Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report: September 11, 2023

VIRCO MFG. CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-8777

95-1613718

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

2027 Harpers Way

Torrance

California

90501

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (310) 533-0474

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

VIRC

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

TABLE OF CONTENTS


Item 2.02 - Results of Operations and Financial Condition
Item 9.01 - Financial Statements and Exhibits
SIGNATURES

Item 2.02 Results of Operations and Financial Condition.

On September 11, 2023, Virco Mfg. Corporation (“Virco”) issued a press release reporting its financial results for the second quarter ended July 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1. The information in this Item 2.02 and the exhibit attached hereto are furnished to, but not filed with, the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits.



Exhibit No.						Description
(d) Exhibit 99.1						Press Release dated September 11 , 2023

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	VIRCO MFG. CORPORATION (Registrant)

Date: September 11, 2023	/s/ Robert A. Virtue
	(Signature)
	Name:	Robert A. Virtue
	Title:	Chief Executive Officer and Chairman of the Board of Directors

Exhibit 99.1

Virco Operating Income Nearly Doubles as Second Quarter Revenue Jumps 30%

•Exemplary Performance by U.S. Factories and Delivery Teams convert record backlog to on-time deliveries for Back-to-School

•Year-to Date Revenue up 24% to $142 million

•Year-to-Date Operating Income improves to $20 million

TORRANCE, CALIFORNIA, September 11, 2023 – Virco Mfg. Corporation (NASDAQ: VIRC), the largest manufacturer and supplier of movable furniture and equipment for educational environments in the United States, today reported financial results for the quarterly period ended July 31, 2023 (second quarter of fiscal 2024).

Virco Mfg. Corporation today reported that revenue for the second quarter ended July 31 grew 30% YOY from $82,797,000 to $107,321,000 as the Company’s U.S. factories and logistics converted a record backlog to nationwide on-time deliveries for the new school year. In combination with stabilizing material and freight costs, the Company’s domestic operations generated improved profitability on the higher volume. For the second quarter, operating income nearly doubled from $11,174,000 to $21,254,000.

Year-to-date, revenue increased 23.8% from $114,881,000 in the first six months of last year to $142,264,000 this year. Operating income for the first six months improved from $6,430,000 last year to $19,942,000 in the current year.

Gross Margin for the second quarter improved from 38.5% to 45.3%, due to a combination of moderating raw material costs and improved operating efficiencies in the Company’s U.S. factories. SG&A as a percent of sales increased slightly from 25.0% last year to 25.5% this year. For the first six months, gross margin improved from 36.2% last year to 43.4% in the current year. For the same period, SG&A as a percent of sales declined from 30.6% to 29.4%.

Interest expense on the Company’s seasonal credit facility was $1,083,000 for the current quarter compared to $698,000 for the same period last year. Year-to-date, interest expense was $1,795,000, or 1.3% of revenue, compared to $1,125,000, or 1.0% of revenue for the first six months of last year. The Company has adequate availability under its current facility and is able to finance its growth organically, with improved profitability and cash flows being generated by the higher revenue. Management observes that timely deliveries have contributed to timely collections on accounts receivable, leading to strong cash flows through the middle of the Company’s busy season. Other key balance sheet items such as inventories, accounts payable, and accounts receivable remain favorably balanced with the increase in revenue and earnings.

Commenting on the strong second quarter and first six months, Virco CEO and Chairman Robert Virtue said: “We performed exceptionally well in this year’s back-to-school season. We had a record backlog of deliveries to make, and we made them. This ability to execute is directly tied to our domestic U.S. factories and logistics teams. As schools have extended their instruction calendar to make up for pandemic-related learning loss, our summer delivery window has effectively been narrowed. We have the physical footprint and the operating know-how to make and deliver millions of pounds of furniture in what is now a six- to eight-week delivery season. This environment has been increasingly challenging for import-based competitors. We are seeing a meaningful gain in new customers in this new competitive landscape.”

Virco President Doug Virtue offered these additional comments: “We consider ourselves fortunate to have come out of the pandemic stronger than we went in. We are uniquely positioned to help schools as they modify their calendars and curricula to address the learning challenges faced by today’s students. Our vertical model has proven highly adaptable to these accelerations. We have good control over inventories, delivery performance, and the entire order-to-cash cycle. Ultimately, this allows us to better serve educators and students as they seek creative solutions to the challenges of the last few years.”

