IPO Report: Amplify Snack Brands (BETR)

Francis Gaskins |

Skinny_Pop.jpg

Amplify Snack Brands (BETR) is a high growth, snack food company focused on developing and marketing brands and products that appeal to consumers’ growing preference for Better-For-You (BFY) snacks. The company is based in Austin, TX.

Six other companies are scheduled for the week of Aug. 3. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Goldman Sachs, Jefferies, Credit Suisse, SunTrust Robinson Humphrey
Co-managers: William Blair, Piper Jaffray

End of lockup (180 days): Monday, February 1, 2016
End of 25-day quiet period: Monday, August 31, 2015

BETR scheduled a $225 million IPO with a market capitalization of $1.1 billion at a price range midpoint of $15 for Wednesday, August 5, 2015 on NYSE.

Amplify Snack Brands Summary

BETR is a high growth, snack food company focused on developing and marketing brands and products that appeal to consumers’ growing preference for Better-For-You (BFY) snacks.

BETR’s anchor brand, SkinnyPop, is a rapidly growing, highly profitable and market leading BFY RTE popcorn brand.

Through its simple, major allergen-free and non-GMO ingredients, SkinnyPop embodies BETR’s BFY mission and has amassed a loyal and growing customer base across a wide range of food distribution channels in the United States.

Amplify Snack Brands Valuation

Glossary

Accumulated deficit (mm)

.

.

$3

     

Per share dilution

.

.

-$17.83

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Amplify Snack Brands

$1,125

6.4

50.2

11.5

-5.3

20%

             

Amplify Snack Brands Conclusion

Buy

All proceeds to shareholders

P/E of 50, 10% growth in '14 to $132mm, began in 2010

Recent  tortilla chip brand  acquisition should help top line rev

Proforma annualized Q1 vs 2014 proforma

. Rev +34%

. Net income +32%

Price to book of 11.5, to tangible bk of -5.3

Price to sales of 6.4

Low barriers to competition

12% profit margin

Per share dilution higher than IPO price

Amplify Snack Brands Business

BETR is a high growth, snack food company focused on developing and marketing brands and products that appeal to consumers’ growing preference for Better-For-You (BFY) snacks.

BETR’s anchor brand, SkinnyPop, is a rapidly growing, highly profitable and market leading BFY RTE popcorn brand.

Through its simple, major allergen-free and non-GMO ingredients, SkinnyPop embodies BETR’s BFY mission and has amassed a loyal and growing customer base across a wide range of food distribution channels in the United States.

SkinnyPop’s continued success and robust financial characteristics, combined with BETR’s experienced and talented management team, position BETR to become an industry-leading BFY snacking company that capitalizes on the potential of great-tasting and high quality BFY snack brands that BETR creates and acquires.

Amplify Snack Brands Acquisition

To that end, in April 2015, BETR acquired Paqui LLC, or Paqui, an emerging BFY tortilla chip brand that has many of the same key taste and BFY attributes as SkinnyPop. Paqui allows BETR to leverage BETR’s infrastructure to help grow into an adjacent snacking sub-segment with a second innovative BFY brand.

 BETR believes that its focus on building a portfolio of exclusively BFY snack brands differentiates BETR and will allow it to leverage its platform to realize material synergies across its family of BFY brands, as well as allow its retail customers to consolidate their vendor relationships in this large and growing category.

Amplify Snack Brands Target markets

BETR targets sizeable global and U.S. markets, with Nielsen estimating global retail snack sales to be in excess of $370 billion and North American snack retail sales in excess of $120 billion for the twelve months ended March 31, 2014.

BETR estimates the U.S. salty snack segment to be approximately $18 billion in annual retail sales and that it will grow approximately 3% to 4% per year through 2019.

To date, BETR’s focus has been on developing brands in the rapidly growing BFY sub-segment of the salty snacks.

