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BT

BLONDER TONGUE LABORATORIES INC (BDRL)·Q3 2021 Earnings Summary

Executive Summary

  • Q3 2021 revenue was essentially flat year over year at $4.172M, but net loss narrowed materially to $(0.201)M (−$0.02 diluted EPS) from $(1.787)M (−$0.18) YoY; mix shift toward IP video encoding/transcoding (ClearView) and NXG supported higher gross profit despite supply chain headwinds .
  • A short‑term semiconductor disruption late in Q3 increased material costs and delayed shipments ~1 month for several products, compressing margins; management implemented price increases on affected products and resumed full production by quarter‑end .
  • Bookings and multi‑month backlog increased, with notable design wins at major service operators for delivery in Q4 and Q1’22; CFO reiterated going‑concern risks and NYSE American compliance efforts continue (next measurement around December 10, 2021) .
  • No formal financial guidance was issued; management expects continued supply chain challenges into 2022 while targeting margin improvement via product mix and pricing actions .

What Went Well and What Went Wrong

What Went Well

  • Strong sales growth in high‑tech product lines: ClearView transcoder and NXG IP video processing; CEO: “We’ve continued to grow sales of our high technology and higher margin IP video encoding, transcoding, transmission, video security and video signal processing... such as the NXG, Clearview and Aircaster lines.” .
  • Customer relationships converted into longer‑term supply commitments, boosting bookings and backlog; plus significant product design wins at large service operators slated for Q4/Q1’22 .
  • Pricing actions successfully offset higher material costs on affected products; full production resumed by quarter‑end .

What Went Wrong

  • Specific late‑quarter semiconductor disruption materially impacted margins and delayed shipments by up to a month; blended margins compressed versus potential absent disruption .
  • Operating cash flow for Q3 was negative at $(0.753)M; liquidity remains constrained and substantial doubt about going‑concern persists per CFO .
  • Legacy categories declined: CPE and HFC distribution sales fell sharply vs prior year, reflecting strategic transition away from lower‑margin hardware .

Financial Results

Quarterly P&L trend (oldest → newest)

MetricQ1 2021Q2 2021Q3 2021
Net sales ($USD)$3,251,000 $4,338,000 $4,172,000
Gross profit ($USD)$1,385,000 $1,605,000 $1,499,000
Loss from operations ($USD)$(863,000) $(617,000) $(703,000)
Net (loss) income ($USD)$(414,000) $1,626,000 $(201,000)
Diluted EPS ($USD)$(0.04) $0.11 $(0.02)

Q3 YoY comparison

MetricQ3 2020Q3 2021
Net sales ($USD)$4,171,000 $4,172,000
Gross profit ($USD)$735,000 $1,499,000
Loss from operations ($USD)$(1,682,000) $(703,000)
Net (loss) income ($USD)$(1,787,000) $(201,000)
Diluted EPS ($USD)$(0.18) $(0.02)

Gross margin commentary (management disclosures)

  • Q1 2021 gross margin was 42.6% (management disclosure) .
  • Q2 2021 blended gross margin was 39.0% (down from 42.6% in Q1) due to PCB delays and raw material cost increases; selective price increases implemented .
  • Q3 2021 margins were negatively impacted by semiconductor cost inflation and smaller batch runs; exact % not disclosed .

Q3 2021 product sales breakdown

Product LineQ3 2021 Sales ($USD)
Transcoder products$1,732,000
NXG products$420,000
Analog video headend products$176,000
CPE products$113,000
HFC distribution products$404,000

KPIs

KPIQ1 2021Q2 2021Q3 2021
Operating cash flow ($USD)$234,000 n/a (company disclosed +$126,000 for first six months) $(753,000)
Avg bookings per month ($USD)n/a$1,647,000 (approx.; +8% vs Q1) n/a

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2021 / Q1 2022NoneNo formal guidance; management cites growing bookings/backlog and design wins n/a
Gross marginNear‑termNoneExpect continued supply chain pressure; pricing actions and mix to support margins; exact % not guided n/a
OpExOngoingNone“Kept operating expenses under tight control” (continued focus) Maintained
Liquidity/NYSE compliance2021Revised plan submittedTargeting compliance by ~Dec 10, 2021; substantial doubt on going‑concern remains Maintained disclosure

