Executive Summary

Q1 2022 delivered modest topline growth but deeper losses as semiconductor shortages constrained production: net sales rose 2.8% to $3.341M, while net loss widened to $(1.154)M and EPS to $(0.09) due to under-absorption of overhead at reduced output levels .
Product mix was favorable: higher demand in encoder/transcoder, NXG IP processing, digital modulation and DOCSIS 3.1 serving hospitality recovery; CPE, coax distribution, and analog modulation continued to decline as planned .
Backlog remained strong at approximately $10.194M, supporting expectations for higher 2022 sales vs. 2021, though management remains cautious on timing given ongoing small-component disruptions and redesigns required to substitute parts .
Liquidity remains tight with going-concern language reiterated; MidCap borrowing outstanding was ~$2.18M with ~$0.243M available as of March 31, 2022 .
Near-term stock reaction catalysts: execution on delivering backlog as supply chain stabilizes, margin recovery from price increases once factory throughput normalizes, and progress on TiVo/DIRECTV-aligned NXG and Clearview encoders .

What Went Well and What Went Wrong

What Went Well

Encoder/transcoder and NXG product families saw continued demand; management highlighted “continued strong demand” for Clearview and Drake encoders and NXG IP platforms, with DOCSIS demand rising as hospitality markets recover .
Targeted price increases across November–April helped product-level margins; management: “across the board price increases… and targeted… in Nov–Apr… helping the situation,” with product margins “definitely improving” .
Strategic partnerships and portfolio expansion: TiVo-specific NXG configuration began shipping; Clearview 4:2 products certified by DIRECTV; new two-channel Drake PEG PLUS encoder introduced to support IP network conversions .

What Went Wrong

Semiconductor shortages (notably low-cost controllers and power management ICs) created production delays late January onward; unforeseen small-part outages forced redesigns and QA cycles, depressing output and margins via overhead under-absorption .
Operating performance deteriorated despite revenue growth: gross profit fell to $0.939M and operating loss increased to $(1.021)M in Q1 2022, reflecting lower factory throughput and mix/legacy declines .
Liquidity constraints persisted with going-concern doubt; borrowing headroom limited and equity reduced to $2.411M from $3.285M QoQ, constraining flexibility amid supply shocks .

Financial Results

Consolidated P&L and Margins (Oldest → Newest)

Metric	Q3 2021	Q4 2021	Q1 2022
Revenue ($USD Millions)	$4.172	$3.993	$3.341
Gross Profit ($USD Millions)	$1.499	$1.369	$0.939
Gross Margin %	35.9% (1.499/4.172)	34.3% (1.369/3.993)	28.1% (0.939/3.341)
Operating Income ($USD Millions)	$(0.703)	$(0.777)	$(1.021)
Operating Margin %	(16.8%) ((-0.703)/4.172)	(19.5%) ((-0.777)/3.993)	(30.6%) ((-1.021)/3.341)
Net Income ($USD Millions)	$(0.201)	$(0.927)	$(1.154)
Net Margin %	(4.8%) ((-0.201)/4.172)	(23.2%) ((-0.927)/3.993)	(34.6%) ((-1.154)/3.341)
Diluted EPS ($)	$(0.02)	$(0.07)	$(0.09)

Q1 YoY Comparison

Metric	Q1 2021	Q1 2022	YoY Change
Revenue ($USD Millions)	$3.251	$3.341	+2.8%
Gross Profit ($USD Millions)	$1.385	$0.939	(32.2%)
Diluted EPS ($)	$(0.04)	$(0.09)	More negative

Product/Segment Mix (Q1 2022 vs Q1 2021)

Product Line	Q1 2021 ($000)	Q1 2022 ($000)
DOCSIS data	$24	$454
Encoder/Transcoder	$1,167	$1,518
Digital Modulation	$121	$377
NXG IP Video Signal Processing	$421	$501
CPE	$695	$27
Coax Distribution	$353	$129
Analog Modulation	$244	$99

Note: CFO prepared remarks cited encoder/transcoder at $1,510K vs press release $1,518K, an $8K discrepancy likely from reporting rounding/timing .

Balance Sheet and Liquidity KPIs

KPI	Q4 2021	Q1 2022
Current Assets ($000)	$7,678	$7,539
Total Assets ($000)	$11,910	$11,534
Current Liabilities ($000)	$6,060	$6,799
Long-term Liabilities ($000)	$2,565	$2,324
Stockholders’ Equity ($000)	$3,285	$2,411
MidCap Revolver Outstanding ($000)	$2,180 at 3/31/22	$2,180 at 3/31/22
MidCap Availability ($000)	$92 at 12/31/21	$243 at 3/31/22
Backlog ($000)	~$10,240 at 12/31/21	~$10,194 at 3/31/22

Actual vs Consensus (Q1 2022)

Metric	Actual	Consensus	Surprise
Revenue ($USD Millions)	$3.341	N/A (S&P Global consensus unavailable)	N/A
EPS (Diluted, $)	$(0.09)	N/A (S&P Global consensus unavailable)	N/A

Estimates Context: S&P Global consensus for BDRL Q1 2022 was unavailable; coverage appears limited.