Amplify Snack Brands 10% growth in 2014

BETR believes that within the salty snack segment, BFY-focused brands are taking share from and growing faster than conventional brands, and management estimates that BFY-focused brands experienced aggregate growth in excess of 10% in 2014.

Outside the United States, estimates for the size and growth rates of the BFY category of the snacks market are difficult to aggregate, but BETR believes similar trends are becoming more prevalent globally.

BETR believes the growth rate being experienced by BFY-focused brands is driven by a variety of favorable consumer trends, including a greater focus on health and wellness, increased consumption of smaller, more frequent meals throughout the day and a strong preference for convenient BFY products.

Over time, BETR expects to explore the development and acquisition of additional BFY brands within other U.S. and global segments of the overall snacking market.

Amplify Snack Brands History

BETR’s SkinnyPop brand was established in 2010 by Pam Netzky and Andy Friedman, who saw an opportunity to develop a new popcorn product that would offer consumers a BFY alternative to existing RTE, microwave and movie theatre style popcorn products.

SkinnyPop quickly developed a loyal and passionate consumer following and by 2014 had become a $132.4 million net sales brand. The SkinnyPop brand embodies BETR’s BFY mission while also providing rapid net sales and earnings growth, robust and steady margins, and strong cash flows to help facilitate further investments in organic and inorganic growth opportunities.

BETR has invested significantly to grow the SkinnyPop brand and its Company. BETR has compiled an experienced and talented group of entrepreneurial and classically trained executives to lead and grow the business.

BETR believes it has established a world class BFY snacking platform, supported by strong senior management and talented sales, operations and marketing teams. This infrastructure positions BETR to continue to drive growth and innovation across a diversified group of BFY brands.

Amplify Snack Brands Intellectual Property

BETR believes that its intellectual property has substantial value and has contributed significantly to the success of its business. BETR’s primary trademarks include “SKINNYPOP”, “SKINNYPACK”, “THE BIG SKINNY” and “DON’T WORRY BE PAQUI” all of which are registered with the U.S. Patent and Trademark Office.

BETR’s trademarks are valuable assets that reinforce the distinctiveness of its brand and its consumers’ favorable perception of BETR’s products and brands. Certain of BETR’s marks are also pending registration in Canada. BETR’s web content and the domain name, www.amplifysnackbrands.com, are owned by BETR and the content is copyright protected.

BETR also relies on unpatented proprietary expertise, recipes and formulations, continuing innovation and other trade secrets to develop and maintain its competitive position.

Amplify Snack Brands Competition

BETR has numerous competitors of varying sizes, including manufacturers of private-label products, as well as manufacturers of other branded food products, that compete for trade merchandising support and consumer dollars.

BETR competes with large conventional consumer packaged foods companies such as Frito Lay, Inc., a subsidiary of PepsiCo, Inc., The Kellogg Company, ConAgra Foods, Inc., Diamond Foods, Inc., General Mills, Inc. and Snyder’s-Lance, Inc. BETR also competes directly with smaller, local or regional BFY snack and RTE popcorn companies including Popcorn Indiana and Angie’s as well as private-label RTE popcorn products manufactured by retailers, some of which are BETR’s customers.

An increasing focus on BFY products in the marketplace will likely increase these competitive pressures within the category in future periods.

Amplify Snack Brands 5% Shareholders Pre-IPO

Jeffrey S. Barber           74.7%

William D. Christ II         74.7%

Andrew S. Friedman      5.5%

Pamela L. Netzky          5.5%

Investment funds and entities affiliated with TA Associates   74.7%        

Amplify Snack Brands Dividends

No dividends are planned.

Amplify Snack Brands Use of Proceeds

The selling stockholders, which include certain of BETR’s directors and officers, are selling all of the shares of its common stock being sold in this offering, including any shares that may be sold in connection with the exercise of the underwriters’ option to purchase additional shares.

 Accordingly, BETR will not receive any proceeds from the sale of shares of its common stock in this offering.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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