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Heelys, Allegiant Travel IPOs take flight:

Small-cap deals both price above their range:

By Steve Gelsi, MarketWatch
Last Update: 10:52 AM ET Dec 8, 2006

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NEW YORK (MarketWatch) -- Heelys and Allegiant Travel both priced atop their range for their stock market debuts Friday in a sign of strong interest in the profitable small-cap firms.

Heelys Inc. (HLYS), a maker of children's sneakers, which have wheels in the heels, rolled past its price range of $16 to $18 by setting its IPO at $21 a share.

The Carrollton, Texas company, founded in 2000 by current board member and 40-year skateboarding veteran Roger R. Adams, raised $135 million by offering 6.425 million shares with underwriters Bear Stearns and Wachovia Securities.

Profitable for at least the past three years, Heelys rang up $17.7 million in net income and revenue of $117 million in the nine months ended Sept. 30, compared with net income of $2.9 million and revenue of $29 million in the year-ago period.

Riding a surge in popularity of action sports, Heelys appears to be tapping into interest in the IPO market for youth-oriented brands and popular footwear companies.

Other recent examples include Crocs (CROX), Under Armour (UARM) and Zumiez (ZUMZ).

"Heelys will have a strong market debut given its impressive recent track record and its potential to expand in the U.S. and international markets," Renaissance Capital said in its IPO of the week column. "In addition, the company is being brought to market at a discount to its closest comparable and hyper-growth footwear-designer Crocs." See IPO of the week column.

According to an amended prospectus for the IPO, Adams planned to sell 815,656 shares in the IPO itself for proceeds of about $17 million.

Adams also received $3 million in May for selling stock at $2.76 a share in separate transactions to the company and to Chairman Patrick Hamner, according to filings.

Heelys CEO Michael G. Staffaroni, 49, a former vice president of the Rollerblade division of Benetton Group, initially joined the company in 2000 as a full-time consultant.

Allegiant Travel IPO gains altitude:

Allegiant Travel (ALGT) priced its IPO at $18 -- above its $15-$17 range -- for its stock market debut on Friday. The IPO opened at $24 a share and rose to $25.23 for a gain of 41%.

The company raised $90 million by offering 5 million shares for trading on the Nasdaq.

The Las Vegas-based airline provides flights to 45 cities with operations concentrated in its home base and Florida.
For the nine months ended Sept. 30, Allegiant reported net income of $10.3 million on revenue of $180 million, compared with net income of $7.7 million and revenue of $92.5 million in the year-ago period.

At the midpoint of its IPO price range, Allegiant would be more expensive than Frontier Airlines (FRNT) or AirTran (AAI) but "probably rightly so," Prudential analyst Bob McAdoo wrote in a Nov. 30 note to clients.

"Allegiant's unique operating methods and product offering keep it well below the radar of the big airlines and uniquely attractive to a substantial segment of the population seeking low-priced leisure travel from smaller cities," he said.
Steve Gelsi is a reporter for MarketWatch in New York.