IPO Report: Blue Buffalo Pet Products (BUFF)

Francis Gaskins |

Blue Buffalo Pet Products IPO, Blue Buffalo Pet Products IPO price, Blue Buffalo Pet Products IPO date, stocks to buy now, IPOs this weekBlue Buffalo Pet Products (BUFF) is the fastest growing major pet food company in the United States, selling dog and cat food made with whole meats, fruits and vegetables, and other high-quality, natural ingredients. It is headquartered in Wilton, CT.

Three other companies are scheduled to IPO for the week of July 20. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan and Citigroup.

Co-managers: Barclays, Deutsche Bank Securities, Morgan Stanley, Wells Fargo Securities, and LOYAL3 Securities, Inc.

End of lockup (180 days): Monday, January 18, 2016

End of 25-day quiet period: Monday, August 17, 2015

BUFF scheduled a $502 million IPO with a market capitalization of $3.3 billion at a price range midpoint of $17 for Wednesday, July 22, 2015 on Nasdaq.

Blue Buffalo Pet Products (BUFF) IPO Summary

BUFF is the fastest growing major pet food company in the United States, selling dog and cat food made with whole meats, fruits and vegetables, and other high-quality, natural ingredients.

BLUE is a billion dollar brand based on sales at retail and is the #1 brand in the Wholesome Natural market segment and is one of the top pet food brands overall.

Started in 2003, BUFF currently has approximately 6% share of the overall pet food industry and feeds only 2-3% of the 164 million pets in the United States.

Blue Buffalo Pet Products (BUFF) IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$117

     

-----------------------------

         

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Adj net income

Price /BkVlue

Price /TanBV

% offered in IPO

Blue Buffalo Pet Products (BUFF)

$3,332

3.3

29.2

-60.6

-60.6

15%

Annualizing June 6 mos

       
             

COMPARE

         

Blue Buffalo Pet Products (BUFF)

$3,332

3.3

29.2

-60.6

-60.6

 

Freshpet (FRPT)

$596

5.5

-57.3

5.8

5.8

 
             

Blue Buffalo Pet Products (BUFF) IPO Conclusion

Buy

100% to selling shareholders

Fastest growing major pet food company in the United States

Growth rate will moderate because it's a billion in sales

All internal growth

From 0 in 2003 to 6% of the market

Int'l offers opportunity, only 3% of sales

June 6 mos '15 vs '14

.  Rev +13% to $501mm

.  Adj net income +11% to $52mm

P/E 29

Price to book --61%

Blue Buffalo Pet Products (BUFF) Business

BUFF is the fastest growing major pet food company in the United States, selling dog and cat food made with whole meats, fruits and vegetables, and other high-quality, natural ingredients.

BLUE is a billion dollar brand based on sales at retail and is the #1 brand in the Wholesome Natural market segment and is one of the top pet food brands overall.

Started in 2003, BUFF currently has approximately 6% share of the overall pet food industry and feeds only 2-3% of the 164 million pets in the United States.

New User Acquisition Strategy for $26 Billion Pet Food Market

With a proven new user acquisition strategy, BUFF is committed to converting more pet parents into True Blue Believers and continuing to increase its share of the attractive $26 billion U.S. pet food market.

Breakthrough Brand

BUFF believes it has built an exceptional company with a breakthrough brand and an innovative business model.

Backed by its mission and belief in a large unmet consumer demand for pet food with high-quality, natural ingredients, BUFF invested heavily in its brand well ahead of its scale.

As a result of this investment strategy, BUFF did not turn profitable until 2010.

BUFF’s net sales have grown from $190 million in 2010 to $918 million in 2014, which represents a compound annual growth rate, or CAGR, of 48%.

During this period, BUFF’s operating income grew from $15 million to $179 million, which represents a CAGR of 86%, while its net income grew from $23 million to $102 million, which represents a CAGR of 45%.

Growth Rates Moderate

Given the size and scale BUFF has reached, it expects its growth rates to moderate in the future. BUFF believes that only a few public U.S. CPG companies have its combination of scale, significant growth and strong margins.

Blue Buffalo Pet Products (BUFF) Intellectual Property

BUFF’s primary trademarks include “Blue Buffalo,” “LifeSource Bits,” “Life Protection Formula,” “BLUE Basics,” “BLUE Freedom,” “BLUE Wilderness,” the BLUE shield logo and the Blue Buffalo figure logo, all of which are registered with the U.S. Patent and Trademark Office.

The Blue shield design logo is also registered or has a trademark registration pending in Canada, Mexico, Japan, Europe, Russia, China, Australia and approximately 26 other countries or registries.

BUFF also has numerous other trademark registrations and pending applications for product names and tag lines that are essential to its branding

Blue Buffalo Pet Products (BUFF) Competition

BUFF’s main competitors are large CPG (consumer packaged goods) companies with long histories and well recognized brands.

Companies with major pet food businesses include Nestlé, Mars, J.M. Smucker (owner of recently acquired Big Heart Pet Brands, formerly known as Del Monte) and Colgate-Palmolive.

In August 2014, Mars acquired Procter & Gamble’s pet food business in the United States, which increased Mars’ U.S. market share in Tracked Channels from 15% to 20% for 2014, on a pro forma basis.

Together with Blue Buffalo, these five major pet food companies had an aggregate U.S. market share of approximately 78% in 2014. Private Label brands had an 8% market share in Tracked Channels in 2014.

Blue Buffalo Pet Products (BUFF) 5% Shareholders Pre-IPO

Invus, L.P.        73.19%

Christopher T. Bishop    12.19%

The Bishop Family Limited Partnership   10.17%

William W. Bishop, Jr.   11.58%

Blue Buffalo Pet Products (BUFF) Dividends

No dividends are planned.

Blue Buffalo Pet Products (BUFF) IPOUse of Proceeds

BUFF will not receive any proceeds from the sale of shares of its common stock in this offering by the selling stockholders or from the issuance of shares to certain non-management employees. However, BUFF will pay certain expenses, other than underwriting discounts and commissions, associated with 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

Companies

Symbol Name Price Change % Volume
BUFF Blue Buffalo Pet Products Inc. 23.41 0.15 0.64 763,342

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