Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing established valuation metrics to uncover potential opportunities [2][3]. Company Summary: Virco Manufacturing (VIRC) - Virco Manufacturing holds a Zacks Rank of 1 (Strong Buy) and an A grade for Value, indicating strong investment potential [4]. - The current P/E ratio for VIRC is 7.71, significantly lower than the industry average of 9.58, suggesting it may be undervalued [4]. - VIRC's Forward P/E has fluctuated between 6.52 and 11.62 over the past year, with a median of 8.04 [4]. - The P/B ratio for VIRC is 1.24, which is favorable compared to the industry average of 1.44, indicating solid valuation relative to its book value [5]. - Over the past 12 months, VIRC's P/B has ranged from 1.20 to 3.03, with a median of 1.70 [5]. - VIRC's P/CF ratio stands at 4.94, which is attractive compared to the industry average of 6.52, highlighting its strong cash flow outlook [6]. - The P/CF for VIRC has varied between 4.79 and 9.19 over the past year, with a median of 6.70 [6]. - Overall, the metrics suggest that Virco Manufacturing is likely undervalued, making it one of the strongest value stocks in the market [7].

Group 1 - The article discusses the performance of Virco Mfg. Corporation (NASDAQ: VIRC) since fiscal Q2 2025, indicating that previous analyses have materialized over the past three quarters [1] Group 2 - The investment approach focuses on long-only strategies, emphasizing operational evaluations and long-term earnings potential rather than market-driven dynamics [2] - The company aims to hold investments regardless of future price movements, with most recommendations being holds rather than buys [2] - The articles serve to provide valuable information for future investors and maintain a skeptical view in a generally bullish market [2]

Financial Performance - Net income for the first quarter was $0.7 million, down from $2.1 million in the same period last year, primarily due to a large disaster recovery order last year [1]. - Net sales for the first quarter were $33.754 million, down from $46.735 million in the same period last year [19]. - Operating loss for the first quarter was $94, compared to an operating income of $2.971 million in the prior year [19]. Margins and Costs - Gross margin improved to 47.5%, up 400 basis points from 43.5% in the prior year, attributed to lower margins on last year's disaster recovery order and a higher proportion of full-service orders [2]. Shareholder Returns - The company repurchased $4.0 million worth of shares and paid $0.4 million in cash dividends during the first quarter [7]. - A quarterly dividend of $0.025 per share was declared, payable on July 11, 2025 [3]. Market Outlook - Shipments plus backlog declined by 22.9% to $105.6 million compared to the previous year [3]. - The current year is expected to represent a "pause" in the recovery of the school furniture market post-COVID, but there are hopeful signs for mid-term growth in school construction [10]. - The company maintains an opportunistic stance to navigate challenges and opportunities in the upcoming year [9]. Investments - The company invested over $2.0 million in major platform processes to expand operations and support domestic market expansion [7].

Financial Performance - For the three months ended April 30, 2025, the Company reported a net income of $0.7 million on sales of $33.8 million, a decrease of approximately 27.8% in sales compared to $46.7 million in the same period last year [81]. - Gross margin for the first quarter of 2025 was 47.5%, an increase from 43.5% in the prior year, attributed to a higher proportion of full-service orders [82]. - Selling, general and administrative expenses decreased by approximately $1.3 million compared to the same period last year, primarily due to lower variable selling expenses [83]. - The effective income tax rate for the three months ended April 30, 2025, was 26.4%, compared to 25.5% in the prior year [86]. Backlog and Orders - The Company's backlog as of April 30, 2025, was $70.4 million, down from $88.5 million on April 30, 2024, reflecting a decrease in incoming orders [77]. Share Repurchase - The Company spent $4.0 million to repurchase 348,944 shares of its common stock, with $7.2 million authorized for future repurchases as of April 30, 2025 [91]. Accounts and Inventory - Accounts Receivable decreased by $7.5 million at April 30, 2025, due to decreased shipments and improved collections [88]. - Inventory increased by $2.7 million at April 30, 2025, primarily due to increased material costs during the quarter [88]. Compliance and Future Outlook - The Company believes it will maintain compliance with its financial covenants under the Credit Agreement, despite risks related to economic conditions and raw material costs [92]. - Management cautions that future growth rates are unlikely to match those of the past several years due to various uncertainties, including trade policies and funding for educational institutions [78].

