0000751365FALSE00007513652024-09-092024-09-09

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report: September 9, 2024
VIRCO MFG. CORPORATION
(Exact name of registrant as specified in its charter)
 
 
Delaware 001-8777 95-1613718
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
   
2027 Harpers Way  
TorranceCalifornia 90501
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (310) 533-0474

Not Applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
VIRC
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]


TABLE OF CONTENTS

Item 2.02 - Results of Operations and Financial Condition
Item 9.01 - Financial Statements and Exhibits
SIGNATURES




Item 2.02 Results of Operations and Financial Condition.

On September 9, 2024, Virco Mfg. Corporation (“Virco”) issued a press release announcing its financial results for the second quarter ended July 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 7.01 Regulation FD Disclosure.

On September 3, 2024, the Company’s Board of Directors declared a cash dividend for the Company’s third fiscal quarter of
$0.025 on each outstanding share of common stock. The dividend is payable on October 11, 2024 to stockholders of record of the common stock as of the close of business on September 20, 2024. While the Company currently intends to pay future dividends on a quarterly basis, following review and approval by the Board of Directors, the declaration and payment of future dividends, as well as the amounts thereof, are subject to the discretion of the Board as well as restrictive covenants in the Company’s lending agreements. There can be no assurance that the Company will declare and pay dividends in future periods.


Item 9.01 Financial Statements and Exhibits.
Exhibit
No.		  Description

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
VIRCO MFG. CORPORATION
(Registrant)
 
Date: September 9, 2024/s/ Robert A. Virtue
 (Signature)  
 Name:  Robert A. Virtue
 Title:  Chief Executive Officer and Chairman of the Board of Directors




Exhibit 99.1

Virco Reports Improved Financial Position Following Record Second Quarter and First Half Results

•EPS Improves 9.5% in Quarter, 33.3% YTD to Record $1.16 per Share
•Operating Income reaches 20.2% in Second Quarter; 16.0% YTD
•Company is Effectively Debt Free; Growth is being Financed by Cash Flow from Operations
•Company Increases Quarterly Dividend to $0.025 per share, Payable October 11 to Shareholders of Record as of September 20
•Order Rates Remain Strong but Recent Trends Suggest Post-Pandemic Recovery May Be Slowing

TORRANCE, CALIFORNIA, September 9, 2024 (GLOBE NEWSWIRE)—Virco Mfg. Corporation (NASDAQ: VIRC), a leading manufacturer and supplier of movable furniture and equipment for educational environments, announced results for the Company’s Second Quarter and first six months ended July 31, 2024.

For the Second Quarter, including the months of May through July, revenue increased 1.0% to $108,419,000 from $107,321,000 in the same quarter of the prior year. For the first six months, revenue was up 9.1% to $155,154,000 from $142,264,000 in the first half of the prior year.

Gross profit for the second quarter improved to $50,218,000 from $48,578,000 last year, on gross margin of 46.3% versus 45.3%. Selling, General, and Administrative expenses increased slightly to $28,324,000 or 26.1% of revenue, from $27,324,000 or 25.5% of revenue in the same quarter of the prior year. The increase in operating expense was due to a slightly higher number of full-service orders and related installation expense.

Interest expenses for the second quarter were $322,000 compared to $1,083,000 last year. Year-to-date, interest expenses were $530,000 or 0.3% of sales compared to $1,795,000 or 1.3% of sales last year. As of July 31, 2024 the Company was in a positive cash position and was not utilizing any of the working capital available to it through its seasonal credit facility with PNC Bank. Management believes this is the first time in the Company’s 75-year history that it has been debt-free in the middle of the summer delivery season.

Operating Income for the second quarter improved to a record $21,894,000 from $21,254,000 in the same quarter of the prior year. This represents an operating margin of 20.2% vs. 19.8% last year. For the first six months, including the Company’s traditionally slower first quarter of February through April, Operating Income was a record $24,865,000 compared to $19,942,000 in the prior year. This improvement was driven by a combination of factors, including higher factory output and related operating efficiencies as well as a large counter-seasonal disaster recovery order that is currently ongoing. This order is now blending into the Company’s normal seasonal delivery pattern, which peaks in the second and third quarters when schools are out of session. This particular customer was able to take delivery earlier than usual, which had the highly visible effect of boosting revenue and cash flow in the seasonally light first quarter, contributing to a modest profit. Management cautions that this unusual timing is unlikely to repeat itself, and that the post-pandemic recovery of the school furniture market may yet hold additional surprises—both positive and negative—that are hard to predict.

