Virco Reports Full Year Revenue Increased 16.5% to $269.1 million, delivering 32.4% growth in Net Income
- Net revenue increased to $269.1 million, a 16.5% growth from the prior year.
- Record Net Income of $21.9 million compared to $16.5 million in the prior year.
- Gross Margin improved to 43.1% for the full year, up from 36.9% in the prior year.
- Debt-free status at year-end, except for a small mortgage on one facility in Arkansas.
- Vertical business model and experienced staff supported efficient operations and financial performance.
- Integrated strategy ensured timely delivery of school furniture and enhanced customer service.
- Controlled order-to-cash cycle contributed to strong operating and financial efficiencies.
- None.
Insights
The reported financial results from Virco Mfg. Corporation indicate a significant improvement in several key performance metrics, which is indicative of a strong operational year. The increase in net revenue by 16.5% and full year gross margin expansion to 43.1% from 36.9% reflect a solid demand for the company's products and effective cost management. The company's ability to generate a cash flow from operations of $27.0 million, a stark contrast to the negative cash flow in the previous year, suggests a robust recovery post-pandemic and efficient inventory management.
From a financial perspective, the company's status as effectively debt-free, barring a small mortgage, provides it with a strong balance sheet and financial flexibility. This is particularly important as the company enters the peak summer season, where it expects to utilize its revolving credit facility. The reduction in Selling, General and Administrative expenses as a percentage of revenue also indicates improved operational efficiency.
However, the increase in interest expenses, albeit slight, is a reminder of the broader macroeconomic environment of rising interest rates, which could affect future borrowing costs. Investors should monitor this alongside the company's ability to maintain its operational efficiencies and margin improvements in a potentially volatile economic climate.
Virco's focus on the educational environment, a sector with cyclical demand patterns, requires a nuanced understanding of market dynamics. The company's seasonally adjusted revenue increases and its record 'Shipments plus Backlog' metric suggest a strong market position and an effective anticipation of demand. This is important in an industry where the seasonal nature of school furniture purchases can create significant operational and logistical challenges.
The company's vertical business model, which integrates sales, manufacturing and service, appears to be a key differentiator, enabling it to provide enhanced services that now constitute over two-thirds of its revenue. This strategic approach not only ensures customer loyalty but also provides a competitive edge by enabling Virco to respond quickly to market changes and customer needs.
Furthermore, the company's long-standing history and experienced workforce contribute to its market stability and reliability. This, combined with the fact that the company is effectively debt-free, positions Virco favorably for both short-term operational execution and long-term strategic initiatives.
Virco's operational strategy, reflected in its financial results, demonstrates a high degree of efficiency in managing the order-to-cash cycle and balancing post-pandemic inventories. The company's ability to emerge from the pandemic with stronger financials than in 2019 is a testament to its operational resilience and the effectiveness of its vertically integrated business model.
The expansion of gross margin is particularly noteworthy as it indicates not just a recovery but an improvement in operational efficiency. The stabilization of raw material costs and the benefits of operating at a higher volume have evidently led to better cost absorption and profitability. The company's seasonal business model, with a significant portion of installations occurring during summer, requires precise management of production and staffing to align with demand cycles.
Lastly, the development of proprietary systems over its 74-year history highlights a commitment to continuous improvement and innovation in operational processes. This is critical in ensuring that the company can maintain its service levels and financial performance in the face of potential supply chain disruptions and market fluctuations.
- U.S. Factories and experienced staff support broad school recovery and related demand for school furniture
- Vertical control of order-to-cash cycle generates strong operating and financial efficiencies, with most metrics at historic highs
- Net Income reaches
$21.9 million vs.$16.5 million in prior year - Full Year Gross Margin expands to
43.1% vs.36.9% in prior year - Cash flow from operations reaches
$27.0 million vs.$(3.8 million ) in prior year due to combined operating income and balancing of post-pandemic inventories - Forward indicator of “Shipments plus Backlog” reaches record
$317.6 million vs.$289.6 million last year - Company is effectively debt-free at year end
- Net Income reaches
TORRANCE, Calif., April 12, 2024 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (NASDAQ: VIRC), the leading manufacturer and supplier of moveable furniture and equipment for educational environments in the United States, today reported financial results for the fourth quarter and full fiscal year ended January 31, 2024.
Net revenue for the full year ended January 31, 2024 increased
For the full year, the Company’s domestically-based vertical business model continued to support timely delivery of highly seasonal school furniture, approximately
Gross margin for the full year improved to
Selling, General, and Administrative expenses for the full year declined to
Operating Income for the full year ended January 31, 2024 was
Total Net Income after taxes for the full year was
Looking forward, Management notes that its preferred early-season measure of business velocity: “Shipments + Backlog” exceeded
Commenting on the year’s results, Virco Chairman and CEO Robert Virtue said: “While we are extremely pleased with last year’s results, we’ve been at this long enough to know that markets and competition are always evolving. We have meaningful opportunities and challenges ahead of us, but I feel confident in our ability to address these with the same discipline and optimism that we’ve exhibited over our 74-year history. I also want to thank our loyal investors, whose support made it possible to realize the vision of our long-term strategy. A visit to our factories, or to one the thousands of schools that we furnished last year, will validate the qualitative elements of our strategy. Good jobs and good schools: two things we’re honored to support.”
