even jackets, etc then there is some potential.

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I agree. They may not be a good 6-12 month investment, but if it dips by 30-50% after IPO and they announce apparel and merchandise lines, I think it could be a decent investment over a longer period. Maybe not something that will ever make you rich necessarily, just a good addition to a portfolio.

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Only on texags...

"bad investment. too many people buy their high quality, high priced products and their brand loyalty is way too high. "

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You do realize that stocks are primarily priced based on expected future earnings and growth. It isn't having have a very wide and deep market distribution network would indicate that they might not be able to grow thier market as much as would be expected by a typical ipo company. It isn't like they need the funds to either grow their distribution or marketing capabilities.

The durability/quality of the product is a double edged sword. Sure it build brand loyalty but it comes at the expense of replacement sales. Which again means that sales will not grow quickly (at best) or decline (at worst) . The most likely case is that the demand grows at a rate closer to the population growth.

So yeah, too many people buying a high quality product before you go public means it will probably be a bad investment.

But if they can expand the product line AND protect the brand they could be a great investment. But history doesn't have a lot of examples like this. Typically a hiding company like LVMH, FBHS, Newell or VF will aquire the company and add it to thier portfolio to leverage manufacturing, finance, supply chain and logistics synergies.

Time to jump into the refrigerator market.

We are Aggies. Anything perceived as luxury, snooty or overpriced we are all going to naturally rebel against and **** on. That's what Aggies do and have always done.

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Only on texags...

"bad investment. too many people buy their high quality, high priced products and their brand loyalty is way too high. "

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Look back at Crocs. They had a hard time telling the items initially which helped them support a high price. But, much like these coolers, they didn't wear out. So once everyone bought 1 (or 3), you had no additional purchases or growth. Then you had a lot of "well, what else can we make".

I see Yeti doing that. Everyone gets one, they are going to try to license out the name, which erodes brand quality, all while the original investors cash out.


And I thought of it (yeti coolers) before, because my dad still rocks the red igloo from 1980-ish that has 1/2" thick walls and goes through ice like crazy. I always though "I wonder if you put like home insulation inside, could it hold ice longer?"

~egon

I thought of the iPhone first. I was like, wouldn't it be great if you could take a landline with you, and connect to the internet.

I also thought of the Internet before Al Gore, too.

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Look back at Crocs. They had a hard time telling the items initially which helped them support a high price. But, much like these coolers, they didn't wear out. So once everyone bought 1 (or 3), you had no additional purchases or growth. Then you had a lot of "well, what else can we make".

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But Crocs (in my opinion) are a kid item, from ages 3 on up, so we bought a pair per kid whenever they outgrew them. So I think this is different for a cooler. Kids feet grow, therefore seeding the repurchase model. Agree not the same for Yeti.

Crocs for adults should be against the law