Contact:

Virco Mfg. Corporation

(310) 533-0474

Robert A. Virtue, Chairman and Chief Executive Officer

Doug Virtue, President

Robert Dose, Chief Financial Officer

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 severity, duration and 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, 2023, 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

Unaudited Condensed Consolidated Balance Sheets


	7/31/2023		1/31/2023		7/31/2022
	(In thousands)

Assets
Current assets
Cash	$	1,600	$	1,057	$	2,179
Trade accounts receivables, net	68,592		18,435		44,286
Other receivables	58		68		95
Income tax receivable	—		19		111
Inventories	71,853		67,406		61,228
Prepaid expenses and other current assets	2,228		2,083		2,068
Total current assets	144,331		89,068		109,967
Non-current assets
Property, plant and equipment
Land	3,731		3,731		3,731
Land improvements	686		686		653
Buildings and building improvements	51,441		51,310		51,456
Machinery and equipment	115,899		113,662		115,029
Leasehold improvements	977		983		1,012
Total property, plant and equipment	172,734		170,372		171,881
Less accumulated depreciation and amortization	137,392		135,810		136,973
Net property, plant and equipment	35,342		34,562		34,908
Operating lease right-of-use assets	8,285		10,120		12,115
Deferred tax assets, net	7,100		7,800		488
Other assets, net	9,279		8,576		8,051
Total assets	$	204,337	$	150,126	$	165,529

Virco Mfg. Corporation

Unaudited Condensed Consolidated Balance Sheets


	7/31/2023		1/31/2023		7/31/2022
	(In thousands, except share and par value data)

Liabilities
Current liabilities
Accounts payable	$	27,854	$	19,448	$	27,290
Accrued compensation and employee benefits	10,983		9,554		6,873
Income tax payable	3,325		—		—
Current portion of long-term debt	32,256		7,360		22,736
Current portion operating lease liability	5,386		5,082		4,909
Other accrued liabilities	11,259		7,081		10,057
Total current liabilities	91,063		48,525		71,865
Non-current liabilities
Accrued self-insurance retention	934		1,050		1,436
Accrued pension expenses	10,827		10,676		15,238
Income tax payable	81		79		73
Long-term debt, less current portion	14,261		14,384		14,504
Operating lease liability, less current portion	4,317		6,796		9,241
Other long-term liabilities	559		555		667
Total non-current liabilities	30,979		33,540		41,159
Commitments and contingencies (Notes 6, 7 and 13)
Stockholders’ equity
Preferred stock:
Authorized 3,000,000 shares, $0.01 par value; none issued or outstanding	—		—		—
Common stock:
Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 16,347,314 shares at 7/31/2023 and 16,210,985 at 1/31/2023 and 7/31/2022	164		162		162
Additional paid-in capital	121,030		120,890		120,684
Accumulated deficit	(36,539)		(50,631)		(62,582)
Accumulated other comprehensive loss	(2,360)		(2,360)		(5,759)
Total stockholders’ equity	82,295		68,061		52,505
Total liabilities and stockholders’ equity	$	204,337	$	150,126	$	165,529

Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of Income


	Three months ended
	7/31/2023		7/31/2022
	(In thousands, except per share data)
Net sales	$	107,321	$	82,797
Costs of goods sold	58,743		50,952
Gross profit	48,578		31,845
Selling, general and administrative expenses	27,324		20,671


Operating income	21,254		11,174
Unrealized (gain) loss on investment in trust account	(325)		305
Pension expense	161		196
Interest expense	1,083		698
Income before income taxes	20,335		9,975
Income tax expense	4,801		295
Net income	$	15,534	$	9,680


Net income per common share:
Basic	$	0.95	$	0.60
Diluted	$	0.95	$	0.60
Weighted average shares of common stock outstanding:
Basic	16,272		16,108
Diluted	16,294		16,108

Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of Income


	Six months ended
	7/31/2023		7/31/2022
	(In thousands, except per share data)
Net sales	$	142,264	$	114,881
Costs of goods sold	80,484		73,329
Gross profit	61,780		41,552
Selling, general and administrative expenses	41,838		35,122
Operating income	19,942		6,430
Unrealized (gain) loss on investment in trust account	(624)		305
Pension expense	322		391
Interest expense	1,795		1,125
Income before income taxes	18,449		4,609
Income tax expense	4,357		13
Net income	$	14,092	$	4,596


Net income per common share:
Basic	$	0.87	$	0.29
Diluted	$	0.87	$	0.29
Weighted average shares of common stock outstanding:
Basic	16,242		16,071
Diluted	16,257		16,071

Cover	Sep. 11, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Sep. 11, 2023
Entity Registrant Name	VIRCO MFG. CORPORATION
City Area Code	(310)
Local Phone Number	533-0474
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000751365
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-8777
Entity Tax Identification Number	95-1613718
Entity Address, Address Line One	2027 Harpers Way
Entity Address, Postal Zip Code	90501
Entity Address, City or Town	Torrance
Entity Address, State or Province	CA
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	VIRC
Security Exchange Name	NASDAQ