Virco(VIRC) - 2021 Q3 - Quarterly Report

Financial Performance - For the three months ended October 31, 2020, the company reported a pre-tax income of $4,864,000 on sales of $56,741,000, a decrease of 15.3% in net sales compared to the prior year [107]. - For the nine months ended October 31, 2020, net sales decreased by approximately $30,625,000 or 18.6% compared to the same period last year [111]. - Gross margin for the third quarter was approximately 39.3% of sales, down from 40.1% in the prior year, affected by unfavorable manufacturing variances due to moderated production rates [108]. Orders and Market Trends - Year-to-date orders through October 31, 2020 have declined by approximately 19.5%, with orders for the first quarter down 2.1%, second quarter down nearly 28%, and third quarter down 22.5% [106]. - The company anticipates a decline in the overall market for school furniture in the fiscal year ending January 31, 2021, due to budgetary concerns from state and local governments [104]. Expenses and Cost Management - Selling, general and administrative expenses decreased by $4,025,000 for the three months ended October 31, 2020, representing 29.0% of sales compared to 30.6% in the prior year [109]. - Capital spending for the nine months ended October 31, 2020 was $1,900,000, down from $2,963,000 for the same period last year, reflecting management's cash preservation strategy [118]. - Interest expense decreased by $184,000 for the three months ended October 31, 2020, as the company borrowed less money for seasonal working capital [110]. Inventory and Financing - The company’s inventory decreased by $6,035,000 at October 31, 2020 compared to the prior year, contributing to the complete paydown of its revolving line of credit [116]. - The company has obtained waivers and amendments from PNC Bank regarding its fixed-charge coverage ratio due to the adverse impact of the COVID-19 pandemic on operations [119].