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].

Group 1 - Virco Mfg. Corporation (NASDAQ: VIRC) is a small company with a long operational history, being public since 1964, although its business is somewhat cyclical [1] - The company recently experienced a significant decline of 30% from $16 per share after reporting worse-than-expected results [1] Group 2 - The company is analyzed in the context of long-term fundamentals driving share prices, with a focus on predicting earnings per share [1]

Core Viewpoint - Virco Mfg. Corporation has announced a new share repurchase program for up to $10,000,000 of its Common Stock, starting February 1, 2025, with no specified time limit [1]. Group 1 - The share repurchase program allows for purchases at management's discretion through various means, including open market purchases and privately negotiated transactions [2]. - The timing and total amount of stock repurchases will be influenced by business, economic, and market conditions, as well as corporate and regulatory requirements [2]. - The company plans to use its existing cash and cash equivalents to fund the repurchases under the new program [2].

Revenue and Orders - The Company recognized approximately $9 million in additional revenue from disaster recovery orders in Q1 2024 compared to Q1 2023, with further orders of $4 million and $6 million delivered in Q2 and Q3, respectively [89]. - For the three-month period ended October 31, 2024, the Company experienced a 13% decrease in orders compared to the same period last year, but a 2% increase in orders for the nine-month period [90]. - The sales order backlog decreased to approximately $25 million at October 31, 2024, down from $42.6 million in the prior year [91]. Financial Performance - Net income for the three months ended October 31, 2024, was $8.4 million on sales of $82.6 million, compared to net income of $10.2 million on sales of $84.3 million in the prior year [97]. - Sales for the nine-month period ended October 31, 2024, increased by approximately $11.3 million or 5.0% compared to the same period in the prior year, driven by increased volume and product mix [102]. - Gross margin for the first nine months ended October 31, 2024, was 45.1%, up from 44.1% in the prior year, due to increased production levels and stable raw material costs [103]. - Selling, general and administrative expenses for the nine months ended October 31, 2024, increased to 30.0% of sales from 28.9% in the prior year, attributed to higher variable selling and service expenses [104]. Cash and Tax - The Company had $38.9 million in cash and no borrowings under its line of credit as of October 31, 2024, compared to $4.9 million in cash and approximately $3.7 million in borrowings at the same date in 2023 [92]. - The effective income tax rate for the nine months ended October 31, 2024, was 24.4%, compared to 24.0% in the prior year [106]. Lease and Assets - The Company executed a 5-year lease renewal for its facility in Torrance, CA, resulting in an increase in ROU Assets of approximately $33 million [93].

Economic Overview - Major indexes have experienced volatility, with soft economic data raising concerns about the economy's health [1][3] - The August jobs data showed private payrolls increased by only 142,000, below the expected 161,000, leading to worries about a cooling labor market [3] - The manufacturing sector continues to struggle, with the ISM manufacturing index declining for the fifth consecutive month [4] Market Performance - The S&P 500 declined 4.3% for the week, marking its worst week since March 2023, while the Nasdaq fell 5.8%, its worst weekly performance since 2022 [4] - September is historically one of the worst months for stocks, with the S&P 500 showing poor performance since 1950 due to portfolio adjustments by investors returning from summer vacations [7][6] Federal Reserve Actions - The Federal Reserve is expected to initiate rate cuts, with a 25 basis point cut anticipated in the upcoming FOMC meeting [5] - There is uncertainty regarding the extent of the rate cuts, especially with the Presidential election approaching [6] Dividend-Paying Stocks - In light of market volatility, investing in dividend-paying stocks is recommended for steady income and capital preservation [2][8] - Companies highlighted for their dividend performance include: - **Virco Mfg. Corporation (VIRC)**: Dividend of $0.03 per share, 0.61% yield, payout ratio of 5% [10] - **Brady Corporation (BRC)**: Dividend of $0.24 per share, 1.29% yield, payout ratio of 22% [12] - **Broadcom Inc. (AVGO)**: Dividend of $0.53 per share, 1.49% yield, payout ratio of 56% [15] - **Verizon Communications Inc. (VZ)**: Dividend of $0.68 per share, 6.23% yield, payout ratio of 58% [17]