Group 1: Earnings Performance - Virco Manufacturing Corporation reported a quarterly loss of $0.01 per share, outperforming the Zacks Consensus Estimate of a loss of $0.13, compared to earnings of $0.13 per share a year ago, representing an earnings surprise of 92.31% [1] - The company posted revenues of $33.75 million for the quarter ended April 2025, missing the Zacks Consensus Estimate by 17.87%, and down from $46.74 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times [2] Group 2: Stock Performance and Outlook - Virco Manufacturing shares have declined approximately 19.9% since the beginning of the year, while the S&P 500 has gained 1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.81 on revenues of $113.8 million, and $0.79 on revenues of $270.5 million for the current fiscal year [7] - The estimate revisions trend for Virco Manufacturing is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Furniture industry, to which Virco Manufacturing belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5]

Core Insights - Virco Mfg. Corporation reported a net income of $0.7 million for the first quarter of 2025, a decrease from $2.1 million in the same period last year, primarily due to a significant disaster recovery order in the previous year [1][6] - The company experienced a 22.9% decline in shipments and backlog, totaling $105.6 million, while gross margin improved from 43.5% to 47.5% [6][2] - Management remains optimistic about underlying demand, which is believed to be within normal parameters for multi-year, election-related bond cycles [1][9] Financial Performance - Net sales for the first quarter were $33.754 million, down from $46.735 million year-over-year [18] - Gross profit decreased to $16.020 million from $20.347 million, while selling, general, and administrative expenses were $16.114 million compared to $17.376 million last year [18] - The company repurchased $4.0 million worth of shares and declared a cash dividend of $0.025 per share for the second fiscal quarter [5][6] Operational Insights - The company is focusing on financing seasonal inventories and accounts receivable, alongside investing in major capital equipment [5] - Management believes that tariffs will not significantly impact gross margins due to the domestic manufacturing of most products [2] - The company is confident in its ability to manage peak-season deliveries despite supply chain disruptions in other markets [2][8] Market Outlook - The current year is viewed as a "pause" in the recovery of the school furniture market post-COVID, but there are positive signs in the mid-term school bond environment [9] - The company is investing in training and technology to maintain operational efficiency and capitalize on future opportunities [8]

Core Viewpoint - Virco Manufacturing Corporation reported an adjusted loss in Q4 of fiscal 2024, leading to a 2.6% decline in its shares, with net sales missing expectations and showing a year-over-year decline [1][3]. Financial Performance - The company reported an adjusted loss of $0.35 per share, which was 133.3% worse than the Zacks Consensus Estimate of a loss of $0.15 [3]. - Net sales were $28.5 million, missing the consensus estimate of $43 million by 33.8% and declining 33.2% from the previous year's quarter [3]. - The net loss for the quarter was $5.7 million, an increase from a net loss of $2.3 million in the same quarter last year [6]. Operational Highlights - Shipments plus backlog decreased by 0.6% year over year to $316.4 million as of January 31, 2024 [4]. - The gross margin contracted by 1,150 basis points to 26.2% compared to 37.7% a year ago, primarily due to lower revenues and increased costs [5]. - Selling, general, and administrative expenses as a percentage of sales increased by 1,050 basis points to 54.7% from 44.2% reported a year ago [5]. Market Conditions - The company's performance was negatively impacted by unfavorable weather conditions, lower volumes, uncertainties in the global trade market, and ongoing inflationary pressures [2]. - Despite the challenges, Virco's long-term strategy of investing in domestic manufacturing and services is expected to positively influence its market prospects [2]. Financial Position - At the end of fiscal 2024, Virco had cash reserves of $26.9 million, significantly up from $5.3 million at the end of fiscal 2023 [7]. - Long-term debt (less current portion) was $3.9 million, down from $4.1 million at the end of fiscal 2023 [7].

