At Compass Diversified’s 2020 Investor Day, Shawn Neville, CEO of Boa Technology, provided a bullish outlook on the lacing system’s growth potential, believing Boa could quadruple its market share over the next decade.

On October 19, Boa became CODI’s latest acquisition with the purchase price totaling $454 million. CODI’s initial equity ownership in Boa is 82 percent. Boa’s management team, including Neville, and existing shareholders invested alongside CODI and own the remaining 18 percent.

CODI’s business holdings also include a number of other brands in the active lifestyle space including 5.11, Liberty Safe, Marucci Sports, and Velocity Outdoor; as well as Advanced Circuits, Arnold Magnetic Technologies, Ergobaby, Foam Fabricators, and Sterno.

“We see significant upside in the Boa business,” Pat Maciariello, CODI’s COO told investors at the Investor Day event. “And we believe our expertise and resources will prove invaluable to the team as we work to grow and build sustainable, long-term success at Boa.”

In his presentation, Neville said he expects Codi to become a “really strong partner” for Boa. He pointed to the confidence he’s gained in CODI’s team as the deal was completed during the stresses of the pandemic and noted he has become an investor in Codi.

Most of his presentation, however, focused on the story of Boa and the technology’s growth potential.

He began discussing the founding of the Boa lacing system by Gary Hammerslag in 2001 after Hammerslag successfully sold his previous company, which created catheter solutions that improved angioplasty procedure speed and effectiveness. Moving to Steamboat Springs, CO, Hammerslag also had a passion for snowboarding to led to Boa’s technology first being brought to snowboard boots.

“Over the course of the last 20 years, we’ve remained committed to our roots in the mountain and disruptive innovation,” said Neville. “And at the same time, we’re innovating and transforming from an organization that delivers a product that is outstanding in getting in and out of the product through a system to transforming fit for athletes getting dialed in for fast, effortless precision fit.”

A Shift Toward End Consumers
Neville showed a number of videos from Boa’s “Dialed In” campaign that launched last year and features elite athletes across running, cycling and snowboarding tackling obstacles using Boa’s fit systems to define the “focus, confident, fearless” aura behind the brand. The videos included one featuring the Bora-Hansgrohe cycling team led by Peter Sagan, the three-time world champion; as well as one featuring an ultra-trail runner in the Dolomites showcasing the La Sportiva VK Boa mountain running shoe. The spots were created internally by Boa’s creative team.

Neville believes Boa benefits not only because consumers can see the lacing system and feel the difference, but they’re able to hear the sound of the Boa system as they twist the device around the foot. The sound is emphasized in the brand’s consumer campaigns.

“The essence of that sound is getting ‘dialed in’,” said Neville. “It’s about a mindset. It’s altering the state. It’s connecting to that possibility to perform at your peak.”

Boa over the last few years has shifted away from trade marketing to working directly to reach end consumers and direct them to brand partners.

Since the boafit.com website and first consumer direct marketing campaign was launched in 2019, the site has driven over 200,000 consumers to brand partner sites in 2020. Neville noted that overall 20 percent of visitors to Boafit.com go to brand partner sites. He said the site’s reach is still “relatively small” but will be important not only to create a community with Boa’s fan “but also drive traffic and support as we become better partners for our brand partners.”

Boa works with over 400 brand partners, which is 50 fewer since Neville joined Boa as CEO in 2016. The narrowing of the vendor base was intentional. Said Neville, “Our objective is not the number of partners, it’s the quality and the depth. And our businesses are up of almost 70 percent from that period, collectively.”

The consumer branding push is part of a shift made three years ago to focus more on positioning Boa as “a fully integrated solution and experience” for end consumers. He added, ‘We create disruptive, innovative, high-quality products and solutions that transform fit and performance. “

Proven Performance Attributes
A big part of the branding push will be enhanced messaging that involves “scientifically proving” Boa’s performance benefits. Boa has over 255 patents with over 60 of them pending with new recent innovations.

Neville listed Boa’s four distinct performance advantages:

  • Agility And Speed: Enables faster, more powerful directional changes through a seamless connection between equipment and body.
  • Power And Precision: Power without compromising precision, delivering more explosive action and accuracy.
  • Endurance And Health: Go further, faster and stronger saving energy by improved circulation and efficiency.
  • Durability And Quality: Engineered with durable, quality materials and field-tested and guaranteed to perform in any environment.

