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Virco's Q2 Earnings Beat Estimates, Revenues Miss, Stock Falls
VIRCVirco(VIRC) ZACKS·2024-09-10 14:06

Core Viewpoint - Virco Manufacturing Corporation (VIRC) reported mixed results for the second quarter of fiscal 2024, with earnings exceeding expectations while sales fell short, leading to a 9.3% decline in share price following the announcement [1]. Financial Performance - Adjusted earnings were reported at 1.04pershare,surpassingtheZacksConsensusEstimateof1.04 per share, surpassing the Zacks Consensus Estimate of 1.00 by 4%, and increased from 95 cents per share in the previous quarter [5]. - Net sales reached 108.4million,missingtheconsensusestimateof108.4 million, missing the consensus estimate of 115.9 million by 6.5%, but grew 1% year-over-year [5]. - Gross profit increased by 3.4% year-over-year to 50.2million,withgrossmarginexpandingby100basispointsto46.350.2 million, with gross margin expanding by 100 basis points to 46.3% [6]. - Operating profit was reported at 21.9 million, compared to 21.2millionintheprior−yearquarter[7].OperationalHighlights−Theincreaseinearningsandsaleswasdrivenbyhigherfactoryoutput,improvedoperatingefficiencies,andasignificantcounter−seasonaldisasterrecoveryorder[2].−Althoughorderratesslightlydeclinedduringsummer,shipmentsandbacklogremainedhigherthanthepreviousyear,indicatingconfidenceinadaptingtomarketchanges[3].StrategicOutlook−Thecompanyplanstopursuepotentialacquisitionopportunitiestoenhanceitsbusinesscapabilitiesandaimstoaddshareholdervaluethroughquarterlydividendsandsharerepurchases[4].−Virco′sstrongfinancialpositionsupportsongoinginvestmentsinnewmanufacturingequipmentandserviceexpansions,positioningthecompanytocapitalizeonunexpectedopportunitiesinthepost−pandemicmarket[3].FinancialPosition−Asoftheendofthefiscalsecondquarter,cashstoodat21.2 million in the prior-year quarter [7]. Operational Highlights - The increase in earnings and sales was driven by higher factory output, improved operating efficiencies, and a significant counter-seasonal disaster recovery order [2]. - Although order rates slightly declined during summer, shipments and backlog remained higher than the previous year, indicating confidence in adapting to market changes [3]. Strategic Outlook - The company plans to pursue potential acquisition opportunities to enhance its business capabilities and aims to add shareholder value through quarterly dividends and share repurchases [4]. - Virco's strong financial position supports ongoing investments in new manufacturing equipment and service expansions, positioning the company to capitalize on unexpected opportunities in the post-pandemic market [3]. Financial Position - As of the end of the fiscal second quarter, cash stood at 0.8 million, down from 5.3millionattheendoffiscal2023,whilelong−termdebtslightlydecreasedto5.3 million at the end of fiscal 2023, while long-term debt slightly decreased to 4 million [8]. - Inventory at the end of the second quarter was 58.6million,aslightincreasefrom58.6 million, a slight increase from 58.4 million in the year-ago period [8].