Core Insights - Virco Mfg. Corporation reported a net loss of $1.3 million in Q3 2025, a significant decline from a net profit of $8.4 million in Q3 2024, with sales dropping from $82.6 million to $47.6 million [2][10] - For the nine months ending October 31, 2025, net income was $9.6 million on sales of $173.5 million, down from $27.4 million on sales of $237.8 million in the same period last year [3][10] - The company’s gross profit margin decreased from 44.4% to 38.0% in Q3 and from 45.1% to 43.2% over the nine-month period [2][3] Financial Performance - Q3 sales were $47.6 million, down 42.4% year-over-year, while gross profit for the quarter was $18.1 million [2][28] - SG&A expenses in Q3 decreased to $19.8 million, representing 41.5% of sales, compared to 30.9% in the same period last year [2] - For the nine months, SG&A expenses totaled $61.4 million, or 35.4% of sales, compared to 30.0% last year [3] Market Conditions - The decline in operating metrics was primarily due to lower sales and production levels, with a noted downturn of approximately 30% in the market for moveable school furniture over the last two years [4][5] - The expiration of pandemic recovery stimulus funds (ESSER funds) is identified as a key factor contributing to the slowdown, alongside a cautious mood among school administrators [6][10] Order and Backlog Trends - Incoming order rates have begun to stabilize, with the unshipped backlog nearly even with the prior year's backlog by the end of Q3 [7] - The preferred measure of overall business velocity, "Shipments Plus Backlog," declined 25% from $265 million to $199 million year-to-date [7] Future Outlook - Management anticipates a potential recovery similar to post-pandemic patterns, with a focus on maintaining a strong balance sheet to respond to new opportunities [9][15] - The company is actively exploring opportunities in adjacent public and private markets, viewing the current environment as a chance for growth [16] Dividend Declaration - The Board declared a quarterly cash dividend of $0.025 per share, payable on January 9, 2026, to shareholders of record as of December 19, 2025 [10][12]

Core Insights - Virco Mfg. Corporation reported strong profitability in Q2 and the first half of 2025 despite a downturn in demand for educational furniture and equipment [1][4] - Shipments in Q2 totaled $92.1 million, down from $108.4 million in the same quarter last year, reflecting a 15.1% decline [1][5] - For the first six months, total shipments were $125.8 million, an 18.9% decline from $155.2 million in the previous year [2][5] Financial Performance - Operating income for Q2 was $15.4 million compared to $21.9 million in the prior year [1][5] - Year-to-date operating income was $15.3 million, down from $24.9 million last year, marking the third highest in the past decade [2][5] - Net income for the first half was $10.9 million, down from $19.0 million last year, but still the third-best result in the last decade [4][5] Revenue Quality - The gross profit margin for the first six months was 45.2%, slightly down from 45.5% last year, indicating high revenue quality [2][5] - The company’s SG&A expenses increased to 33.1% of revenue from 29.5% in the prior year, reflecting cost control amidst inflationary pressures [3][5] Market Conditions - Management noted a general slowdown in the school furniture market and the absence of a large counter-seasonal disaster recovery order from the previous year, which had contributed approximately $13 million to revenue [2][5] - The company is preparing for potential market recovery in the next two years, with spending on school furniture typically fluctuating around election cycles [7][10] Dividend Declaration - The Board declared a quarterly dividend of $0.025 per share, payable on October 10, 2025, to shareholders of record as of September 19, 2025 [5][8] Strategic Outlook - Management is cautious about the remainder of the year due to ongoing economic uncertainties and school funding issues [5][10] - The company aims to leverage its domestic manufacturing capabilities to navigate supply chain challenges and capitalize on future opportunities [4][10]