Golf's Public Company You Haven't Heard Of
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Today At A Glance:
A golf company with $190,000 in annual revenue in 2022 went public earlier this year. Its stock price shot up on IPO day, and its market cap was over $400 million. Today’s newsletter breaks down the financial details behind Sacks Parente.
Read Time: 7 Minutes
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Hey Golfers —
Sacks Parente Golf was the hottest IPO of the year — up over 600% on its first day of trading on the Nasdaq.
Maybe you’ve heard of Sacks Parente — I hadn’t.
Sacks Parente was founded in 2018 by industry veterans Steve Sacks and Rich Parente. Steve co-founded Goldwin Golf — he also worked at golf companies Carbite Golf and Rife. Rich was an original co-founder of Callaway and the company’s first president.
Sacks and Parente brought their idea to Tim Triplett and Akinobu Yorihiro at the PGA Show in 2018, and the four eventually founded the company.
At its core — Sacks Parente is a putter company.
Sacks Parente’s IPO is one of golf's most interesting business stories this year.
The company did $190,000 in revenue in 2022 and had operating expenses of $2.9 million. Sacks Parente had a net loss of $3.5 million in 2022 with $171,000 in cash.
How about 2021?
Sacks Parente did $200,000 in revenue in 2021 with $378,000 in operating expenses. Their net loss was $302,000.
No growth from 2021 to 2022 — we actually saw topline revenue decline.
Sacks Parente's average selling price of a putter is $350. Meaning they sold approximately 550 putters in 2022.
There are thousands of golf companies. Yet, there are very few public golf companies. Before Sacks Parente went public, only two were publicly traded on the three major indexes.
Acushnet
Callaway
So why go public? Sacks Parente needed cash (they had $30,000 as of March 31st, 2023). And one possible answer is that investment markets dried up in 2022. The other option was going public — which requires significant capital to have a firm underwrite commissions and transaction costs.
Sacks Parente began trading on August 15th under the ticker symbol SPGC. They offered 3.2 million shares at a price of $4.00 per share.
Their stock quickly rallied to $30.00 — increasing over 600% on its IPO day. Sacks Parente enjoyed a market cap of over $400 million during the run-up.
Over $400 million market cap for a company with $190,000 in revenue and not making a profit.
Since its opening trading day — Sacks Parente stock has dropped significantly. It is now trading at $.65 per share. And has a market cap of $9.5 million.
Here’s some context on publicly traded companies and their market caps. Of the 5,719 companies in the United States — Sacks Parente is ranked 5,325.
Sacks Parente raised $12.8 million in its IPO. After deducting the underwriting discounts, commissions, and transaction expenses, they were left with $11.6 million. They spent around $1.2 million to raise money and go public — six times their revenue in 2022.
Sacks Parente detailed ten areas where they planned to use the IPO proceeds in the next 12 to 24 months. Let’s touch on these four areas.
~$250,000 for new product development
~$2.5 million for new opportunities in Asia
~$548,000 to repay loans from related parties
~$1.65 million for accrued compensation owed to executives
Sacks Parente lists several patents in their filings. And their ultra-low balance point technology in their putters is intriguing. Essentially, the head is the same weight as a traditional putter, but the shaft and grip are lighter. Making the putter head feel heavier in the hands for a better stroke.
Why do I bring up the above? Because $250,000 on new product development seems light — it is 2% of their IPO raise. It’s possible they are happy with their products and technology.
Sacks Parente stated that half of its $95,000 in revenue from the third quarter came from South Korea. The company has distributors set up in Japan and South Korea and is set to invest over 20% of its IPO raise in Asia. And this move makes sense — the two markets are in the top five golf markets worldwide.
The company had several loans to related parties and their respective companies. Here is how the $548,000 stacks up.
Akinobu Yorihiro (Co-founder & Director) — $67,000 line of credit
Tim Triplett (Co-founder & Director) — $77,000 line of credit
GML Holdings (owned by Akinobu Yorihiro) — $152,000 line of credit
NXV (owned by Akinobu Yorihiro & Tim Triplett) — $19,000 line of credit
Michael Keller (former CFO) — $233,000 line of credit
Akinobu Yorihiro & Tim Triplett each made $200,000 in 2022 and were awarded options worth $593,697.
Nippon Xport Ventures (NXV) is owned by Akinobu Yorihiro (50%) & Tim Triplett (50%). Before the IPO, NXV owned 7.25 million shares of Sacks Parente, or 67% of the company. It is difficult to understand what NXV does — their website is expired.
Sacks Parente’s primary revenue stream is putters. But they are launching a driver shaft in the coming weeks. They expect the driver shaft to make up a significant portion of revenue.
While the company is based in California, they have a St. Joseph, Missouri facility. They announced on an investor call last week they plan on moving all manufacturing to this facility in the next few months.
Golf Digest wrote a piece on Sacks Parente a couple of months ago. In that piece, they reached out to the economic development teams in St. Joseph to confirm that Sacks Parente had a facility in their town. The economic development team essentially stated they did not have a facility in St. Joseph, Missouri.
In early October — the city of St. Joseph, Missouri, published approved business licenses for the month of September. They did list Sacks Parente with a St. Joseph address in that filing.
Putter companies are challenging to comp — there haven’t been too many recent transactions. Evnroll reportedly sold 70% of its company to Uneekor for $15 million. And MyGolfSpy conducted a survey and found that ~7% of putter purchases were an Evnroll Putter.
Sacks Parente’s market cap is $10 million, and their Enterprise Value is $2 million — their EV is 10x revenue.
Sacks Parente’s IPO truly is one of the most unique business stories in golf this year. Why did their stock run up over 600% on its IPO day — especially for a company that is five years old with declining revenue from 2021 to 2022 — and only $190,000 revenue at that?
Golfers like their putters. I have received feedback from golfers who play one — they love it. I look forward to following the Sacks Parente story and am excited to review their next earnings report in 2024.
Have yourself a great Monday. Talk to you next week!
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