Virco(VIRC) - 2026 Q3 - Quarterly Report

Financial Performance - For the three months ended October 31, 2025, the Company reported a net loss of $1.3 million on sales of $47.6 million, a decrease of approximately 42.3% compared to the prior year [89]. - For the nine months ended October 31, 2025, net income was $9.6 million on sales of $173.5 million, reflecting a decrease of approximately 27.0% compared to the same period last year [94]. Cost and Expenses - Cost of goods sold for the quarter ended October 31, 2025, was 62.0% of net sales, compared to 55.6% in the same quarter last year, resulting in a gross margin decline to 38.0% from 44.4% [90]. - Selling, general and administrative expenses (SG&A) for the three months ended October 31, 2025, were 41.5% of sales, up from 30.9% in the prior year due to lower sales volume [91]. Order and Inventory Management - The Company's order backlog at October 31, 2025, was approximately $26 million, slightly down from $27 million in the prior year, with expectations for most of the backlog to be recognized as revenue in Q4 [84]. - Accounts receivable decreased by $14.4 million at October 31, 2025, primarily due to a decrease in shipments [100]. - Inventory increased by $4.1 million at October 31, 2025, driven by increased costs, despite decreased production levels [100]. Tax and Cash Flow - The effective income tax rate for the three months ended October 31, 2025, was 26.8%, compared to 25.5% in the prior year [93]. - The Company spent $5.1 million on capital expenditures for the nine months ended October 31, 2025, down from $5.4 million in the same period last year [101]. - The Company had approximately $26.5 million in cash at October 31, 2025, compared to $38.9 million in the prior year, with ongoing cash flow used for capital expenditures and stock repurchases [102]. Risks and Market Conditions - The Company has made forward-looking statements regarding its performance and market conditions, which are subject to risks and uncertainties [111]. - Key risks include availability of funding for educational institutions, material costs, labor costs, product demand, competitive conditions, and general economic conditions [111]. - The Company is classified as a smaller reporting company and is not required to provide detailed market risk disclosures [113].