Virco(VIRC) - 2026 Q2 - Quarterly Results

Executive Summary & Financial Highlights Second Quarter and Six Months Financial Performance Overview Virco Mfg. Corporation reported strong profitability for the Second Quarter and first six months ended July 31, 2025, despite a significant reduction in revenue due to a general downturn in demand for educational furniture and the absence of a large prior-year disaster recovery order Shipments and Operating Income Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YTD 2025 (Millions) | YTD 2024 (Millions) | YoY Change (YTD) | | :----------------- | :----------------- | :----------------- | :------------------ | :------------------ | :--------------- | | Shipments | $92.1 | $108.4 | $125.8 | $155.2 | -18.9% | | Operating Income | $15.4 | $21.9 | $15.3 | $24.9 | -38.6% | - The year-over-year decline in revenue reflects a general slowdown in demand for school furniture and the absence of a large, counter-seasonal disaster recovery order from the prior year, which contributed approximately $13 million to total revenue through six months of last year[2] Key Financial Metrics and Ratios The company maintained high revenue quality with a strong gross profit margin, although SG&A expenses increased as a percentage of revenue, and net income for the six months declined compared to the prior year but remained the third-best in the last decade Key Financial Ratios (Six Months Ended July 31) | Metric | YTD 2025 | YTD 2024 | | :---------------------- | :------- | :------- | | Gross Profit Margin | 45.2% | 45.5% | | SG&A as % of Revenue | 33.1% | 29.5% | | Interest Expense | $0.3M | $0.5M | | Net Income | $10.9M | $19.0M | - Despite unfavorable year-over-year comparisons, the current year's six-month net income of $10.9 million is the Company's third-best in the last decade, contributing to a strong balance sheet[4] Dividend Declaration The Board of Directors declared a quarterly cash dividend for the second fiscal quarter, payable in October 2025, with the company intending to continue quarterly dividends, subject to Board review and lending agreement covenants Second Fiscal Quarter Dividend Details | Detail | Value | | :-------------- | :-------------- | | Dividend Amount | $0.025 per share| | Payment Date | October 10, 2025| | Record Date | September 19, 2025| - The declaration and payment of future dividends are subject to the discretion of the Board and restrictive covenants in the Company's lending agreements, with no assurance of future payments[9] Management Outlook and Market Conditions Management acknowledges the current market slowdown but remains optimistic about long-term opportunities, drawing parallels to 2021, and is leveraging its domestic capabilities and strong financial position to navigate uncertainties and prepare for a potential market recovery - Management is cautious about the remainder of the year due to ongoing uncertainties over economic conditions and related school funding[5] Shipments plus Backlog (as of July 31) | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change | | :-------------------- | :-------------- | :-------------- | :--------- | | Shipments plus Backlog| $165.9 | $223.7 | -25.8% | - The company is actively working to balance output, inventories, and expenses while preparing for a possible market recovery in the next two years, noting that spending for school furniture typically fluctuates around the election cycle[8] - Management observes similarities between current market conditions and those of 2021, when supply chains were readjusting to pandemic disruptions, and believes the company's vertically-integrated domestic manufacturing, liquidity, and strong balance sheet position it to benefit from future market equilibrium[4][11] Company Information About Virco Mfg. Corporation Virco Mfg. Corporation, founded in 1950, is a leading US-based manufacturer and supplier of educational furniture and equipment, serving a broad range of markets beyond K-12 education with all operations based in the United States - Founded in 1950, Virco Mfg. Corporation is the largest manufacturer and supplier of moveable educational furniture and equipment for the preschool through 12th grade market in the United States[13] - The company manufactures a wide assortment of products including mobile tables, storage equipment, desks, computer furniture, chairs, and folding furniture[13] - In addition to the education market, Virco supplies furniture and equipment to convention centers, arenas, the hospitality industry, government facilities, and places of worship, with all operations based in the United States[13] Statement Concerning Forward-Looking Information This section outlines the company's forward-looking statements, which are subject to known and unknown risks and uncertainties, advising against undue reliance on these statements and listing various factors that could cause actual results to differ materially - Forward-looking statements include those regarding future financial results, business growth, strategies, market demand, backlog estimates, order rates, economic conditions, and supply chain challenges[14] - Key risk factors include impacts of tariffs and global trade uncertainties, changes in general economic conditions (raw material, energy, freight costs), state and municipal bond funding, tax receipts, market seasonality, and the competitive landscape[14] - The company disclaims any obligation to update forward-looking statements, reserving the right to do so via press release, periodic reports, or other public disclosure methods[14] Financial Statements Unaudited Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets provide a snapshot of the company's financial position at July 31, 2025, January 31, 2025, and July 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | 7/31/2025 | 1/31/2025 | 7/31/2024 | | :-------------------------- | :-------- | :-------- | :-------- | | Total Assets | $198,641 | $191,946 | $216,348 | | Total Liabilities | $83,265 | $82,681 | $108,536 | | Total Stockholders' Equity | $115,376 | $109,265 | $107,812 | | Cash | $2,610 | $26,867 | $7,771 | | Trade Accounts Receivables, net | $46,817 | $13,004 | $56,065 | | Inventories | $59,866 | $55,647 | $58,574 | Unaudited Condensed Consolidated Statements of Income The unaudited condensed consolidated statements of income present the company's financial performance for the three and six months ended July 31, 2025, and 2024, showing declines in net sales, gross profit, operating income, and net income across both periods Condensed Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Net Sales | $92,086 | $108,419 | $125,840 | $155,154 | | Gross Profit | $40,874 | $50,218 | $56,894 | $70,565 | | Operating Income | $15,371 | $21,894 | $15,277 | $24,865 | | Net Income | $10,186 | $16,833 | $10,918 | $18,973 | | Basic Net Income Per Share | $0.65 | $1.04 | $0.69 | $1.16 | | Cash Dividends Declared Per Share | $0.025 | $0.020 | $0.050 | $0.040 |