Bruush Oral Care Readies $15 Million U.S. IPO (Pending:BRSH)

A Quick Take On Bruush Oral Care

Bruush Oral Care (BRSH) has filed to boost $15.3 million in an IPO of its items consisting of frequent stock and one warrant, in line with an F-1 registration assertion.

The agency develops and sells electrical toothbrushes to customers primarily within the United States and Canada.

Given administration’s extreme valuation expectations and potential for gross sales headwinds going into an financial downturn, I’m on Hold for the Bruush IPO, though within the brief time period, it might entice day-traders in search of volatility.

Bruush Overview

Vancouver, Canada-based Bruush was based in 2018 to develop digital enamel brushing gadgets and a associated product subscription enterprise.

Management is headed by founder and CEO Aneil Manhas, who has been with the agency since inception in 2018 and was beforehand CEO of Surface 604, an electrical bicycle firm, and beforehand labored at Credit Suisse and Onex Corporation.

The firm’s major choices embody:

• Electric toothbrush

• Brush heads

• Charging stand

• Travel case

Bruush has booked truthful market worth funding of $13.2 million as of October 31, 2021, from traders, together with Yaletown Bros. Ventures, Prodigy Capital and founder & CEO Manhas.

Bruush – Customer Acquisition

The agency sells its merchandise within the U.S. and Canada by its personal web site and thru Amazon and different retail distribution factors.

The firm’s web site accounts for almost all of its gross sales and the United States for almost all of gross sales by nation.

Advertising and Marketing bills as a proportion of whole income have dropped as revenues have elevated, because the figures beneath point out:

(Source – SEC)

The Advertising and Marketing effectivity a number of, outlined as what number of {dollars} of further new income are generated by every greenback of Advertising and Marketing spend, rose to 0.4x in the latest reporting interval, as proven within the desk beneath:

(Source – SEC)

Bruush’s Market & Competition

According to a 2019 market research report by Grand View Research, the worldwide market for electrical toothbrushes was an estimated $2.5 billion in 2018 and is forecast to achieve $3.9 billion by 2026.

This represents a forecast CAGR of 5.8% from 2019 to 2026.

The important drivers for this anticipated development are rising consciousness of the significance of oral well being and rising availability of progressive merchandise at cheap costs.

Also, beneath is a chart exhibiting the historic and projected future development trajectory of the U.S. electrical toothbrush market from 2015 to 2026:

Major aggressive or different business contributors embody:

• Colgate-Palmolive (CL)

• Philips (PHG)

• Procter & Gamble (PG)

• FOREO

• Den-Mat Holdings

• SONIC

• Water Pik

• Burst

• Goby

• Moon

• Quip

Bruush Oral Care Financial Performance

The firm’s current monetary outcomes could be summarized as follows:

• Growing topline income

• Increasing gross revenue however diminished gross margin

• Variable working loss

• Reduced money utilized in operations

Below are related monetary outcomes derived from the agency’s registration assertion. Note: the partial 12 months interval for interval ending October 31, 2021, just isn’t immediately akin to the earlier identical interval, as a result of an accounting year-end change:

(Source – SEC)

As of October 31, 2021, Bruush had $14,530 million in money and $5 million in whole liabilities.

Free money move through the twelve months ended October 31, 2021, was detrimental ($677,370).

Bruush Oral Care IPO Details

Bruush intends to boost $15.3 million in gross proceeds from an IPO of its items consisting of frequent stock and one warrant, providing roughly 2.47 million items at a proposed midpoint worth of $6.20 per unit.

The items, consisting of frequent stock and one warrant to buy one share of frequent stock at an train worth equal to the IPO worth, additionally produce other options for big holders of the items.

No current shareholders have indicated an curiosity to buy shares on the IPO worth.

Assuming a profitable IPO, the corporate’s enterprise worth at IPO would approximate $29.3 million, excluding the results of underwriter over-allotment choices.

The float to excellent shares ratio (excluding underwriter over-allotments) will likely be roughly 40.58%. A determine beneath 10% is mostly thought of a ‘low float’ stock which could be topic to vital worth volatility.

Management says it is going to use the online proceeds from the IPO as follows:

Management’s presentation of the corporate roadshow is available here till the IPO is accomplished.

Regarding excellent authorized proceedings, administration says there are ‘no materials proceedings to which any director or officer is a celebration that’s adversarial to the Company…’

The sole listed bookrunner of the IPO is Aegis Capital Corp.

Valuation Metrics For Bruush

Below is a desk of related capitalization and valuation figures for the corporate:

(Source – SEC)

Commentary About Bruush’s IPO

BRSH is in search of U.S. public funding capital to fund its additional commercialization efforts for its toothbrush product and associated subscription service and repay some debt.

The firm’s financials have produced rising topline income, increased gross revenue however diminished gross margin, fluctuating working loss and lowered money utilized in operations. (Note: the partial 12 months interval just isn’t immediately akin to the earlier identical interval, as a result of an accounting year-end change.)

Free money move for the twelve months ended October 31, 2021, was detrimental ($677,370).

Advertising and Marketing bills as a proportion of whole income have dropped as income has elevated; its Advertising and Marketing effectivity a number of rose to 0.4x in the latest reporting interval.

The agency presently plans to pay zero dividends on its frequent stock and intends to retain future earnings, if any, for its growth initiatives.

BRSH’s CapEx Ratio is comparatively excessive, which signifies it’s presently spending little or no on capital expenditures as a proportion of its working money move.

The market alternative for electrical toothbrushes is comparatively massive and anticipated to develop at a average price of development over the approaching years.

Aegis Capital Corp. is the lead underwriter, and IPOs led by the agency over the past 12-month interval have generated a mean return of detrimental (78.1%) since their IPO. This is a bottom-tier efficiency for all main underwriters through the interval.

The major threat to the corporate’s outlook is provide chain inflation and a looming macroeconomic slowdown in North America, which can cut back discretionary spending by customers and decrease the agency’s development trajectory whereas rising prices.

As for valuation, administration is asking traders to pay an EV/Revenue a number of of practically 15x at IPO.

For comparability, a basket of publicly held shopper electronics firms as of January 2022 as compiled by famous valuation professional Dr. Aswath Damodaran indicated that shopper electronics firms had a mean EV/Sales a number of of only one.55x, so BRSH is asking traders to pay roughly 10x that at IPO.

Given administration’s extreme valuation expectations and potential for gross sales headwinds going into an financial downturn, I’m on Hold for the Bruush IPO, though the stock may even see day-trader volatility within the brief time period.

Expected IPO Pricing Date: To be introduced.