Tuesday, June 30, 2015

Dallas-based Wingstop soars in market debut

Stock in Dallas-based Wingstop took off like a rocket Friday, in the company’s first day in the public market.
Shares of Wingstop Inc., trading on the Nasdaq under the symbol “WING,” closed at $30.59, up 61 percent from the initial public offering price of $19 a share. Investors hoisted the stock price to more than double the $14 figure that was at the high end of the company’s earlier estimated range.
“At the end of the day we're very happy,” said company chief executive Charlie Morrison. “I think investors are definitely interested in the growth story of Wingstop.”
Wingstop, one of the nation’s fastest-growing chicken chains, has 745 locations, including 700 in the U.S. and 85 each in Dallas-Fort Worth and Los Angeles. Those are the chain’s two largest markets.
About 97 percent of the locations are owned by franchisees who, like Friday’s investors, have been drawn to the chain’s appeal to millennials, its positioning in the rapidly growing fast casual restaurant segment and its strong cash generation. The company has posted increases in same-store sales for 11 consecutive years.
Morrison said the company is not giving growth guidance for 2015 or 2016. Eventually the company expects to triple the number of U.S. locations.
For Friday’s IPO, Wingstop offered up 2.15 million shares of stock, and affiliates of owner Roark Capital Partners offered 3.65 million. Roark purchased the company in 2010 and still will own more than 60 percent of the shares after the public offering.
The underwriters for the offering have a 30-day option to buy up to an additional 870,000 shares at the initial public offering price, less the underwriting discount.
Earlier this month the company estimated that its initial public offering price would be between $12 and $14 a share. A $19 price placed the value of the offering at about $110 million.
Morgan Stanley, Jefferies, and Baird acted as lead joint book-running managers for the offering, which is expected to close June 17.
Wingstop’s debut sets the bar high for another North Texas restaurant company looking to wade into the public market: Fogo de Chão Inc.
The Brazilian-themed, meat lovers’ paradise expects to raise between $67 million and $77 million in an IPO with a midpoint price of $17 a share. The company is owned by private equity firm Thomas H. Lee Partners LP, which will continue to own at least 80 percent of the company after the IPO.  
Karen Robinson-Jacobs/ Dallas Morning News