FRIEDRICHSHAFEN, Germany (BRAIN)—SRAM president Stan Day said on Thursday he still feels taking the company public is the right decision for the long-term, and will initiate an IPO as soon as stability and visibility improves in global financial markets.
With the current uncertainty with Europe’s economy and the election year in the U.S., SRAM has pushed the target timeframe for the initial public offering on the Nasdaq stock exchange until at least next spring, Day said in an interview at the Eurobike tradeshow.
SRAM, however, is fully committed to following through on its IPO. “We’re just waiting for the right time to flip the switch,” he said.
In the mean time, the Chicago-based component supplier is already operating internally as though it were public, staging practice quarterly earnings calls with questions from financial analysts and undergoing formal audits with accounting firm Price Waterhouse Coopers. SRAM has already done its due diligence with the U.S. Securities Exchange Commission, and continues to file updated reports on its performance (those filings are confidential as of April due to a provision in the JOBS Act).
Once SRAM decides to move forward with its public filing, it will take about six weeks for the process to go through the motions of a public comment period and the two-week road show, a time to publicly present the company to potential investors.
Day has said the IPO is important in laying the foundation for future growth for SRAM as it looks to become a leader in the urban components market. Answering to shareholders will force the company to make the right financial choices, and he does not foresee the company being plagued by the pressures of producing results for investors.
“We’re not going to undermine the future of the organization just to get quarterly earnings,” he said.
SRAM, which is celebrating its 25th year in 2012, first announced its intentions to go public in May 2011 and said it expected to earn about $300 million from doing so. Shortly after, it consolidated its debt in a new $790 million credit facility, using $575 million to pay off the assets owned by private equity firm Trilantic Partners.
SRAM reported $524.1 million in net sales in 2010, representing growth of 16 percent annually since 2007. Day did not disclose earnings for last year, or the first half of this year, but said aftermarket business was slow in Europe in the first quarter as distributors compressed inventory, and in the last few weeks, orders from OEs have tightened.