Virco(VIRC) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended October 31, 2023, the company reported a pre-tax income of $13.5 million on sales of $84.2 million, compared to a pre-tax income of $8.2 million on sales of $77.4 million in the prior year, reflecting a significant improvement in performance [85]. - Net sales for the third quarter increased by approximately $6.9 million or 8.9% compared to the same period in 2022, driven by improved on-time deliveries and increased order rates [86]. - For the nine months ended October 31, 2023, the company earned a pre-tax profit of $31.9 million on sales of $226.5 million, a significant increase from a pre-tax profit of $12.8 million on sales of $192.3 million in the prior year, representing a 17.8% increase in net sales [91]. Margins and Costs - Gross margin for the third quarter ended October 31, 2023 was 45.4%, up from 39.8% in the prior year, attributed to price increases and stable commodity costs [87]. - Selling, general and administrative expenses for the nine months ended October 31, 2023 increased by $8.2 million but decreased as a percentage of sales, driven by increased orders and variable expenses [93]. - Interest expense increased by $0.9 million for the nine months ended October 31, 2023, primarily due to higher borrowing to finance seasonal working capital and rising interest rates [94]. Orders and Inventory - The company experienced a 25.0% increase in orders during the third quarter compared to the same quarter in 2022, contributing to a 10.3% increase in orders for the first nine months of fiscal 2023 [83]. - Accounts receivable increased by $5.0 million at October 31, 2023, reflecting the increased sales in the quarter [97]. - Inventory increased by $1.5 million at October 31, 2023, primarily due to increased costs rather than quantity, financed by cash flow from operations [98]. Financial Compliance - 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 [101].