Inrad Optics, Inc. (INRD)·Q1 2022 Earnings Summary

Executive Summary

• Q1 2022 revenue fell 12.3% year over year to $2.44M, while gross margin expanded 200 bps to 31.2%; operating income was $0.08M and net income was $0.04M as prior-year results benefited from a $0.97M PPP loan forgiveness gain .
• Orders and backlog inflected sharply: Q1 orders booked were $7.4M (+139% YoY), and backlog reached a record $17.4M vs. $7.9M a year ago, with management expecting to ship a majority of backlog in FY2022 .
• Mix shift to Process Control & Metrology (PC&M) offset aerospace/defense timing; PC&M rose 30% YoY to $1.40M, while aerospace/defense declined 29% YoY to $0.85M due to delivery timing .
• No formal quarterly guidance or earnings call was published; Street consensus from S&P Global was unavailable for INRD, limiting beat/miss framing; near-term stock catalysts hinge on semiconductor-related demand and backlog conversion .

What Went Well and What Went Wrong

What Went Well

• PC&M demand strengthened, driven by semiconductor customers; PC&M sales rose 30.2% YoY to $1.40M in Q1 2022 .
• Gross margin expanded to 31.2% (from 29.2%), despite lower sales, reflecting cost mix improvements; gross profit was ~$0.8M in both periods .
• Bookings and backlog surged: Q1 orders booked rose to $7.4M (+139% YoY), and backlog reached $17.4M; majority of backlog expected to ship in FY2022 .
  Quote: “We’ve seen increased demand in process control and metrology components across all industrial sectors, most significantly in the optical and x-ray components we produce for the semiconductor capital equipment market.” — Amy Eskilson, CEO (Apr 7, 2022) .

What Went Wrong

• Revenue declined 12.3% YoY to $2.44M, with aerospace/defense sales down 28.8% due to delivery timing; laser systems and Scientific/R&D were also down YoY .
• Operating leverage compressed: SG&A rose to 27.8% of sales (from 21.9%), reflecting higher personnel costs and insurance; operating income fell to $0.08M (from $0.20M) .
• Prior-year PPP forgiveness effects created a difficult net income comparison; Q1 2021 included a $0.97M gain, which was absent in Q1 2022 .

Financial Results

Segment sales (market area) YoY:

KPIs and balance items:

Guidance Changes

No formal quantitative guidance issued for revenue, margins, OpEx, OI&E, tax rate, or dividends in Q1 2022 filings .

Earnings Call Themes & Trends

No quarterly earnings call transcript was located for Q1 2022 (nor for the prior quarters in the period reviewed); themes below derive from 10-Q MD&A and company press releases .

Management Commentary

• “We’ve seen increased demand in process control and metrology components across all industrial sectors, most significantly in the optical and x-ray components we produce for the semiconductor capital equipment market.” — Amy Eskilson, CEO (Apr 7, 2022) .
• “Orders booked during the first three months of 2022, totaled $7.4 million… Order backlog at March 31, 2022… was $17.4 million… We anticipate shipping a majority of the present backlog during fiscal year 2022.” — Q1 2022 MD&A .

Q&A Highlights

No Q1 2022 earnings call transcript or Q&A session was found; investor communications for the period consisted of the 10-Q and a prior press release covering FY2021 results .

Estimates Context

• S&P Global/Capital IQ consensus EPS and revenue estimates for INRD were unavailable; coverage appears limited for this OTC microcap, so beat/miss vs Street cannot be assessed for Q1 2022.

Key Takeaways for Investors

• Mix shift toward semiconductor PC&M end markets is durable; PC&M +30% YoY supports medium-term thesis on backlog conversion and semi capex cycles .
• Backlog and bookings inflection (+139% YoY bookings; backlog $17.4M) provide revenue visibility; management expects most to ship in FY2022, a potential near-term catalyst as conversion accelerates .
• Gross margin improved 200 bps YoY despite lower sales, indicating progress on cost/mix; watch SG&A creep (27.8% of sales) for operating leverage as volume ramps .
• Aerospace/defense and Scientific/R&D softness were timing/contract-lap driven; recovery hinges on delivery schedules and new awards, while PC&M remains the growth pillar .
• Capex and equipment financing stepped up in Q1 to expand capacity; near-term cash is modest ($1.79M) with $2.5M related-party convertibles—monitor working capital and execution risk on ramp .
• With no formal guidance and no analyst consensus, the narrative is driven by backlog conversion and semi demand; upside comes from execution on shipments and margin maintenance, downside from supply chain/inflation and defense timing .