Virco(VIRC) - 2022 Q3 - Quarterly Report

Orders and Backlog - Orders received during the nine months ended October 31, 2021 increased by 35.1% compared to the same period in 2020, with significant increases of 26.7% in Q1, 29.9% in Q2, and 59.0% in Q3[96] - The order backlog at October 31, 2021 was $50,955,000, representing a 195% increase from $17,249,000 at the same date in 2020[96] Financial Performance - The company earned a pre-tax profit of $1,620,000 on sales of $57,331,000 for the three months ended October 31, 2021, compared to a pre-tax profit of $4,864,000 on sales of $57,221,000 in the prior year[108] - Gross margin for the third quarter was 35.4% of sales, down from 38.9% in the prior year, primarily due to increased raw material costs[109] - Selling, general and administrative expenses for the three months ended October 31, 2021 increased due to higher variable freight and selling expenses[110] Production and Sales Outlook - Production rates decreased by 25% in Q1 and 8% in Q2 compared to the same periods last year, but increased by 39% in Q3[100] - The company anticipates that sales for the fourth quarter ending January 31, 2022 may be double compared to the same period last year, contingent on no unforeseen supply chain or COVID-related issues[106] Accounts and Expenditures - Accounts receivable increased by $7,947,000 at October 31, 2021, reflecting a shift in sales timing compared to the prior year[119] - Capital expenditures for the nine months ended October 31, 2021 were $2,552,000, up from $1,768,000 in the same period last year[121] Risk Factors - The company successfully negotiated an amendment to its credit agreement due to non-compliance with the fixed-charge coverage ratio requirement as of October 31, 2021[123] - The Company has made forward-looking statements regarding its performance and market conditions, indicating potential risks and uncertainties that could affect actual results[127] - Key risks include availability and cost of materials, particularly steel, and labor costs, which may impact product demand and pricing[127] - The Company is classified as a smaller reporting company and is not required to provide detailed market risk disclosures[129]