In the Second Quarter the Company also completed a 5-year lease renewal on its Torrance, California headquarters, factory, and distribution center. The Company has occupied this facility, which totals 560,000 square feet, since 1994. The Company also owns over 1,750,000 square feet of combined factory and distribution space in Conway, Arkansas, where it has operations dating back to 1954. These strategic geographies provide the Company with significant logistical advantages in the highly seasonal market for bulky school furniture. California remains the Company’s single largest state by revenue, while states in the Southeast, serviced out of Arkansas, comprise the fastest-growing region.








Following the pandemic there was a flurry of school reopening, boosted somewhat by federal stimulus. Although most of that stimulus was designated for personnel to address learning loss, a small portion was directed to building improvements, including new furniture. Management points out that over 85% of public school funding still comes from state and local taxes and bonds, and that these are not likely to be impacted by the end of federal stimulus, which was recently extended to September, 2025 for ESSER funds previously granted but still un-spent. However, the Company has noted a slight softening in order rates as the current summer progressed. While Shipments plus Backlog (Management’s preferred forward-looking measure of business velocity) remains higher on a year-over-year basis, the recent rate of growth in this metric may in fact be slowing. Management believes the Company’s business model is sufficiently flexible to respond to these fluctuations, and that its current financial strength will continue to support capital investments in new manufacturing equipment and service extensions. Management also believes the Company is well-positioned to take advantage of unforeseen opportunities that may present themselves as the competitive landscape continues to evolve toward a new, post-pandemic equilibrium.

Commenting on the strong quarter and year-to-date results, Virco Chairman and CEO Robert Virtue said: “I’m very proud of our performance, not just this summer, but over the last four years. These years included the first-ever school closures in Virco’s history, as well as an unprecedented surge in re-openings. The fact that we could respond so effectively to challenges both up and down is a testament to our staff and their dedication to serving America’s students and educators.

“Next year will mark Virco’s 75th year in business, and the 99th year that our family has been making furniture. We’ve experienced some real surprises during those years, from the Great Depression (1929-1939) and World War II (1940-1945), to The Baby Boom (1946-1964) and its “Echo” (1976-2001), followed by the dot.com stock market collapse (2001-2002) and the subsequent crisis in public school funding (2002-2007). Also, at about the same time as the Dot.com crisis, China was admitted to the World Trade Organization, launching a twenty-year period of outsourcing when American factories and their workers came to be seen as liabilities, not assets.

“During all of these ups and downs we stayed committed to our vision of service, quality, frugality, and loyalty to our employees. We also continued investing in our U.S. factories and warehouses, even as the “smart money” told us to stop manufacturing here and relocate to Asia.

“Our view of the school furniture business is very long-term. This applies to our customers, who are ultimately the American taxpayers and their children, our long-term employees, our supplier partners, and the communities where we’ve been privileged to operate. It also applies to our conception of ourselves as owner/managers.

“To be able to see all the pieces coming together after the recent years of uncertainty is very gratifying. Many Americans now fully appreciate that school really matters. We never lost sight of this, nor our commitment to do whatever it took to remain a trusted partner for educators and the families they serve. Our approach has proven resilient through many different cycles and trends, and we believe it will prove equally successful with whatever challenges and opportunities lie ahead.

"Given the strength of our current position, we are actively reviewing our options for capital allocation. Among these are fair and equitable returns to shareholders in the form of dividends, share repurchases—we still have $3.5 million remaining in board-authorized funds for this purpose—and potential share price appreciation. We are also reviewing possible acquisitions, although as always we are quite careful in assessing the risks as well as the likely net contributions of such actions. Finally, we continue to invest in capital equipment, especially in processes and systems that expand the scope of our present capabilities and give us access to new and/or adjacent markets.

“I also want to personally recognize the support we’ve received from our shareholders, many of whom share the same owner/manager vision that we do. We look forward to using our financial strength to continue serving students and educators as well as providing a well-deserved return to the partners who have made our continuity of service possible.”