Earnings Call Themes & Trends

TopicQ1 2021 (May)Q2 2021 (Aug)Q3 2021 (Oct)Trend
Supply chainProactive stocking; normal lead times despite industry shortages Managed well; selective price increases; normal lead times vs competitors Specific semiconductor disruption increased costs, delayed shipments; resumed production; challenges likely into 2022 Deteriorating in Q3; headwind into 2022
Product mix shift (IP/OTT)NXG/Transcoder sales rising; 42.6% GM ClearView/NXG growth; OTT/IP roadmap Strong IP product growth; wins at major operators Positive momentum
CPE transitionStrategic move to services/fulfillment model Lower CPE revenue; higher margins over time CPE sales lower; focus on services recurring SLAs Ongoing shift
DOCSIS/hospitalityWeak due to sector recovery lag Still lagging; watching late‑Sept conference Not highlighted; broader mix shift continues Slow recovery
Liquidity/going concernSubstantial doubt persists; MidCap availability $537k Substantial doubt persists; MidCap $487k Substantial doubt persists; MidCap $516k Persistent risk, modest facility availability
NYSE American listingRevised plan filed; measurement Dec 10 Ongoing updates; notices of deficiency per protocol Plan accepted; aiming for compliance by Dec 10 Active remediation
R&D/technology (MPEG‑DASH/HLS)Expanding OTT/IP features in portfolio New product announcements expected H2 DASH prototypes with >5 operators; initial sales; SLA recurring revs Execution progressing

Management Commentary

  • CEO on Q3 progress: “We’ve greatly increased our bookings and multi‑months product backlog… significant product design wins at large service operator accounts.” .
  • CEO on supply chain: “This disruption… had a material adverse impact… delayed product shipments… as much as a month… we’ve implemented price increases… and resumed full production by the end of the quarter.” .
  • CFO on going concern: “Accordingly, there still exists substantial doubt about the company’s ability to continue as a going concern.” .
  • CEO on margin aspirations: “I would personally like us to be 4 or 5 points better than we've been running… clear path… if it weren’t for the supply chain issues.” .
  • CEO on DASH/HLS product: “We have prototypes… past the MVP… winning some sales… will have a recurring element… via service level agreements.” .

Q&A Highlights

  • Market shift scope: Management sees transcoder/encoding markets as “much larger” than legacy segments where they previously had small shares; pursuing share gains across service operators .
  • Supply chain pricing: Company passed cost increases to customers with commitment to reverse when costs normalize; avoided absorbing full margin hit .
  • Margins: Absent disruptions, margins would have been “significantly higher” in Q3; smaller batch runs also increased per‑unit labor and reduced efficiency .
  • Cash flow: Q3 operating cash flow used was $(753,000); MidCap facility remains in good standing .
  • NYSE compliance: Plan accepted; aiming for compliance by ~Dec 10, with quarterly updates to the exchange .
  • Product roadmap: MPEG‑DASH/HLS solution in operator trials (>5), initial purchases, and SLA‑based recurring revenue layer .

Estimates Context

  • S&P Global (Wall Street consensus) for Q3 2021 EPS and revenue was unavailable via our system at this time; therefore, we cannot assess beat/miss versus consensus. Actuals reported: Revenue $4.172M and diluted EPS −$0.02 .

Key Takeaways for Investors

  • Mix shift to IP transcoding/processing is driving structural improvement: gross profit nearly doubled YoY in Q3 despite flat revenue; watch continuation of ClearView/NXG adoption and SLA attach rates .
  • Supply chain remains the swing factor: Q3 was negatively impacted, but pricing actions and resumed production bode well; expect ongoing volatility into 2022 per management .
  • Bookings/backlog strength and new design wins at major operators should support Q4/Q1’22 revenue visibility; near‑term execution hinges on component availability .
  • Liquidity and listing risk are non‑trivial: CFO reiterates going‑concern language; maintain focus on cash generation and MidCap facility access while executing margin/price levers .
  • No formal guidance: trade the tape on backlog/margin commentary and supply chain developments; absence of consensus estimates reduces event‑risk clarity, but actuals show improving profitability trajectory YoY .
  • Operational discipline: OpEx control continues; management targets multi‑point margin improvement once supply chain normalizes—monitor gross margin disclosures and price realization .
  • Medium‑term thesis: If IP product momentum and recurring SLAs scale while legacy declines stabilize, operating leverage should improve; key risks are component shortages, hospitality/DOCSIS recovery, and capital/liquidity constraints .