Virco Mfg (VIRC) Q2 2027 earnings summary

Executive summary

• Net sales for the quarter were $87.5 million, down 5.0% year-over-year, and six-month net sales were $118.2 million, down 6.1%, due to macroeconomic headwinds and cautious school spending.

• Gross margin declined to 40.0% for the quarter and 40.4% for the six months, reflecting lower sales volume and higher costs.

• Net income was $8.6 million for the quarter (down 15.4%) and $5.8 million for the six months (down 46.5%).

• Order backlog as of July 31, 2026, was 13% higher than the prior year, indicating potential revenue recognition in the next quarter.

• Management notes cautious school spending due to budget cycle uncertainties, with recent trends showing slight improvement after new budgets were approved.

Financial highlights

• Quarterly net sales: $87.5 million (down from $92.1 million year-over-year); six-month net sales: $118.2 million (down from $125.8 million year-over-year).

• Quarterly gross profit: $35.0 million (down from $40.9 million); six-month gross profit: $47.7 million (down from $56.9 million).

• Quarterly operating income: $10.5 million (down from $15.4 million); six-month operating income: $6.9 million (down from $15.3 million).

• Quarterly EPS (diluted): $0.55 (down from $0.65); six-month EPS (diluted): $0.37 (down from $0.69).

• Cash on hand at July 31, 2026 was $9.2 million, down from $14.4 million at January 31, 2026.

Outlook and guidance

• Management expects the majority of the current backlog to be delivered and recognized as revenue in the third quarter.

• Ongoing macroeconomic uncertainty and volatility in material and transportation costs are expected to impact margins for the remainder of the fiscal year.

• Management expects the positive demand trend to have limited impact on full-year results due to seasonally lower volumes in the second half.

• Ongoing investments in new products and platform processes are planned, with annual capital expenditures expected to remain within $4–$6 million.

• Management remains cautious due to fluid supply chain conditions and market uncertainties.