Cortec-backed YETI pulls IPO after nearly two years

YETI Holdings, which makes coolers that can withstand a grizzly-bear attack, has pulled its highly anticipated IPO.

The Austin company said it chose not to proceed with the offering due to market conditions, according to a March 23 letter to the SEC.

YETI has been in registration since July 2016, when it filed for the IPO. Cortec Group, which owns a majority, was expected to make 50x its money with the IPO, the Wall Street Journal reported at the time.

Yeti in October of that year opted to delay the IPO as it considered raising funds through a sale to PE or by issuing debt, the WSJ said. 

Fishermen Roy and Ryan Seiders founded YETI in 2006. The brothers wanted a cooler they could stand on without fear of collapse as they fly-fished, Inc magazine reported.

YETI’s high-priced outdoor equipment, which includes coolers, chairs and drinkware, are geared for hunters, outdoor adventurers and fishermen. A Tundra 350, which can hold 259 cans, sells for $1299.99, while a Rambler 1 gallon jug goes for $129.99. The Interagency Grizzly Bear Committee has certified YETI’s Tundra coolers as “bear resistant,” the regulatory filing said.

Sales for Yeti grew fivefold to $468.9 million in 2015 from $89.9 million two years before, according to the 2016 regulatory filing. Current sales were not available.

YETI is making money but its business momentum is not what it once was, one banker said. “It’s still positive but not what they were seeing a few years ago,” the source said.

The company’s recent revenue was “closet loading,” said one PE executive, referring to customers who made their first Yeti purchase. “Now that wave has crested and they’re just existing on replacement/new incremental demand, which is much lower.”

YETI’s coolers also don’t really fit in the “need a second one” category since the products last forever, the PE executive said.

Cortec, a middle-market PE firm, invests in sectors including consumer, healthcare and specialty products.

The PE firm acquired YETI Coolers in 2012. The investment came from its fifth fund, which closed on $620 million. Cortec Fund VI collected $1.1 billion in 2015. In January, the firm recapitalized Window Nation Inc and Groome Holdings Inc in separate transactions.

Cortec reportedly invested $67 million into YETI. The firm has already made more than that back. In 2016, YETI paid out a $451.3 million special dividend, of which $312.1 million went to Cortec, the regulatory filing said.

YETI and Cortec could not be reached for comment.

Action Item: Call YETI CEO Matthew Reintjes at +1 512-394-9384

A grizzly bear growls at the St-Felicien Wildlife Zoo in St-Felicien, Quebec, on Sept. 24, 2008. Photo courtesy Reuters/Mathieu Belanger