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BT

BLONDER TONGUE LABORATORIES INC (BDRL)·Q4 2021 Earnings Summary

Executive Summary

  • Q4 2021 net sales were $3.993M, down 7.7% YoY; gross profit was $1.369M; net loss was $(0.927)M with diluted EPS of $(0.07) .
  • Product mix shifted positively: video encoder/transcoder sales rose to $2.529M (vs. $1.381M YoY) and NXG series to $0.614M (vs. $0.135M YoY), partially offsetting declines in legacy CPE, DOCSIS, analog modulation, and coax distribution .
  • Management cited severe semiconductor supply-chain disruptions driving price increases and margin compression in Q4; year-end backlog reached ~$10.240M, providing 2022 sales visibility amid uncertainty .
  • Liquidity remains tight; MidCap facility availability was ~$92K at year-end and the 2021 10-K carries a going-concern explanatory paragraph, a key overhang and potential stock-reaction catalyst .

What Went Well and What Went Wrong

What Went Well

  • Encoder/transcoder and NXG momentum: “Sales of video encoder/transcoder products were $2,529,000… and our NXG series products were $614,000… in the fourth quarter of 2021” .
  • Strategic partnerships and certifications: DIRECTV certification for Clearview 4:2 transcoder family and TiVo-specific NXG configuration broaden market access and dealer subsidies .
  • Full-year profitability aided by product mix and non-operating income: “Positive net income of $84,000… improved blended product gross margin… and recognition of significant nonoperating income… ERTC and PPP loan forgiveness” .

What Went Wrong

  • Supply chain and margin pressure: “Global semiconductor… bottlenecks… negative impact on our fourth quarter… Q4 margins took quite a hit… price increases to compensate for raw material premiums” .
  • Legacy portfolio drag: Sharp declines in CPE ($0.023M), DOCSIS ($0.122M), analog modulation ($0.133M), and coax distribution ($0.171M) in Q4; management expects analog/coax declines to continue in 2022 .
  • Liquidity/going concern risk: Only ~$92K borrowing availability under MidCap at 12/31/21; auditor included an “Explanatory Paragraph-Going Concern” in the 2021 10-K .

Financial Results

Quarterly performance vs prior quarters

MetricQ2 2021Q3 2021Q4 2021
Revenue ($USD Millions)$4.338 $4.172 $3.993
Gross Profit ($USD Millions)$1.605 $1.499 $1.369
Gross Profit Margin %37.0% 35.9% 34.3%
Operating Loss ($USD Millions)$(0.617) $(0.703) $(0.777)
Net Income ($USD Millions)$1.626 $(0.201) $(0.927)
Diluted EPS ($USD)$0.11 $(0.02) $(0.07)
Diluted Shares (Millions)15.254 12.227 12.729

Q4 2021 vs Q4 2020

MetricQ4 2020Q4 2021YoY Change
Revenue ($USD Millions)$4.327 $3.993 -7.7%
Gross Profit ($USD Millions)$0.495 $1.369 +$0.874
Operating Loss ($USD Millions)$(2.305) $(0.777) +$1.528
Net Loss ($USD Millions)$(2.413) $(0.927) +$1.486
Diluted EPS ($USD)$(0.23) $(0.07) +$0.16

Segment/Product mix – Q4

Product Line ($USD Millions)Q4 2020Q4 2021
CPE$1.114 $0.023
DOCSIS Data$0.418 $0.122
Analog Modulation$0.438 $0.133
Coax Distribution$0.287 $0.171
Video Encoder/Transcoder$1.381 $2.529
NXG IP Processing$0.135 $0.614

KPIs and Balance Sheet Snapshot

KPIQ3 2021Q4 2021
Backlog ($USD Millions)N/A$10.240
MidCap Facility Availability ($USD Millions)$0.516 $0.092
Stockholders’ Equity ($USD Millions)$3.755 $3.285

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Overall SalesFY 2022NoneExpects higher 2022 sales driven by ~$10.240M backlog; does not expect return to pre-pandemic levels Narrative raised
Video Encoder/Transcoder & NXGFY 2022NoneExpects sales to remain at 2021 levels or increase, supply-chain dependent Maintained/upside bias
CPEFY 2022NoneDeemphasis continues; sales expected to decline as model shifts to services/support Lowered/affirmed decline
Analog Modulation & Coax DistributionFY 2022NoneSales expected to continue to decline Lowered/affirmed decline
MarginsNear-termNonePrice increases implemented; some recovery expected but management is cautious due to supply chain variability Qualitative caution
Liquidity/Going ConcernOngoingNone10-K includes “Explanatory Paragraph-Going Concern”; may seek additional capital Risk highlighted