He said durability and quality have always been the backbone of Boa and that’s the reason the brand offers a lifetime guarantee. But the other three attributes have been increasingly emphasized over the last three years with the paired benefits typically working against each other, such as improving agility often coming at the expense of speed.

Boa has consequently opened a Human Performance Fit Lab and invested in major pilot programs to prove out Boa’s performance attributes. Said Neville, “If we could alter the way the consumer behaved, and radically shifted the way the upper of the product works from what was traditional laces, we believe that we could create a real revolution.”

In one pilot, a validation study conducted with the University of Denver addressed agility and speed, which is about lateral medial movement. Researchers in a white paper showed the connectivity of Boa’s product created up to a 5 percent improvement in the response rate, as well as explosiveness.

Exploring power and precision, a second pilot specifically focused on golf has resulted in two major product initiatives planned for next year with Footjoy and Adidas. On the broader topic of endurance and health, Boa’s pilot study, which is now going to validation, has found up to a 2 percent improvement in efficiency from a metabolic assessment.

Neville believes Nike’s broadly-covered “4 Percent Study” that showed the benefits of the carbon-fiber plate in the sole of a running shoe is just the beginning of putting more science behind innovations. He said, “We’ve already worked with a number of brands and it’s been a catalyst for new innovation.”

Boa To Reach 100M Milestone
Boa this year will surpass 100 million systems sold over in what will be its 20th year, including 17 million units sold this year. Prior to the current year, growth has been at a healthy double-digit rate due to a strong retention rate as consumers tend to repurchase a Boa-infused footwear model after the initial purchase as well as consistent new innovations. Following snowboard boots in 2001, Boa entered hiking/trail in 2005, golf/cycling in 2006, hunt & fish in 2008, work in 2008, medical bracing and ski mountaineering in 2001, running/training in 2013, and court sports in 2020.

Overall, however,  Boa estimates it has only 2.5 percent of the total addressable market for such enclosure devices with the total market seen at 750 million units. Laces are estimated to control up about 95 percent of the market with velcro at about 2 percent.

Boa breaks down its growth opportunity across three levels of the adoption curve.

The first, mid-late Adoption, covers snowboarding, cycling, and golf where Boa collectively has about 40 percent share although the market opportunity is small, at 10 million units. Boa still sees a mid-to-long-term opportunity to get to 65 percent share in these core segments. Boa controls over 70 percent of the snowboard market and over 50 percent of the cycling market. In golf, Boa has almost 80 percent market share in Asia.

The second adoption level, “Early Adoption,” includes workwear, outdoor footwear and medical bracing that’s seen as a 320-million-unit opportunity worldwide. Boa only captures a 5 percent share. Workwear is the largest single opportunity and Boa’s potential can be seen in Northern Europe, where the brand has over 30 percent of the addressable work footwear market. Outdoor footwear is also seen as a major opportunity with a 60-million-unit addressable market. Boa is making a big push being mountaineering and trail. Neville said of outdoor footwear, “Over the next three or four years, we see tremendous growth.”

Finally, the third segment, “Pioneering,” represents a 420-million-unit opportunity and includes run/train, court sports including basketball, tactical and alpine. Boa currently controls less than one percent of the share across Pioneering categories but Neville said the growth opportunity in areas such as athletic will become more evident as Boa’s test lab and research is able to demonstrate “meaningful benefits to the end consumer.” Alpine downhill, set to launch in 2023, is expected to build on Boa’s success in ski mountaineering.

Boa’s overall revenues from 2016 to 2019 have grown at a 15 percent CAGR (compound annual growth rate), reaching $106.3 million in 2019. Said Neville, “If you look at our historical growth rate and you move that forward into eight to 12 years, it’s not inconceivable that we could quadruple our market share, especially as some of these markets continue to grow. And we believe that’s clearly a high potential.”

From a profitability standpoint, EBITDA CAGR was 32 percent over the 2016-to-2019 period. EBITDA as a percent of sales increased from 18 percent in 2016 to 30 percent. Said Neville, “Over the course of the next five to 10 years, we believe that we can maintain that EBITDA percentage as we ramp up further investment in marketing and capabilities on the innovation side to build a long-term foundation of growth and profitability for this business.”

In 2020, revenue is expected to be flat to down slightly due to the impact from COVID-19 but EBITDA is still tracking to show an increase.

Photo courtesy Boa