About Virco Mfg. Corporation
Founded in 1950, Virco Mfg. Corporation is the largest manufacturer and supplier of moveable educational furniture and equipment for the preschool through 12th grade market in the United States. The Company manufactures a wide assortment of products, including mobile tables, mobile storage equipment, desks, computer furniture, chairs, activity tables, folding chairs and folding tables. Along with serving customers in the education market - which in addition to preschool through 12th grade public and private schools includes: junior and community colleges; four-year colleges and universities; trade, technical and vocational schools - Virco is a furniture and equipment supplier for convention centers and arenas; the hospitality industry with respect to banquet and meeting facilities; government facilities at the federal, state, county and municipal levels; and places of worship. The Company also sells to wholesalers, distributors, traditional retailers and catalog retailers that serve these same markets. With operations entirely based in the United States, Virco designs, manufactures, and ships its furniture and equipment from one facility in Torrance, CA and three facilities in Conway, AR. More information on the Company can be found at www.virco.com.
Contact:
Virco Mfg. Corporation
(310) 533-0474
Robert A. Virtue, Chairman and Chief Executive Officer
Doug Virtue, President
Robert Dose, Chief Financial Officer
Non-GAAP Financial Information
This press release includes a statement of shipments plus unshipped backlog as of January 31, 2024 compared to the same date in the prior fiscal year. Shipments represent the dollar amount of net sales actually shipped during the period presented. Unshipped backlog represents the dollar amount of net sales that we expect to recognize in the future from sales orders that have been received from customers in the ordinary course of business. The Company considers shipments plus unshipped backlog a relevant and preferred supplemental measure for production and delivery planning. However, such measure has inherent limitations, is not required to be uniformly applied or audited and other companies may use methodologies to calculate similar measures that are not comparable. Readers should be aware of these limitations and should be cautious as to their use of such measure.
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 Consolidated Balance Sheets | |||||||
January 31, | |||||||
2024 | 2023 | ||||||
(In thousands, except share and par value data) | |||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 5,286 | $ | 1,057 | |||
Trade accounts receivables (net of allowance of | 23,161 | 18,435 | |||||
Other receivables | 20 | 68 | |||||
Income tax receivable | — | 19 | |||||
Inventories | 58,371 | 67,406 | |||||
Prepaid expenses and other current assets | 2,188 | 2,083 | |||||
Total current assets | 89,026 | 89,068 | |||||
Property, plant, and equipment | |||||||
Land | 3,731 | 3,731 | |||||
Land improvements | 694 | 686 | |||||
Buildings and building improvements | 51,576 | 51,310 | |||||
Machinery and equipment | 114,400 | 113,662 | |||||
Leasehold improvements | 523 | 983 | |||||
Total property, plant, and equipment | 170,924 | 170,372 | |||||
Less accumulated depreciation and amortization | 136,356 | 135,810 | |||||
Net property, plant, and equipment | 34,568 | 34,562 | |||||
Operating lease right-of-use assets | 6,508 | 10,120 | |||||
Deferred income tax assets, net | 6,634 | 7,800 | |||||
Other assets | 9,709 | 8,576 | |||||
Total assets | $ | 146,445 | $ | 150,126 |
Virco Mfg. Corporation Consolidated Balance Sheets | |||||||
January 31, | |||||||
2024 | 2023 | ||||||
(In thousands, except share and par value data) | |||||||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable | $ | 12,945 | $ | 19,448 | |||
Accrued compensation and employee benefits | 10,880 | 9,554 | |||||
Income tax payable | 145 | — | |||||
Current portion of long-term debt | 248 | 7,360 | |||||
Current portion of operating lease liability | 5,744 | 5,082 | |||||
Other accrued liabilities | 8,570 | 7,081 | |||||
Total current liabilities | 38,532 | 48,525 | |||||
Non-current liabilities | |||||||
Accrued self-insurance | 650 | 1,050 | |||||
Accrued retirement benefits | 9,429 | 10,676 | |||||
Income tax payable | 128 | 79 | |||||
Long-term debt, less current portion | 4,136 | 14,384 | |||||
Operating lease liability, less current portion | 1,829 | 6,796 | |||||
Other long-term liabilities | 562 | 555 | |||||
Total non-current liabilities | 16,734 | 33,540 | |||||
Commitments and contingencies (Note 8) | |||||||
Stockholders’ equity | |||||||
Preferred stock: | |||||||
Authorized 3,000,000 shares, | — | — | |||||
Common stock: | |||||||
Authorized 25,000,000 shares, | 164 | 162 | |||||
Additional paid-in capital | 121,373 | 120,890 | |||||
Accumulated deficit | (29,048 | ) | (50,631 | ) | |||
Accumulated other comprehensive loss | (1,310 | ) | (2,360 | ) | |||
Total stockholders’ equity | 91,179 | 68,061 | |||||
Total liabilities and stockholders’ equity | $ | 146,445 | $ | 150,126 |
Virco Mfg. Corporation Consolidated Statements of Income | |||||||
Year ended January 31, | |||||||
2024 | 2023 | ||||||
(In thousands, except per share data) | |||||||
Net sales | $ | 269,117 | $ | 231,064 | |||
Costs of goods sold | 153,059 | 145,723 | |||||
Gross profit | 116,058 | 85,341 | |||||
Selling, general, and administrative expenses | 84,181 | 74,697 | |||||
Operating income | 31,877 | 10,644 | |||||
Unrealized gain on investment in trust account | (1,050 | ) | (194 | ) | |||
Pension expense | 1,008 | 816 | |||||
Interest expense, net | 2,679 | 1,979 | |||||
Income before income taxes | 29,240 | 8,043 | |||||
Income tax expense (benefit) | 7,330 | (8,504 | ) | ||||
Net income | $ | 21,910 | $ | 16,547 | |||
Cash dividends declared per common share: | $ | 0.02 | $ | — | |||
Net income per common share: | |||||||
Basic | $ | 1.34 | $ | 1.03 | |||
Diluted | $ | 1.34 | $ | 1.02 | |||
Weighted average shares outstanding: | |||||||
Basic | 16,295 | 16,142 | |||||
Diluted | 16,388 | 16,192 |
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