Hey everyone…welcome back to the latest episode of IPO This Week. As of this recording,
we have 8 companies looking to come out. I’ll give you overviews with the trading details
on each of the IPOs, and if you listen closely, you’ll hear one I’m personally thinking
will do pretty well based on my initial look at it…and another one that doesn’t meet
the profile of companies I typically invest in, so I’ll be passing on it. But no matter
what I think, let me know in the comments which of the companies you’re most interested
in…and if there’s a lot of interest in one of them, I’ll consider putting together
a more in-depth video on that company later in the week. And then, after we get through
the list of companies going public this week, as always, I’ll let you know what companies
are having expirations of some of their locked up shares.
Alright to keep jshashwat93 in the community happy, I’ll keep this intro short and sweet…especially
since he’s frequently the first to comment with simply ‘first’. Every time I see
that, it makes me think how funny it would be if everyone kept it going by commenting
with what number they were. Anyways...let’s get started with Agrify,
ticker AGFY. This company is a developer of hardware and software growing solutions for
the growing indoor agriculture marketplace. They tout that they are the only company with
an automated and fully integrated solution in the indoor agriculture industry. They believe
that because of their trademarked Agrify “Precision Elevated” cultivation solution, which they
say is different from anything else on the market in that it seamlessly combines their
integrated hardware and software offerings with a wide range of associated services...
such as consulting, engineering, and construction to form a complete solution available from
a single provider, sort of one-stop shopping, if you will. Like so many agricultural companies
that have recently come out, while they aren’t directly part of the cannabis market, they
do see growth opportunities for themselves by supporting the sector.
The company notes that they were impacted by the pandemic and disclosed that they did
take out a Paycheck Protection Program loan, which I think is the first IPO I’ve noticed
this on. To summarize the financial data available in the filing, when comparing the first 9
months of 2019 to 2020, revenue grew threefold up to 7.7 million dollars, while the company’s
net loss was just under 10 million, up from over 5.3 million in 2019.
The Agrify IPO is currently set for Monday with pricing expected to come within a range
of $8 to $10. Agrify stock would then begin trading under the symbol AGFY on Tuesday.
As I like to share with anyone new here, the information on IPOs are fluid where dates
and pricing often change, so if you see that anything has changed in the offering, definitely
feel free to update everyone in the comments. Next up we have Shoals Technologies Group
who’ll trade under the ticker SHLS. And I’ll say upfront that I think this is definitely
one to watch. From their prospectus, the company is a leading provider of electrical balance
of system or “EBOS” solutions for solar energy projects in the United States. EBOS
encompasses all of the components that are necessary to carry the electric current produced
by solar panels to an inverter and ultimately to the power grid. These components are critical
products that have a high consequence of failure, including lost revenue, equipment damage,
fire damage, and even serious injury or death. Because of the crucial nature of these risks,
Shoals believe that their customers prioritize reliability and safety over price when selecting
EBOS solutions. Demand for EBOS is driven primarily by installations
of new ground-mounted solar energy projects, and to that point, Solar is the fastest growing
form of electricity generation in the U.S. From 2014 to 2019, annual installations of
ground-mounted solar generation capacity in the U.S. grew at a compound annual growth
rate of 20% according to IHS Markit...and represented nearly 22% of all new generation
over one megawatt brought online over the same time period, according to the Federal
Energy Regulatory Commission. Additionally, IHS Markit forecasts that this rapid growth
will continue, with annual installations of ground-mounted solar generation capacity in
the U.S. increasing at a compound annual growth rate of 16% through 2023.
For a quick look at the financials, for the year ended December 31, 2020, they estimate
that revenues will come within a range of 174 to 176 million dollars, an increase of
$30.5 million or 21% from 2019. Another good thing to see in their financials is that they’re
already profitable, estimating that net income will range from 32 to 34.5 million dollars,
an increase of $8.1 million or 32% over 2019. They’re also reporting an increase of Adjusted
EBITDA of 64% over the same time period. Okay, just to share some thoughts on the Shoals
Technologies IPO: 2021, solar company, fast growing, and already profitable. Price aside,
sounds like a winner to me. As for the details of the offering, they plan to raise $1 billion
at a $3.6 billion market cap with the IPO on Tuesday, with pricing expected to come
within a range of 19 to 21 dollars. Trading would then begin on Wednesday with Shoals
Technologies stock trading under the symbol SHLS.
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Alright, moving on we have Ortho Clinical Diagnostics. This company focuses on in vitro
diagnostics, a business where they claim to impact approximately 800,000 patients every
day. In 2014, they were acquired by The Carlyle Group from Johnson & Johnson and became an
independent organization, solely focused on delivering high quality in vitro diagnostic
products and services to deliver consistently fast, accurate and reliable results that allow
clinicians to make better-informed treatment decisions.