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 ongoing and long-term 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, 2024, 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

7/31/20241/31/20247/31/2023
(In thousands)
Assets
Current assets
Cash$7,771 $5,286 $1,600 
Trade accounts receivables, net56,065 23,161 68,592 
Inventories58,574 58,371 71,853 
Prepaid expenses and other current assets2,921 2,208 2,286 
Total current assets125,331 89,026 144,331 
Non-current assets
Property, plant and equipment
Land3,731 3,731 3,731 
Land improvements697 694 686 
Buildings and building improvements51,899 51,576 51,441 
Machinery and equipment116,284 114,400 115,899 
Leasehold improvements523 523 977 
Total property, plant and equipment173,134 170,924 172,734 
Less accumulated depreciation and amortization138,154 136,356 137,392 
Net property, plant and equipment34,980 34,568 35,342 
Operating lease right-of-use assets37,988 6,508 8,285 
Deferred tax assets, net6,682 6,634 7,100 
Other assets, net11,367 9,709 9,279 
Total assets$216,348 $146,445 $204,337 











Virco Mfg. Corporation

Unaudited Condensed Consolidated Balance Sheets


7/31/20241/31/20247/31/2023
(In thousands, except share and par value data)
Liabilities
Current liabilities
Accounts payable$26,085 $12,945 $27,854 
Accrued compensation and employee benefits11,572 10,880 10,983 
Income tax payable3,648 145 3,325 
Current portion of long-term debt253 248 32,256 
Current portion of operating lease liability1,431 5,744 5,386 
Other accrued liabilities12,517 8,570 11,259 
Total current liabilities55,506 38,532 91,063 
Non-current liabilities
Accrued self-insurance retention1,285 650 934 
Accrued pension expenses9,536 9,429 10,827 
Income tax payable, less current portion232 128 — 
Long-term debt, less current portion4,008 4,136 14,261 
Operating lease liability, less current portion37,204 1,829 4,317 
Other long-term liabilities765 562 640 
Total non-current liabilities53,030 16,734 30,979 
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 16,289,406 shares at 7/31/2024, and 16,347,314 at 1/31/2024 and 7/31/2023163 164 164 
Additional paid-in capital119,734 121,373 121,030 
Accumulated deficit(10,728)(29,048)(36,539)
Accumulated other comprehensive loss(1,357)(1,310)(2,360)
Total stockholders’ equity107,812 91,179 82,295 
Total liabilities and stockholders’ equity$216,348 $146,445 $204,337 













Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of Income


Three months ended
7/31/20247/31/2023
(In thousands, except per share data)
Net sales$108,419 $107,321 
Costs of goods sold58,201 58,743 
Gross profit50,218 48,578 
Selling, general and administrative expenses28,324 27,324 
Operating income21,894 21,254 
Unrealized gain on investment in trust account(597)(325)
Pension expense107 161 
Interest expense322 1,083 
Income before income taxes22,062 20,335 
Income tax expense5,229 4,801 
Net income$16,833 $15,534 
Cash dividends declared per common share:$0.02 $— 
Net income per common share:
Basic$1.04 $0.95 
Diluted$1.04 $0.95 
Weighted average shares of common stock outstanding:
Basic16,214 16,272 
Diluted16,215 16,294 











Virco Mfg. Corporation
Unaudited Condensed Consolidated Statements of Income

 Six months ended
 7/31/20247/31/2023
(In thousands, except per share data)
Net sales$155,154 $142,264 
Costs of goods sold84,589 80,484 
Gross profit70,565 61,780 
Selling, general and administrative expenses45,700 41,838 
Operating income 24,865 19,942 
Unrealized gain on investment in trust account(812)(624)
Pension expense214 322 
Interest expense530 1,795 
Income before income taxes24,933 18,449 
Income tax expense5,960 4,357 
Net income$18,973 $14,092 
Cash dividends declared per common share:$0.04 $— 
Net income per common share:
Basic$1.16 $0.87 
Diluted$1.16 $0.87 
Weighted average shares of common stock outstanding:
Basic16,305 16,242 
Diluted16,305 16,257 





v3.24.2.u1
Cover
Sep. 09, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Sep. 09, 2024
Entity Registrant Name VIRCO MFG. CORPORATION
City Area Code (310)
Local Phone Number 533-0474
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0000751365
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity File Number 001-8777
Entity Tax Identification Number 95-1613718
Entity Address, Address Line One 2027 Harpers Way
Entity Address, Postal Zip Code 90501
Entity Address, City or Town Torrance
Entity Address, State or Province CA
Title of 12(b) Security Common Stock, $0.01 par value per share
Trading Symbol VIRC
Security Exchange Name NASDAQ
Virco Manufacturing (NASDAQ:VIRC)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more Virco Manufacturing Charts.
Virco Manufacturing (NASDAQ:VIRC)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more Virco Manufacturing Charts.