The Solo Brands Inc. IPO expects to get about $200 million from the offering. The company grows and buys outdoor consumer lifestyle brands through a direct-to-consumer marketing approach. CEO and President John Merris heads the management. He has been with the company for the past three years and was previously the Chief Revenue Officer at Clarus Glassboards. The company has over $310 million in equity investment from various investors such as Neuberger Berman affiliated entities, Jan Brothers Holdings, Bertram Capital, and Summit Partners.
Solo Brands Inc. IPO Company and Technology
The company is already planning to go public with its Solo Brands Inc. IPO after only some months as a standalone outdoor platform backed by private equity. This week, the Texas-based firm filed a Form S-1 registration statement with the Securities and Exchange Commission to launch Solo Brands Inc. IPO. The company did not describe the number of shares it plans to give or a price range for the offering. But the filing helps to give a detailed look into the new company and its goals. A few months ago, the firm had announced the formation of a holding company after a number of acquisitions by its main product, Solo Stove. The firm bought men's outdoor apparel brand Chubbies Shorts a few months ago. This was after the acquisition of paddleboard maker ISLE and Oru Kayak. The outcome of the buying spree was a fresh outdoor platform called Solo Brands. This was incorporated in June, with the businesses functioning together under the ownership of Boston-based Summit Partners.
John Merris became the CEO of Solo Brands along with the brand president of Solo Stove. He said it made great business sense for these digitally native and customer-obsessed firms to get under a single platform. He said, "We just started leaning in hard on everything that these brands collectively could bring together, and we started envisioning our customers in Chubbies gear feeling great about themselves, or out on the water on an ISLE paddleboard, or in an Oru Kayak, or sitting around their Solo Stoves at camp. It just started all feeling right, and we thought, these brands are in our wheelhouse, and maybe we are thinking about something even bigger than we initially thought. And the idea of Solo Brands was born."
According to Merris, the PE-backed firm was advantageous because Summit Partners, the owner of Solo Brands, has the same ideals as the companies. He said, "Our whole brand mantra at Solo Brands and Solo Stove has been around 'create good,' and that is what we have leaned into and from the beginning. That is what we continue to lean into. It is important, in my role, to make sure that we are partnered with the right sponsors and the right backers that have that same mentality and commitment to creating good. Fortunately, we found that in the Summit."
Solo Brands Inc. IPO Has a Different Mindset Now
Now, the company will have a different mindset as it seeks to snare a much broader base of investors and the current one, which will be an investor along with the other pre-IPO holders. In the SEC filing, the company said the main way it wanted to get a share in the outdoor marketplace was by continuing to differentiate as the main digitally native DTC lifestyle disruptor. The statement said, "Our DTC model enables us to communicate directly with our customers, which provides real-time customer insights, control of pricing and brand messaging, and helps cultivate a loyal following. This focus on DTC goes hand-in-hand with our data-driven sales and marketing engine that leverages the power of consumer information, including intent trends, purchasing history, and direct contact via email and text messaging. Our expertise with data and our expansive digital infrastructure position us as an agile, fast-moving leader in the DTC lifestyle marketplace."
The company also described strengths as a culture-driven and experienced leadership team, a scalable infrastructure, passionate connection with buyers, and product excellence. The firm also described strategies for growth for a publicly traded corporation. This includes additional acquisitions, global growth, channel expansion, greater product innovation, and brand awareness. The company is not able to comment on the process of Solo Brands Inc. IPO. But the statement gave some other details. It is now clear that the company gave nearly $25 million each to get ISLE and Oru Kayak and nearly $130 million to acquire Chubbies. These were amounts that the company had not disclosed at the time of acquisition.
The company also listed the net sales for all of the presently owned brands in the previous year. Oru's revenue was $12 million, ISLE's revenue was $21 million, and Chubbies earned $44 million. The net sales of each of these brands came before the company acquired them. The advancement of each brand has been great due to the surge in demand for outdoor products. For the past half-year, Oru got sales of $11 million, ILSE obtained sales of $12 million, and Chubbies got sales of $50 million.
Solo Brands Inc. IPO Customer Acquisition
The company markets its product by a digital-first strategy that is mainly done through the brand's website. The firm also focuses on third-party e-commerce websites such as Amazon along with its DTC marketing. The G&A and selling expenses as a percentage of total revenue have been lower as revenues have grown. The G&A efficiency rate and the selling demarcated how many dollars of extra revenue is created by each G&A spend and selling dollar. It increased by 2.5 times in the most recent period. According to a market research report, the global market for apparel and outdoor gear was predicted to be nearly $50 billion in the previous year and exceed $75 billion in the next six years. This shows a forecast CAGR of nearly six percent in the next six years.
The primary drivers for this are growth in consumer participation in outdoor activities for recreation and health purposes in China, Europe, and the US. Also, increasing disposable incomes and greater innovation from suppliers will contribute to the demand profile over time. The brands of the firm compete with a great variety of competitive platforms and products.
Solo Brands Inc. IPO Details
The company wants to raise $200 million in gross proceeds from Solo Brands Inc. IPO of its Class A common stock. It is going to give nearly 13 million shares at a midpoint price of $15.50 per share. Class A and Class B common shareholders will get one vote per share. But Class B holders will have no financial interest in the firm. The S&P 500 index does not admit companies with multiple classes of stocks in the index. No current shareholder has said that they are interested in getting the Solo Brands Inc. IPO at the declared price. Assuming a successful Solo Brands Inc. IPO, the firm's enterprise value at IPO would be nearly $1.6 billion. This excludes the effects of underwriter over-allotment options. The float to outstanding shares ratio will be nearly 13.5%. Any figure beneath 10% is usually seen as a low float stock. This can lead to a lot of price volatility.
The listed bookrunners of Solo Brands Inc. IPO are Jefferies, JP Morgan, BofA Securities, and other investment banks. The presentation of the company roadshow by the management is not present. Regarding legal proceedings, the management has said that it does not believe that any of the present pending proceedings will adversely affect the operation, cash flows, or financial conditions. The management says that it wants to utilize the net proceeds from Solo Brands Inc. IPO as follows, "We intend to use the net proceeds to us from this offering to purchase 12,903,225 LLC Interests from Holdings at a purchase price per LLC Interest equal to the initial public offering price per share of Class A Common Stock less the underwriting discounts and commissions. We intend to cause Holdings to use such proceeds, after deducting estimated offering expenses, to repay $30.0 million of the Summit Notes and the remainder for general corporate purposes."
The company gets more than 90% of its revenue from one of its brands and has not shown that it can grow the other brands organically. So, Solo Brands Inc. IPO is a wait-and-watch prospect.