Guidance Changes

Metric	Period	Previous Guidance (Q4 2021)	Current Guidance (Q1 2022)	Change
Overall Sales	FY 2022	Expect higher vs. 2021; not returning to pre-pandemic levels; supported by ~$10.240M backlog	Expect higher vs. 2021; not returning to pre-pandemic levels; supported by ~$10.194M backlog	Maintained
DOCSIS demand (hospitality)	FY 2022	Expected improvement in 2022 as markets recover	“Particular demand growth” and expected continuation through the year	Raised qualitatively
Encoder/Transcoder & NXG	FY 2022	Expected to remain at 2021 levels or increase, subject to supply chain	Expected to “remain at these levels or increase” with sustained demand	Maintained
CPE products	FY 2022	Continued deemphasis with lower sales trend	Continued deemphasis; sales reduction expected to continue	Maintained
Analog Modulation & Coax	FY 2022	Continued decline expected	Continued decline expected	Maintained
Margins	Near term	Q4 margin hit from supply chain; price increases implemented to offset	Product margins “definitely improving” from price actions; overall margins constrained by overhead under-absorption due to lower throughput	Mixed (improving product-level; overall constrained)
Operating Expenses	Near term	Cost reductions underway	Reduced OpEx by $187K vs. Q4 while maintaining capacity/R&D	Lowered

Earnings Call Themes & Trends

Topic	Q3 2021	Q4 2021	Q1 2022	Trend
Supply chain & semiconductors	Initial short-term disruption; price increases to offset; resumed full production by quarter end	Broader issues; shifting from complex SoCs to smaller parts; weekly production planning impacts margins	Small components (Ethernet controllers, power mgmt) caused majority of Q1 issues; redesigns and QA cycles; cautious outlook	Persisting but shifting to small parts
Pricing actions & margins	Implemented increases; customers accepted; intended to roll back if costs normalize	Broad price increases; margins hit in Q4; plan for margin recovery	Across-the-board and targeted increases Nov–Apr; product margins improving; overall margins pressured by under-absorption	Improving product-level margins; overall constrained
Backlog & demand	Growing bookings; design wins; backlog building	Year-end backlog ~$10.240M; demand in NXG/Clearview/Aircaster	Backlog ~$10.194M; strongest demand in encoder/transcoder, NXG, DOCSIS 3.1	Strong and stable
Hospitality recovery (DOCSIS)	Anticipated improvement	Expected improvement in 2022	Particular demand growth in DOCSIS; expected to continue	Improving
Partnerships/product pipeline	Broad product releases; developing streaming (MPEG-DASH/HLS) with SLAs	DIRECTV Clearview certification; TiVo NXG	TiVo-specific NXG shipping; new Drake PEG PLUS encoder; broader encoder derivatives to expand TAM	Expanding execution
Liquidity/going concern	Substantial doubt noted; MidCap availability $516K at 9/30/21	Going concern explanatory paragraph; MidCap availability $92K at 12/31/21	Going concern persists; MidCap outstanding $2.18M and availability $243K at 3/31/22	Constraints persistent

Management Commentary

“Despite continued strong demand… the Company was faced with significant semiconductor supply chain disruptions… [and] reduced its operating expenses by $187,000 vs Q4 2021” .
On supply chain composition: “smaller Ethernet controllers, power management chips… $1–$8 parts… we didn’t have any warning” .
On remediation cadence: “We’re finding alternatives… requires redesign… QA… able to get products back into production over approximately an 8–10 week period” .
On margins: “Product margins are definitely improving… but… overhead absorption effects… until we can produce at a monthly level that’s fully absorbing our overhead rate” .
On backlog delivery: “Confident backlog… will be delivered this year… majority over next 4–5 months” with caution due to potential new surprises .

Q&A Highlights

Backlog fulfillment timing: management aims to deliver majority within 4–5 months, but emphasized scenario-based caution given unpredictable disruptions .
Margin dynamics: price increases improved product-level margins, but under-absorption from lower factory throughput depressed reported gross margins .
Component issues: unexpected small, low-cost IC shortages drove Q1’s majority issues versus prior quarter’s complex SoCs, necessitating rapid redesigns .
Market/TAM expansion: NXG derivatives tied to TiVo address >100 small operators; encoder derivatives target broadcast and existing customers to expand TAM .

Estimates Context

S&P Global consensus for Q1 2022 revenue and EPS was unavailable for BDRL; coverage appears limited. As a result, no beat/miss assessment versus Street consensus can be provided for this quarter.
Given demand strength and backlog, Street models (where they exist) may need to reflect margin recovery timing driven by production normalization rather than price increases alone .

Key Takeaways for Investors

Execution risk remains supply-chain centric: progress on redesigns and component substitutions is critical to unlock backlog and restore margin via overhead absorption; monitor small-component availability, not just high-end silicon .
Price discipline is working at product level; broader margin recovery hinges on throughput normalization—watch monthly production cadence and any commentary on factory batch sizes/productivity .
Mix shift toward encoder/transcoder, NXG, and DOCSIS 3.1 supports medium-term thesis as legacy CPE/coax/analog decline; partnerships (TiVo/DIRECTV) strengthen go-to-market .
Liquidity and going-concern disclosures elevate financing risk; track MidCap revolver availability, equity levels, and any capital-raising or covenant updates .
Near-term trading setup: catalysts include confirmation of backlog shipments resuming at pace, margin inflection from improved absorption, and additional product wins; risks include new component surprises and prolonged under-absorption .
For 2022, management continues to guide to higher sales vs 2021 but below pre-pandemic levels—stock likely sensitive to cadence of deliveries rather than headline demand .

Citations:

BLONDER TONGUE LABORATORIES INC (BDRL)·Q1 2022 Earnings Summary