Virco Reports $700,000 First Quarter Profit as Demand for School Furniture Slows

Core Insights - Virco Mfg. Corporation reported a net income of $0.7 million for the first quarter of 2025, a decrease from $2.1 million in the same period last year, primarily due to a significant disaster recovery order in the previous year [1][6] - The company experienced a 22.9% decline in shipments and backlog, totaling $105.6 million, while gross margin improved from 43.5% to 47.5% [6][2] - Management remains optimistic about underlying demand, which is believed to be within normal parameters for multi-year, election-related bond cycles [1][9] Financial Performance - Net sales for the first quarter were $33.754 million, down from $46.735 million year-over-year [18] - Gross profit decreased to $16.020 million from $20.347 million, while selling, general, and administrative expenses were $16.114 million compared to $17.376 million last year [18] - The company repurchased $4.0 million worth of shares and declared a cash dividend of $0.025 per share for the second fiscal quarter [5][6] Operational Insights - The company is focusing on financing seasonal inventories and accounts receivable, alongside investing in major capital equipment [5] - Management believes that tariffs will not significantly impact gross margins due to the domestic manufacturing of most products [2] - The company is confident in its ability to manage peak-season deliveries despite supply chain disruptions in other markets [2][8] Market Outlook - The current year is viewed as a "pause" in the recovery of the school furniture market post-COVID, but there are positive signs in the mid-term school bond environment [9] - The company is investing in training and technology to maintain operational efficiency and capitalize on future opportunities [8]