Virco Reports Financial Results for First Quarter of Fiscal 2019
June 08 2018 - 9:30AM
Virco Mfg. Corporation (Nasdaq:VIRC) today announced
results for its first fiscal quarter ended April 30, 2018.
Revenue for the first three months ended April 30, 2018 declined
3% from $23,235,000 to $22,569,000. The Company’s preferred
early-season indicator of overall demand — actual YTD shipments
through May plus the unshipped backlog — increased 13% compared to
the prior year. Management believes this combined measurement
taken one month after the quarter end is deep enough into the order
entry cycle to be reflective of the year’s trajectory.
Management has found it helpful for evaluating overall business
activity in the highly seasonal market for school furniture.
As always, investors are cautioned not to assume that these
positive early trends will continue for the full year.
Due to the modest reduction in early-season shipments as well as
advanced preparations for what management believes will be a
further intensification of summer deliveries, the net loss for the
first quarter increased to $3,572,000 from $2,211,000 last
year. Due to a modest price increase during the first
quarter, margins appear to have stabilized for orders received
during the quarter. This price increase has offset most or
all of the cost pressures that have been building over the past
several quarters. In particular, the Company is experiencing
higher costs for steel, transportation, and related delivery
services.
With student enrollment in public schools growing annually only
in the low single digits, the Company’s recent revenue growth
exceeding this rate may be due to a combination of factors,
including gains in market share; faster-than-average new school
construction rates (and purchases of new furniture) in the West and
South; attempts by school administrators to accelerate
refurbishment of older schools and equipment; and/or a generally
more favorable funding environment for public schools.
Management also cautions that such growth may not continue should
one or more of these factors prove unsustainable.
Nonetheless, a new “steady-state” does appear to have been
established following several years of declining demand for public
school furniture that began with the Great Recession in 2008.
|
|
Three Months Ended |
|
|
4/30/2018 |
|
4/30/2017 |
|
|
(In thousands, except per share data) |
|
|
|
|
|
Net sales |
|
$ |
22,569 |
|
|
$ |
23,235 |
|
Cost of sales |
|
|
14,884 |
|
|
|
14,808 |
|
Gross profit |
|
|
7,685 |
|
|
|
8,427 |
|
Selling, general administrative & other
expense |
|
|
12,273 |
|
|
|
11,692 |
|
Operating loss |
|
|
(4,588 |
) |
|
|
(3,265 |
) |
Interest expense, net |
|
|
446 |
|
|
|
295 |
|
Loss before income taxes |
|
|
(5,034 |
) |
|
|
(3,560 |
) |
Income benefits |
|
|
(1,462 |
) |
|
|
(1,349 |
) |
Net loss |
|
$ |
(3,572 |
) |
|
$ |
(2,211 |
) |
|
|
|
|
|
Dividend declared per share: |
|
|
|
|
|
Cash |
|
|
$ |
0.015 |
|
|
$ |
- |
|
|
|
|
|
|
|
Net loss per common share - basic |
|
$ |
(0.23 |
) |
|
$ |
(0.15 |
) |
Net loss per common share - diluted (a) |
|
$ |
(0.23 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
|
15,317 |
|
|
|
15,128 |
|
Weighted average shares outstanding - diluted (a) |
|
|
15,317 |
|
|
|
15,128 |
|
|
|
|
|
|
(a) Net loss per common share was calculated
based on basic shares outstanding due to the anti-dilutive effect
on the inclusion of common stock equivalent shares. |
|
|
|
|
|
|
|
4/30/2018 |
|
1/31/2018 |
|
4/30/2017 |
Current assets |
$ |
77,822 |
|
$ |
55,713 |
|
|
$ |
68,004 |
|
Non-current assets |
|
61,685 |
|
|
60,910 |
|
|
|
61,750 |
|
Current liabilities |
|
51,412 |
|
|
27,723 |
|
|
|
43,716 |
|
Non-current liabilities |
|
32,831 |
|
|
30,188 |
|
|
|
28,409 |
|
Stockholders' equity |
|
55,264 |
|
|
58,712 |
|
|
|
57,629 |
|
Commenting on these developments, Virco CEO and Chairman Robert
A. Virtue said: “We’re seeing good early indicators this spring for
continued growth above the underlying growth rate in student
enrollment in U.S. public schools. While we can’t guarantee
this will continue, we’re encouraged by the strength of the market
and our possible gains in market share.”
President Doug Virtue elaborated: “While Virco is known
primarily as a manufacturer and supplier of school furniture and
equipment, we are actively exploring new markets and new channels
of outreach and distribution to diversify the customers we can
serve with our U.S. factories and employees. Speaking of
employees, this spring we celebrated the anniversaries of Virco
employees with more than five years of service. In all, we
recognized 519 employees out of a total of 805. Of these, 316
— or almost 40% -- had more than twenty years of service. The
collective knowledge and experience of these employees can’t be
overstated. We are extremely fortunate to have such a
dedicated team making and delivering furniture for American and
International schools. We look forward to finding new markets
where these skills and experience can support additional
growth.”
Contact:
Virco Mfg. Corporation (310) 533-0474Robert A. Virtue, Chairman
and Chief Executive OfficerDoug Virtue, PresidentRobert Dose, Chief
Financial Officer
This news release contains “forward-looking statements” as
defined by the Private Securities Reform Act of 1995. These
statements include, but are not limited to, statements
regarding: business strategies; market demand and product
development; order rates and trends in seasonality; product
relevance; economic conditions and patterns; the educational
furniture industry including the domestic market for classroom
furniture; state and municipal bond and/or tax funding; the rate of
completion of bond funded construction projects; cost control
initiatives; absorption rates; the relative competitiveness of
domestic vs. international supply chains; trends in shipping costs;
use of temporary workers; marketing initiatives; and international
or non K-12 markets. 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:
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,
2018 and other material filed 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.
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