Revenue Performance - Full year revenue for Virco Mfg. Corporation declined 1.1% to $266.24 million from $269.12 million in the prior year[1] - Fourth quarter revenue decreased 33.2% to $28.47 million from $42.60 million in the prior year, attributed to the absence of a counter-seasonal disaster recovery order[1] - Net sales for the year ended January 31, 2025, were $266,240, a decrease of 1% from $269,117 in 2024[21] Profitability Metrics - Gross margin for the full year remained steady at 43.1%, while it declined to 26.2% in the fourth quarter from 37.7% in the prior year[2] - Operating income for the full year was $27.86 million, or 10.5% of sales, compared to $31.88 million, or 11.8% of sales last year[4] - Operating income fell to $27,859, representing a decline of 12.3% compared to $31,877 in 2024[21] - Net income for the full year reached $21.64 million, slightly down from $21.91 million last year[4] - Net income for the year was $21,644, a slight decrease of 1.2% from $21,910 in 2024[21] Cash and Equity - Cash at year-end increased significantly to $26.87 million from $5.29 million last year[5] - Shareholder equity increased by 20% to $109.27 million compared to $91.18 million last year[5] - Cash dividends declared per common share increased to $0.09, up from $0.02 in the previous year[21] Expenses and Liabilities - Selling, general, and administrative expenses rose to $86,835, an increase of 3.1% from $84,181 in 2024[21] - Interest expense, net significantly decreased to $349, down from $2,679 in the previous year[21] - Income tax expense decreased to $6,780, down from $7,330 in the previous year[21] Operational Insights - Shipments plus backlog as of January 31, 2025, totaled $316.42 million, down from $318.40 million in the prior year[7] - The company executed a 5-year extension of its operating lease in Torrance, California, impacting right-of-use assets and liabilities[6] - Management emphasizes the importance of investing in domestic manufacturing to mitigate risks from global trade uncertainties[8] Shareholder Information - Basic net income per common share remained stable at $1.32, unchanged from the previous year[21] - Weighted average shares outstanding for basic shares increased to 16,365 from 16,295 in 2024[21]

Company Overview - Virco Mfg. Corporation is the largest domestic manufacturer and distributor of Furniture, Fixtures, and Equipment (FF&E) for the education market, with approximately 70% to 80% of sales being direct to customers [168]. Financial Performance - The Company reported a pre-tax profit of $28.4 million on net sales of $266.2 million for fiscal 2025, compared to a pre-tax profit of $29.2 million on net sales of $269.1 million in fiscal 2024, indicating a slight decline in both profit and sales [196]. - Net sales decreased by 1.1% in fiscal 2025, attributed to a slight increase in selling prices offset by a minimal decrease in unit volume, while order rates increased by approximately 3.3% compared to 2024 [197]. - Selling, general and administrative expenses increased by $2.6 million to $86.8 million in fiscal 2025, primarily due to an increase in variable selling and other compensation expenses [202]. - Cash flow provided by operations was $33.1 million in fiscal 2025, an increase from $27.0 million in fiscal 2024, primarily due to a decrease in accounts receivable [207]. - The effective tax rate for fiscal 2025 was 23.9%, reflecting the forecasted mix of income before taxes in various jurisdictions and the recording of a partial valuation allowance on net deferred tax assets [204]. - The material portion of costs as a percentage of sales was 33.2% in fiscal 2025, a decrease from 34.7% in fiscal 2024, primarily due to stable commodity costs [200]. Market Conditions - The company experienced a decline in order rates by 20% during fiscal 2021 due to the COVID-19 pandemic, but order rates recovered during fiscal 2022, 2023, and 2024, with 47% to 49% of annual revenue generated in June, July, and August [173][175]. - The company anticipates continued uncertainty and volatility in commodity costs, particularly with respect to steel, plastic, and energy, due to new tariffs and trade policies announced in early 2025 [183]. - The Company anticipates continued volatility in costs for fiscal 2026, particularly regarding imported components, transportation, and energy, which may adversely affect profitability [211]. - The Company is subject to market risk from changes in raw material prices, which can adversely impact operating results if costs increase unexpectedly [246]. Operational Efficiency - The company has maintained its domestic fabrication facilities, which are well-maintained and automated, providing a competitive advantage over companies that import finished products [171]. - The company has invested in automation at its domestic manufacturing facilities, allowing for rapid product development and customization to meet seasonal demand [185]. - The educational furniture market is highly seasonal, with average weekly shipments during peak months being as much as six times the level in winter months [177]. - The company has developed proprietary PlanSCAPE® software to enhance project management and logistics for FF&E solutions, supporting classroom-specific product selection and delivery [170]. Inventory and Costs - As of January 31, 2025, the company's inventory obsolescence adjustments were $5.6 million, representing 9.1% of inventories on a FIFO basis [187]. - The Company has negotiated increased flexibility in long-term contracts to allow for price increases on future orders [246]. - The Company actively works to offset increased raw material costs through sourcing initiatives and product re-engineering [246]. - The Company benefits from decreases in raw material costs under its contracts [246]. Shareholder Returns and Capital Management - The company spent $3.8 million to repurchase 342,026 shares of its common stock in fiscal 2025, with $11.2 million authorized for future repurchases [219]. - The company declared cash dividends in the fourth quarter of 2024 and in each quarter of 2025 [235]. - The equity section of the balance sheet on January 31, 2025 reflects additional paid-in capital of approximately $117.5 million and an accumulated deficit of approximately $8.9 million [236]. - The company has a secured revolving line of credit of up to $65.0 million, which can increase to $70.0 million during the peak months of June, July, and August 2024 [222]. - As of January 31, 2025, approximately $30.0 million was available for borrowing under the revolving line of credit [228]. Employee and Benefit Plans - The Company intends to continue offering lump sum benefits to terminated and retired employees to de-risk the Employee Plan, which may result in future settlement costs [191]. - Contributions to the Qualified Plan Trust and benefit payments under the VIP Plan totaled $623,000 in fiscal 2025 [232]. Risk Management and Compliance - The Company was self-insured for product liability losses up to $250,000 per occurrence and general liability losses up to $50,000 per occurrence in fiscal 2025 [240]. - The Company has purchased insurance to cover losses exceeding self-insured retention up to a limit of $30 million [240]. - Management does not anticipate that any related settlements would materially affect the Company's financial position or cash flows [241]. - The Company's exposure to self-insured retentions may vary based on market conditions in the insurance industry [240]. - The company maintains compliance with financial covenants, although uncertainties exist regarding raw material costs and supply chain challenges [228]. Environmental Initiatives - The company has enacted policies for recycling and resource recovery, earning multiple environmental commendations [238]. - The Company has implemented a program to improve product quality, resulting in reductions in product liability claims and litigated cases [241].

