• Virco Operating Income Nearly Doubles as Second Quarter Revenue Jumps 30%

    Source: Nasdaq GlobeNewswire / 11 Sep 2023 07:30:00   America/Chicago

    • Exemplary Performance by U.S. Factories and Delivery Teams convert record backlog to on-time deliveries for Back-to-School
    • Year-to Date Revenue up 24% to $142 million
    • Year-to-Date Operating Income improves to $20 million

    TORRANCE, Calif., Sept. 11, 2023 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (NASDAQ: VIRC), the largest manufacturer and supplier of movable furniture and equipment for educational environments in the United States, today reported financial results for the quarterly period ended July 31, 2023 (second quarter of fiscal 2024).

    Virco Mfg. Corporation today reported that revenue for the second quarter ended July 31 grew 30% YOY from $82,797,000 to $107,321,000 as the Company’s U.S. factories and logistics converted a record backlog to nationwide on-time deliveries for the new school year. In combination with stabilizing material and freight costs, the Company’s domestic operations generated improved profitability on the higher volume. For the second quarter, operating income nearly doubled from $11,174,000 to $21,254,000.

    Year-to-date, revenue increased 23.8% from $114,881,000 in the first six months of last year to $142,264,000 this year. Operating income for the first six months improved from $6,430,000 last year to $19,942,000 in the current year.

    Gross Margin for the second quarter improved from 38.5% to 45.3%, due to a combination of moderating raw material costs and improved operating efficiencies in the Company’s U.S. factories. SG&A as a percent of sales increased slightly from 25.0% last year to 25.5% this year. For the first six months, gross margin improved from 36.2% last year to 43.4% in the current year. For the same period, SG&A as a percent of sales declined from 30.6% to 29.4%.

    Interest expense on the Company’s seasonal credit facility was $1,083,000 for the current quarter compared to $698,000 for the same period last year. Year-to-date, interest expense was $1,795,000, or 1.3% of revenue, compared to $1,125,000, or 1.0% of revenue for the first six months of last year. The Company has adequate availability under its current facility and is able to finance its growth organically, with improved profitability and cash flows being generated by the higher revenue. Management observes that timely deliveries have contributed to timely collections on accounts receivable, leading to strong cash flows through the middle of the Company’s busy season. Other key balance sheet items such as inventories, accounts payable, and accounts receivable remain favorably balanced with the increase in revenue and earnings.

    Commenting on the strong second quarter and first six months, Virco CEO and Chairman Robert Virtue said: “We performed exceptionally well in this year’s back-to-school season. We had a record backlog of deliveries to make, and we made them. This ability to execute is directly tied to our domestic U.S. factories and logistics teams. As schools have extended their instruction calendar to make up for pandemic-related learning loss, our summer delivery window has effectively been narrowed. We have the physical footprint and the operating know-how to make and deliver millions of pounds of furniture in what is now a six- to eight-week delivery season. This environment has been increasingly challenging for import-based competitors. We are seeing a meaningful gain in new customers in this new competitive landscape.”

    Virco President Doug Virtue offered these additional comments: “We consider ourselves fortunate to have come out of the pandemic stronger than we went in. We are uniquely positioned to help schools as they modify their calendars and curricula to address the learning challenges faced by today’s students. Our vertical model has proven highly adaptable to these accelerations. We have good control over inventories, delivery performance, and the entire order-to-cash cycle. Ultimately, this allows us to better serve educators and students as they seek creative solutions to the challenges of the last few years.”

    Contact:
    Virco Mfg. Corporation
    (310) 533-0474
    Robert A. Virtue, Chairman and Chief Executive Officer
    Doug Virtue, President
    Robert Dose, Chief Financial Officer

    Statement Concerning Forward-Looking Information

    This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: our future financial results and growth in our business; business strategies; market demand and product development; estimates of unshipped backlog; order rates and trends in seasonality; product relevance; economic conditions and patterns; the educational furniture industry generally, including the domestic market for classroom furniture; cost control initiatives; absorption rates; and supply chain challenges. Forward-looking statements are based on current expectations and beliefs about future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are out of our control and difficult to forecast. These factors may cause actual results to differ materially from those that are anticipated. Such factors include, but are not limited to: uncertainties surrounding the severity, duration and effects of the COVID-19 pandemic; changes in general economic conditions including raw material, energy and freight costs; state and municipal bond funding; state, local, and municipal tax receipts; order rates; the seasonality of our markets; the markets for school and office furniture generally, the specific markets and customers with which we conduct our principal business; the impact of cost-saving initiatives on our business; the competitive landscape, including responses of our competitors and customers to changes in our prices; demographics; and the terms and conditions of available funding sources. See our Annual Report on Form 10-K for the year ended January 31, 2023, our Quarterly Reports on Form 10-Q, and other reports and material that we file with the Securities and Exchange Commission for a further description of these and other risks and uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We nonetheless reserve the right to make such updates from time to time by press release, periodic reports, or other methods of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements which are not addressed by such an update remain correct or create an obligation to provide any other updates.

