BOA net sales for the year ended December 31, 2023 were $155.8 million, a decrease of $52.9 million, or 25.3 percent, when compared to net sales of $208.7 million for the year ended December 31, 2022.
Parent company Compass Diversified Holding (CODI) said on a conference call with analysts that the decrease was reportedly reflected across key industries including Snow Sports, Cycling, Outdoor, Athletic, Workwear, and Performance Bracing. The main factor of the decrease in sales was said to be higher-than-anticipated end-market inventory levels due to supply chain normalization and the corresponding inventory ordering surge experienced in many of the brand’s industries in 2022. The company said it anticipates a normalization of inventory levels by the middle of next year.
Gross margin was 59.7 percent of net sales for the year, compared to 60.7 percent for the same period in 2022. The decrease in gross margin was said to be driven by fixed manufacturing overhead expenses and an increase in depreciation expense related to tooling.
SG&A expense for the year was $49.0 million, or 31.5 percent of net sales, compared to $52.3 million, or 25.0 percent of net sales for 2022. The $3.2 million decrease in SG&A expense for the year was said to be primarily due to decreased employee costs related to BOA’s bonus plan.
Segment operating income was $27.3 million for the year ended December 31, 2023 as compared to $57.8 million in segment operating income in the year ended December 31, 2022, a decrease of $30.5 million.
Fourth quarter sales at BOA were flattish, a total of $42.4 million, compared to $44.5 million in Q4 2022. Adjusted EBITDA for the BOA business increased to $14.0 million in Q4, compared to $13.8 million in the 2022 fourth quarter.
In December 2023, CODI completed a recapitalization at BOA whereby the LLC entered into an amendment to the intercompany loan agreement with BOA. The BOA Credit Agreement was amended to provide for additional term loan borrowings of $165.9 million to fund a distribution to shareholders. The LLC received a distribution of $131.0 million related to their ownership of the outstanding shares of BOA on the date of the distribution. Non-controlling shareholders received a distribution of $11.7 million, and the remaining amount of the recapitalization was used to repurchase employee-owned shares and to pay a bonus to employees who held phantom stock options and were not eligible to participate in the distribution to non-controlling shareholders. BOA recorded a compensation expense of $3.1 million related to the bonus paid to employees as part of the recapitalization.
In September 2021, BOA repurchased shares of its issued and outstanding common shares from its largest minority shareholder for a total payment of $48.0 million, which BOA financed by borrowing under the BOA Credit Agreement. The BOA Credit Agreement was amended to provide for additional term loan borrowings of $38.0 million, and consent to the repurchase of the shares from the minority shareholder. The transaction was accounted for per ASC 810 Consolidation, whereby the carrying amount of the non-controlling interest was adjusted to reflect the change in the ownership interest in BOA that occurred as a result of the share repurchase. The difference between the fair value of the consideration paid of $48.0 million and the amount by which the non-controlling interest was adjusted of $39.4 million was recognized in equity attributable to the company.
A contract manufacturer used by BOA as the primary supplier of molded injection parts is a non-controlling shareholder of BOA. During the years ended December 31, 2023, 2022 and 2021, BOA purchased approximately $42.1 million, $56.1 million and $48.3 million, respectively, from the supplier.
Image courtesy BOA, Sage Kotsenburg, BOA Athlete, Pro Snowboarder