They currently operate two lines of business: the first is Clinical Laboratories which measures
target chemicals in bodily fluids for the evaluation of health and the clinical management
of patients. The other line is Transfusion Medicine, which is where blood and plasma
are screened and typed at donation. Financially, during the fiscal nine months
ended September 27, 2020, they reported net revenue of $1.2 billion, a net loss of $171
million, and Adjusted EBITDA of $322 million. They did note that the net revenue was approximately
5.9% lower as compared to the first 9 months of 2019, primarily due to decreased shipments
to customers as a result of the pandemic. Something else to be aware of….as of September
27, they had a total debt load of $3.7 billion. Not surprising, this is where the IPO proceeds
will go, paying it down. Ortho Clinical Diagnostics plans to raise $1.5 billion at a $4.9 billion
market cap at their IPO on the 27th with expected pricing of their shares coming within a range
of 20 to 23 dollars. Trading would then begin on Thursday with Ortho Clinical Diagnostics
stock trading under the symbol OCDX. Next we have a software company, Qualtrics
International. This company shares in their filing that they have pioneered a new category
of software, what they call experience management, or XM for short. Experience management is
defined by Qualtrics as the business discipline of finding and fixing experience gaps. These
gaps––the difference between what businesses believe is happening and what is actually
happening––are where poor experiences result. Without being properly addressed,
experience gaps result in: failed product launches, customer churn, employee attrition,
and eventually, brand irrelevance. The XM Platform helps other companies or organizations
both design and improve the experiences that, quoting the filing, “turn their customers
into fanatics, employees into ambassadors, products into obsessions, and brands into
religions.” As of September 30 the Qualtrics XM Platform is utilized by more than 12,000
customers of all sizes, including 85% of the Fortune 100.
Looking at the financials, for the year ended December 31, 2019, revenue was at $591.2 million,
a growth of 47% over 2018. In the same time period, net losses grew significantly… from
$37.3 million to just over $1 billion. Also something to be aware of, the company
was acquired by SAP in January of 2019 and has since operated as a wholly owned subsidiary
of SAP. After the IPO, if corporate governance is an issue for you, Qualtrics will continue
to be controlled by SAP. As to the details of the Qualtrics IPO, it’s
expected on Wednesday, where the company plans to raise $1.2 billion at a $12.6 billion market
cap with pricing expectations of 22 to 26 dollars per share. Qualtrics stock would then
begin trading on Thursday under the ticker symbol, XM. And everytime I see that symbol,
I’ll have to remember it’s not SiriusXM! Next up we have Vinci Partners Investments.
As an asset manager, there’s not a lot to say here. They’ve been based in Brazil since
2009 and they’re involved in private equity, public equities, real estate, credit, infrastructure,
hedge funds, and general investment products and solutions. To give you an idea on the
size of the firm, as of September 30, Vinci Partners had 8.7 US billion dollars in assets
under management. Vinci Partners plans to raise $236 million
at a $944 million market cap at its IPO on the 27th. Pricing of shares is expected to
come within a range of 16 to 18 dollars. Trading would then begin on Thursday under the ticker
symbol, VINP. Staying outside of the US, we have Israel-based
ZIM Integrated Shipping Services whose stock will trade under the ticker, what else?...ZIM,
ZIM. This company who has been around since 1945 is a global, asset-light container liner
shipping company. As of September 30, 2020, they operated a fleet of 70 vessels, which
is continuing to get bigger, and they chartered-in 98.5% of their capacity by volume and 98.6%
of the vessels in their fleet, which sounds like a very efficient operation to me.
With a global customer base of approximately 27,000 customers, ZIM Integrated Shipping
operates across five geographic trade zones which are, by highest traffic percentage first:
Transpacific, Atlantic, Cross Suez which consists of East Mediterranean & Black Sea to Far East
trade, and then Intra-Asia, and Latin America. The company reported full year revenue of
$3.3 billion for 2019 and then $2.6 billion for the first 9 months of 2020. As for net
income, they had a loss of $13 million in 2019 and a profit of $158 million for the
first 9 months of 2020. As stated in the filing, the company has adopted a dividend policy,
which will be in effect after the IPO happens and would distribute up to 50% of their annual
net income each year. The ZIM Shipping IPO is expected on Wednesday,
where the company plans to raise 306 million dollars at a $2.1 billion market cap with
pricing expectations of 16 to 19 dollars per share. ZIM stock would then begin trading
on Thursday. The seventh company on this week’s calendar
is Home Point Capital. Home Point is a leading residential mortgage originator and servicer.
