Virco Mfg (VIRC) investor relations material

Executive summary

• Net sales for the quarter ended July 31, 2025, were $92.1 million, down 15.1% year-over-year, with net income of $10.2 million, down from $16.8 million last year.

• Six-month net sales were $125.8 million, an 18.9% decrease year-over-year, and net income was $10.9 million, down from $19.0 million, marking the third-best result in a decade.

• Last year's results were boosted by one-time disaster recovery shipments, which did not recur in 2025, contributing to the revenue decline.

• Management remains cautious for the remainder of the year due to macroeconomic uncertainty and school funding concerns.

• Shipments plus Backlog at July 31, 2025, was $165.9 million, down 25.8% from $223.7 million a year ago.

Financial highlights

• Gross margin for the quarter was 44.4% (down from 46.3%); for six months, 45.2% (down from 45.5%).

• SG&A expenses rose to 27.7% of sales for the quarter (from 26.1%) and 33.1% for six months (from 29.5%), mainly due to higher delivery costs.

• Operating income for the quarter was $15.4 million (down from $21.9 million); for six months, $15.3 million (down from $24.9 million).

• EPS for the quarter was $0.65 (down from $1.04); for six months, $0.69 (down from $1.16).

• Cash at period end was $2.6 million, down from $7.8 million a year ago.

Outlook and guidance

• Management expects most of the current backlog to be delivered and recognized as revenue in Q3.

• Management does not provide formal guidance but uses "Shipments plus Backlog" as a planning metric.

• Market recovery is anticipated over the next two years, with spending typically fluctuating around the election cycle.

• Future growth rates are expected to moderate compared to recent years due to normalization post-COVID and macroeconomic headwinds.

• Management believes cash flow and available credit will be sufficient for the next twelve months.