Core Viewpoint - Virco Manufacturing Corporation (VIRC) reported mixed results for the second quarter of fiscal 2024, with earnings exceeding expectations while sales fell short, leading to a 9.3% decline in share price following the announcement [1]. Financial Performance - Adjusted earnings were reported at $1.04 per share, surpassing the Zacks Consensus Estimate of $1.00 by 4%, and increased from 95 cents per share in the previous quarter [5]. - Net sales reached $108.4 million, missing the consensus estimate of $115.9 million by 6.5%, but grew 1% year-over-year [5]. - Gross profit increased by 3.4% year-over-year to $50.2 million, with gross margin expanding by 100 basis points to 46.3% [6]. - Operating profit was reported at $21.9 million, compared to $21.2 million in the prior-year quarter [7]. Operational Highlights - The increase in earnings and sales was driven by higher factory output, improved operating efficiencies, and a significant counter-seasonal disaster recovery order [2]. - Although order rates slightly declined during summer, shipments and backlog remained higher than the previous year, indicating confidence in adapting to market changes [3]. Strategic Outlook - The company plans to pursue potential acquisition opportunities to enhance its business capabilities and aims to add shareholder value through quarterly dividends and share repurchases [4]. - Virco's strong financial position supports ongoing investments in new manufacturing equipment and service expansions, positioning the company to capitalize on unexpected opportunities in the post-pandemic market [3]. Financial Position - As of the end of the fiscal second quarter, cash stood at $0.8 million, down from $5.3 million at the end of fiscal 2023, while long-term debt slightly decreased to $4 million [8]. - Inventory at the end of the second quarter was $58.6 million, a slight increase from $58.4 million in the year-ago period [8].

Financial Performance - EPS improved by 9.5% in the second quarter and 33.3% year-to-date to a record $1.16 per share[1] - Operating income reached 20.2% in the second quarter and 16.0% year-to-date, with a record operating income of $21,894,000 in Q2[4] - Revenue increased by 1.0% in the second quarter to $108,419,000 and by 9.1% year-to-date to $155,154,000[2] - Gross profit for the second quarter improved to $50,218,000, with a gross margin of 46.3%[2] - Net sales for the three months ended July 31, 2024, increased to $108,419,000, up from $107,321,000 for the same period in 2023, representing a growth of 1.02%[14] - Gross profit for the six months ended July 31, 2024, was $70,565,000, compared to $61,780,000 for the same period in 2023, reflecting an increase of 14.5%[15] - Net income for the three months ended July 31, 2024, was $16,833,000, compared to $15,534,000 for the same period in 2023, marking a rise of 8.35%[14] - Operating income for the six months ended July 31, 2024, was $24,865,000, compared to $19,942,000 for the same period in 2023, an increase of 24.4%[15] - The company reported a basic net income per common share of $1.04 for the three months ended July 31, 2024, compared to $0.95 for the same period in 2023, an increase of 9.5%[14] Debt and Liabilities - Interest expenses decreased significantly to $322,000 in Q2 from $1,083,000 last year, with year-to-date interest expenses at $530,000[3] - The company is effectively debt-free, marking a significant milestone in its 75-year history[3] - Total current liabilities decreased to $55,506,000 as of July 31, 2024, from $91,063,000 as of July 31, 2023, indicating a reduction of 39%[13] - The current portion of long-term debt decreased significantly to $253,000 as of July 31, 2024, from $32,256,000 as of July 31, 2023[13] Equity and Dividends - Total stockholders' equity increased to $107,812,000 as of July 31, 2024, up from $82,295,000 as of July 31, 2023, representing a growth of 31.1%[13] - The quarterly dividend was increased to $0.025 per share, payable on October 11[1] - The company declared cash dividends of $0.02 per common share for the three months ended July 31, 2024, compared to no dividends declared in the same period of 2023[14] Management Insights - Management noted a slight softening in order rates as summer progressed, indicating potential challenges in post-pandemic recovery[6] - The company completed a 5-year lease renewal on its Torrance headquarters, enhancing its logistical advantages[5] - Management is actively reviewing options for capital allocation, including dividends, share repurchases, and potential acquisitions[10]