    Financial Tables Follow

    Virco Mfg. Corporation

    Unaudited Condensed Consolidated Balance Sheets

     7/31/2023 1/31/2023 7/31/2022
    (In thousands)
          
    Assets     
    Current assets     
    Cash$1,600  $1,057  $2,179 
    Trade accounts receivables, net 68,592   18,435   44,286 
    Other receivables 58   68   95 
    Income tax receivable    19   111 
    Inventories 71,853   67,406   61,228 
    Prepaid expenses and other current assets 2,228   2,083   2,068 
    Total current assets 144,331   89,068   109,967 
    Non-current assets     
    Property, plant and equipment     
    Land 3,731   3,731   3,731 
    Land improvements 686   686   653 
    Buildings and building improvements 51,441   51,310   51,456 
    Machinery and equipment 115,899   113,662   115,029 
    Leasehold improvements 977   983   1,012 
    Total property, plant and equipment 172,734   170,372   171,881 
    Less accumulated depreciation and amortization 137,392   135,810   136,973 
    Net property, plant and equipment 35,342   34,562   34,908 
    Operating lease right-of-use assets 8,285   10,120   12,115 
    Deferred tax assets, net 7,100   7,800   488 
    Other assets, net 9,279   8,576   8,051 
    Total assets$204,337  $150,126  $165,529 
                

    Virco Mfg. Corporation

    Unaudited Condensed Consolidated Balance Sheets

     7/31/2023 1/31/2023 7/31/2022
     (In thousands, except share and par value data)
          
    Liabilities     
    Current liabilities     
    Accounts payable$27,854  $19,448  $27,290 
    Accrued compensation and employee benefits 10,983   9,554   6,873 
    Income tax payable 3,325       
    Current portion of long-term debt 32,256   7,360   22,736 
    Current portion operating lease liability 5,386   5,082   4,909 
    Other accrued liabilities 11,259   7,081   10,057 
    Total current liabilities 91,063   48,525   71,865 
    Non-current liabilities     
    Accrued self-insurance retention 934   1,050   1,436 
    Accrued pension expenses 10,827   10,676   15,238 
    Income tax payable 81   79   73 
    Long-term debt, less current portion 14,261   14,384   14,504 
    Operating lease liability, less current portion 4,317   6,796   9,241 
    Other long-term liabilities 559   555   667 
    Total non-current liabilities 30,979   33,540   41,159 
    Commitments and contingencies (Notes 6, 7 and 13)     
    Stockholders’ equity     
    Preferred stock:     
    Authorized 3,000,000 shares, $0.01 par value; none issued or outstanding        
    Common stock:     
    Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 16,347,314 shares at 7/31/2023 and 16,210,985 at 1/31/2023 and 7/31/2022 164   162   162 
    Additional paid-in capital 121,030   120,890   120,684 
    Accumulated deficit (36,539)  (50,631)  (62,582)
    Accumulated other comprehensive loss (2,360)  (2,360)  (5,759)
    Total stockholders’ equity 82,295   68,061   52,505 
    Total liabilities and stockholders’ equity$204,337  $150,126  $165,529 
                

    Virco Mfg. Corporation

    Unaudited Condensed Consolidated Statements of Income

     Three months ended
     7/31/2023 7/31/2022
     (In thousands, except per share data)
    Net sales$107,321  $82,797 
    Costs of goods sold 58,743   50,952 
    Gross profit 48,578   31,845 
    Selling, general and administrative expenses 27,324   20,671 
    Operating income 21,254   11,174 
    Unrealized (gain) loss on investment in trust account (325)  305 
    Pension expense 161   196 
    Interest expense 1,083   698 
    Income before income taxes 20,335   9,975 
    Income tax expense 4,801   295 
    Net income$15,534  $9,680 
        
        
    Net income per common share:   
    Basic$0.95  $0.60 
    Diluted$0.95  $0.60 
    Weighted average shares of common stock outstanding:   
    Basic 16,272   16,108 
    Diluted 16,294   16,108 
            

    Virco Mfg. Corporation

    Unaudited Condensed Consolidated Statements of Income

     Six months ended
     7/31/2023 7/31/2022
     (In thousands, except per share data)
    Net sales$142,264  $114,881 
    Costs of goods sold 80,484   73,329 
    Gross profit 61,780   41,552 
    Selling, general and administrative expenses 41,838   35,122 
    Operating income 19,942   6,430 
    Unrealized (gain) loss on investment in trust account (624)  305 
    Pension expense 322   391 
    Interest expense 1,795   1,125 
    Income before income taxes 18,449   4,609 
    Income tax expense 4,357   13 
    Net income$14,092  $4,596 
        
        
    Net income per common share:   
    Basic$0.87  $0.29 
    Diluted$0.87  $0.29 
    Weighted average shares of common stock outstanding:   
    Basic 16,242   16,071 
    Diluted 16,257   16,071 
            

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