Virco Mfg (VIRC) investor relations material

Executive summary

• Net sales for the quarter ended April 30, 2026, declined 9.1% year-over-year to $30.7 million, primarily due to lower disaster recovery shipments and slowing demand in the education sector.

• The company reported a net loss of $2.8 million versus net income of $0.7 million in the prior year quarter, with gross margin declining to 41.4% from 47.5%.

• Order backlog at April 30, 2026, was comparable to the prior year, with management expecting most backlog to be delivered in the summer peak season.

• Seasonality is returning, with losses expected in the first and fourth quarters and profits in the second and third.

• Ongoing volatility in energy and material costs, as well as trade policy changes, continue to impact operations and margins.

Financial highlights

• Net sales: $30.7 million, down from $33.8 million year-over-year.

• Net loss: $2.8 million, compared to net income of $0.7 million in the prior year.

• Gross margin: 41.4% (down from 47.5%); cost of goods sold increased as a percentage of sales due to lower volume and higher material costs.

• Inventories reduced 7.7% to $68.3 million, aligning with current demand.

• Cash at quarter-end: $3.7 million, up from $0.9 million a year ago but down from $14.4 million at prior fiscal year-end.

Outlook and guidance

• Management expects the majority of current backlog to be delivered and recognized as revenue during the summer months.

• Future growth rates are expected to moderate compared to the post-pandemic recovery period.

• Management is moderating expenses and investments due to flat incoming order rates and a neutral trend line.

• Seasonality is expected to sharpen, with a stronger summer peak as schools extend instructional calendars.

• The company believes cash flows from operations, cash on hand, and unused borrowing capacity will be sufficient to fund requirements for the next twelve months.