Earnings Call Themes & Trends

TopicQ2 2021 (Prior-2)Q3 2021 (Prior-1)Q4 2021 (Current)Trend
Supply ChainManaged well; normal lead times; isolated PCB delay and price increases mitigated via selective pricing Specific semiconductor disruption; margin hit; resumed production; broader tightening expected into 2022 Worsened breadth; parts shortages across components; batch-size inefficiency; airports shutdown delays; ongoing surprises Deteriorating but actively managed
Product Mix ShiftClearview/NXG growth; new customer wins Encoder/NXG growth; backlog increased; design wins at operators Encoder/NXG maintained strength; DIRECTV certification; TiVo NXG config Positive structural shift
Pricing & MarginsImplemented selective price increases to offset cost Passed cost increases to customers; margins impacted by disruption and smaller batches Broad price increases; customers accepted; potential rollback if costs normalize; Q4 margins “took quite a hit” Stabilizing via pricing; margins pressured
Liquidity/Going ConcernMidCap availability $0.487M; going concern doubt persists MidCap availability $0.516M; going concern doubt persists MidCap availability $0.092M; 10-K includes going concern paragraph Risk intensified
Market DemandBookings up; telecom/cable recovery Growing bookings and backlog; recovering market Improving hospitality demand; strong demand for high-tech lines; backlog $10.2M Improving demand vs constrained supply

Management Commentary

  • “Although the Company was able to realize positive net earnings for the full year of 2021, the global semiconductor supply chain bottlenecks… had a significant negative impact on our fourth quarter.” (CEO Ted Grauch) .
  • “Our improved product mix yielded a blended product gross margin improvement in 2021 of 39.8% versus 30% in 2020.” (CEO) .
  • “Our 2021 fourth quarter sales decreased by 7.7% to $3.993 million… net loss… $927,000… we had to engage in a series of price increases.” (CEO) .
  • “The Company had approximately $92,000… available for borrowing under the MidCap Facility… 10-K includes an Explanatory Paragraph-Going Concern.” (CFO) .
  • “DIRECTV… certification by DIRECTV for our Clearview 4:2 IP video transcoder product line… qualified for DIRECTV’s equipment subsidy program.” (CEO) .

Q&A Highlights

  • Supply chain granularity: Issues shifted from high-end SoCs to “smaller parts… crystals… power conditioning… PCBs” with ad hoc redesigns and alternate sourcing to keep lines running .
  • Backlog composition: Partly structural due to 6‑month rolling forecast POs; significant portion constrained by parts shortages; timing of recovery uncertain .
  • Pricing strategy: Broad price hikes accepted by customers; intent to roll back when costs normalize; some vendors already pulled back from “2x” peak to ~10–15% above pre-pandemic pricing .
  • Margin commentary: Q4 margins “took quite a hit”; pricing aids recovery but volatility persists (e.g., Shenzhen airport closures delaying parts) .
  • New products ramp: DIRECTV-certified Clearview already shipping and included in backlog; new Clearview encoder expected to ship ~10–14 weeks after press release .

Estimates Context

  • Wall Street consensus (S&P Global) could not be retrieved during this session for Q4 2021 EPS and revenue; therefore estimate comparisons are unavailable at this time. If consensus exists, we expect near-term revisions to reflect the product-mix strength offset by supply-chain constraints and margin pressure [S&P Global consensus unavailable].

Key Takeaways for Investors

  • Mix upgrade is real: Encoder/transcoder and NXG lines now dominate sales, structurally improving gross margin potential; watch for supply normalization to unlock backlog conversion .
  • Liquidity/going concern is the primary risk overhang: Very limited revolver capacity and auditor’s going-concern paragraph constrain risk appetite until profitability and capital access improve .
  • Near-term trading setup: Headline catalysts include DIRECTV/TiVo channel validation and backlog visibility; but supply-chain headlines and any financing actions may drive volatility .
  • Margin trajectory hinges on input costs and batch efficiency; price actions provide an offset but labor inefficiencies from smaller runs weighed in Q4 .
  • 2022 outlook: Management expects higher sales vs 2021 on backlog, with legacy product declines continuing and high-tech lines stable/up, conditional on semiconductor supply .
  • Full-year profitability in 2021 was aided by ERTC and PPP forgiveness; core operating profitability still needs to be proven as supply-chain disruptions abate .
  • Monitoring list: backlog conversion pace, vendor delivery confirmations into late 2022, hospitality demand recovery for DOCSIS line, and any capital raise or covenant updates .