Core Viewpoint - Virco Mfg. Corporation reported a decline in revenue for the fiscal year ended January 31, 2025, alongside a significant drop in fourth-quarter revenue, attributed to the absence of a prior year's disaster recovery order. Despite these challenges, the company maintains a strong balance sheet and continues to invest in its operations, emphasizing its long-term commitment to the educational furniture market [1][2][5][9]. Financial Performance - Full-year revenue decreased by 1.1% to $266.24 million from $269.12 million in the previous year [2]. - Fourth-quarter revenue fell by 33.2% to $28.47 million compared to $42.60 million in the prior year [2]. - Gross margin for the full year remained stable at 43.1%, while it declined to 26.2% in the fourth quarter from 37.7% in the same period last year [3]. - Operating income for the full year was $27.86 million (10.5% of sales), down from $31.88 million (11.8% of sales) the previous year [5]. - The company reported a net income of $21.64 million for the full year, slightly down from $21.91 million in the prior year [5]. Cash Flow and Investments - Operating cash flow exceeded $33 million, with dividends and share repurchases exceeding $5 million and capital expenditures growing to over $6 million [9]. - Cash at year-end was $26.87 million, a significant increase from $5.29 million the previous year [6]. Strategic Outlook - Management highlighted the importance of the "Shipments plus Backlog" metric, which totaled $316.42 million as of January 31, 2025, down from $318.40 million the previous year [7]. - The company is focusing on domestic manufacturing to mitigate risks associated with global trade volatility and potential tariff impacts [12]. - Management expressed confidence in the long-term demand for educational furniture, indicating a willingness to invest in capabilities despite short-term uncertainties [12][15]. Market Position and Customer Base - Virco is the largest manufacturer and supplier of moveable educational furniture in the U.S., serving a diverse customer base that includes public and private schools, colleges, and various government and commercial entities [17]. - The company operates entirely within the U.S., with manufacturing facilities in California and Arkansas [17].