The company uses a business-to-business-to-customer distribution model in which they utilize independent
mortgage brokerages as partners to reach their end-borrower customers, which now amount to
about 300,000. In this model, which they call their Wholesale channel, their partners establish
and maintain the relationship with the end-borrower, while Home Point Capital as the lender underwrites
the loan in-house and acts as the original lender. While they have other ways to originate
mortgages, their Wholesale channel is where their primary focus is for growing the business.
According to a report by Inside Mortgage Finance as stated in their filing, the company is
the third largest wholesale lender by origination volume in 2020 through September 30th. The
company reports total loan originations of $46.3 billion through their Broker Partner
network in the twelve months ended September 30, 2020, representing an impressive annualized
growth rate of 133% since 2018. Fueled by low interest rates and lots of refinancing,
revenue more than quadrupled from fiscal year 2019 to just the first 9 months of 2020, coming
in at just under a billion dollars. And this also led to net income of 422 million dollars
for the first 9 months of 2020, up from a loss of 29 million dollars in fiscal year
2019. Beginning with the first full quarter following
the completion of the offering, the company does intend to pay cash dividends on a quarterly
basis. Initially, they expect the quarterly dividends to be $0.15 per share, which equals
$0.60 per share on an annualized basis and an annual yield of 3.0% based on a price of
$20.00 per share, which is the midpoint of the estimated range of 19 to 21 dollars where
it is expected to price on Thursday. Home Point Capital stock would then begin trading
on Friday under the ticker HMPT. Moving on, we have maybe a company that a
lot of you might better know through its different brand names. I’m talking about Southeastern
Grocers IPO, whose stock will trade under the ticker SEGR. The company is a leading
regional food retailer based on revenue and number of stores operated with a long-standing
history in the states of Florida, Georgia, Alabama, Louisiana and Mississippi. They operate
420 stores, yes 420, no giggling or jokes on that number. The stores operate under the
iconic “Winn-Dixie,” brand, as well as under the “Harveys” and “Fresco y Más”
supermarket banners. In the filing, the company says they are the sixth-largest conventional
supermarket operator in the United States and the second-largest one in the five states
I just mentioned based on the aggregate number of stores they run. The company also operates
140 liquor stores, 231 in-store pharmacies and one centralized specialty pharmacy.
We talked a lot about the grocery store industry in general when Albertsons went public last
year, where we talked things like the margins, the competition factor, and the benefits they
reaped due to the pandemic when it came to sales, but also the extra expenses that came
along with it to be able to operate in that environment. So a lot of those general areas
are applicable here as well. For some more specifics on Southeastern, you might be interested
to know that they had filed for chapter 11 bankruptcy as recently as 2018. As they emerged
from bankruptcy with their reorganization plan, the last piece of it was finalized in
May of 2020 when the company reached an agreement to sell 62 stores to Food Lion. And then in
September 2020, they announced an agreement to sell an additional 23 stores in South Carolina
and Georgia to Alex Lee in order to reduce their footprint to the states I mentioned
earlier. Looking at the financials, in fiscal 2019
the company generated net sales of $8.3 billion, a net loss of $116.2 million and Adjusted
EBITDA of $292.5 million. And then for the 40 weeks ended September 30, 2020, the company
reported net sales of $7.4 billion, net income of $235.1 million and an Adjusted EBITDA of
$473.8 million. Southeastern Grocers stock will be priced
at its IPO on Thursday within an expected range of 14 to 16 dollars where they look
to raise $134 million at a $725 million market cap. SEGR stock would then begin trading on
Friday. The proceeds of the offering will not go to the company, but to the selling
shareholders. While this isn’t a company that fits the profile for companies I look
to invest in, it might be one that people who like to invest in companies they either
shop at or work for. A positive for investors is that the company does plan to pay a quarterly
dividend of a 2.75% of the IPO price, assumed to be at the midpoint of the expected range.
Okay, so there’s the list that I have for you this week. Again, let me know if you’re
considering any of them in the comments. Now for the investors in the community well
versed on lock up expirations, I, of course, have this week’s list for you. A lot of
familiar companies we talked about on the channel 6 months ago…where does the time
go? Starting on Monday we have Vertex (VERX).
And then on Tuesday, we have Absolute Software (ABST), AlloVir (ALVR), and Li Auto (LI).
Li Auto was a company I had a detailed video on before they IPO’d if you want to check
it out. And then we finish up this week’s list with Goedeker’s (GOED), Fathom Holdings
(FTHM), Vasta Platform (VSTA), and Vital Farms (VITL), all with expirations on Wednesday.
Okay, so there you have it, another episode of IPO This Week in the books. Again, if you
enjoyed the video and want to see more videos like this, please like it, comment on it,
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that, I’ll wish you a good week of trading….thank you for watching, and until next time, have
a great day!