Virco Mfg. Corporation (NASDAQ: VIRC) today reported financial
results for the fourth quarter and full year ended January 31,
2021, in the following press release to shareholders and customers:
A full year of pandemic-related school closures resulted in
lower revenues for the fourth quarter and full year ended January
31, 2021. For the quarter, which includes the seasonally slow
months of November, December and January, net sales totaled
$18,301,000 compared to $27,148,000 in the prior year, a decline of
33%. Due to our aggressive cost controls, especially in sales,
administration, and general activities, operating results for the
fourth quarter improved 18% from a loss of ($7,036,000) in the
prior year to a loss of ($5,778,000) in the most recent fourth
quarter.
Full year net sales declined 21% to $152,795,000 from
$193,001,000. Aggressive variable cost controls enacted at the
beginning of the pandemic crisis resulted in operating income of
$735,000 compared to $5,915,000 in the prior year. Inclusive of
pension expense, interest, and taxes, the Company incurred a net
loss of ($2,232,000) for the year compared to net income of
$2,382,000 in the prior year.
Key balance sheet metrics improved over the course of the year,
reflecting diligent cost controls while exercising precise
execution matching revenue opportunities within the downturn made
possible by the Company’s U.S. factories and short supply chain.
Inventories and related bank borrowings under the Company’s
seasonal credit facility were both lower at year end compared to
the prior year. Shareholder equity was almost unchanged at
$54,187,000 compared to $54,818,000 the prior year.
Here are the numbers:
|
Three Months Ended |
|
Twelve Months Ended |
|
1/31/2021 |
1/31/2020 |
|
1/31/2021 |
1/31/2020 |
|
|
|
|
|
|
|
(In thousands, except per share data) |
|
|
|
|
|
|
Net sales |
$ |
18,301 |
|
$ |
27,148 |
|
|
$ |
152,795 |
|
$ |
193,001 |
Cost of sales |
|
13,759 |
|
|
20,141 |
|
|
|
97,870 |
|
|
121,326 |
Gross profit |
|
4,542 |
|
|
7,007 |
|
|
|
54,925 |
|
|
71,675 |
Selling, general administrative & other expense |
|
10,320 |
|
|
14,043 |
|
|
|
54,190 |
|
|
65,760 |
Operating (loss) income |
|
(5,778 |
) |
|
(7,036 |
) |
|
|
735 |
|
|
5,915 |
Pension expense |
|
547 |
|
|
162 |
|
|
|
2,173 |
|
|
726 |
Interest expense, net |
|
221 |
|
|
252 |
|
|
|
1,538 |
|
|
2,462 |
(Loss) income before income taxes |
|
(6,546 |
) |
|
(7,450 |
) |
|
|
(2,976 |
) |
|
2,727 |
Income tax (benefit) expense |
|
(979 |
) |
|
(3,140 |
) |
|
|
(744 |
) |
|
345 |
Net (loss) income |
$ |
(5,567 |
) |
$ |
(4,310 |
) |
|
$ |
(2,232 |
) |
$ |
2,382 |
|
|
|
|
|
|
Net (loss) income per share - basic (a) |
$ |
(0.35 |
) |
$ |
(0.28 |
) |
|
$ |
(0.14 |
) |
$ |
0.15 |
Net (loss) income per share - diluted |
$ |
(0.35 |
) |
$ |
(0.28 |
) |
|
$ |
(0.14 |
) |
$ |
0.15 |
|
|
|
|
|
|
Weighted average shares outstanding - basic (a) |
|
15,824 |
|
|
15,654 |
|
|
|
15,759 |
|
|
15,590 |
Weighted average shares outstanding - diluted |
|
15,824 |
|
|
15,654 |
|
|
|
15,759 |
|
|
15,694 |
|
|
|
|
|
|
(a) Net loss per share was calculated based on basic shares
outstanding due to the anti-dilutive effect on the inclusion of
common stock equivalent shares. |
|
|
|
|
|
|
|
|
|
|
1/31/2021 |
1/31/2020 |
Current assets |
|
|
|
$ |
50,967 |
|
$ |
58,342 |
Non-current assets |
|
|
|
|
74,069 |
|
|
80,650 |
Current liabilities |
|
|
|
|
22,106 |
|
|
25,118 |
Non-current liabilities |
|
|
|
|
48,743 |
|
|
59,056 |
Stockholders' equity |
|
|
|
|
54,187 |
|
|
54,818 |
|
|
|
|
|
|
As described in prior press releases during the pandemic, school
closures were an unprecedented policy response to COVID-19 with no
guidelines for students, schools, families, or suppliers to follow.
At no time in the country’s history—not for either of the World
Wars, the Spanish Flu of 1918-1919, the Great Depression, the Hong
Kong Flu of 1968, or the Great Recession—had public schools been
closed en masse due to government order. Despite this, and
reflecting the truly diverse nature of the pandemic in different
regions at different timescales, deliveries of school furniture did
continue throughout the year although at significantly reduced
levels.
One of the clearest lessons from the pandemic was the crucial
importance of in-person, on-campus education, especially for
disadvantaged students or those with learning disabilities. School
closures provided an unintended referendum on the vital role played
by public and private schools in all aspects of social and economic
health, perhaps in a way that only a shock of such magnitude can
provide.
As a result, many state and local governments are now directing
substantial additional funds towards re-opening and provisioning of
public schools. Some of these funds are time-lagged and extend out
to 2025; others are being spent or invested right now. Reflecting
this new interest in funding education, the Company’s indicator of
forward business activity (“actual YTD shipments + the unshipped
backlog”) is at a sixteen-year high in fiscal 2022.
As always, management cautions against using this positive
early-season metric as guidance. Especially coming out of the
unprecedented and unpredictable circumstances of the pandemic, many
things in the market for school furniture might change between now
and year-end. Nonetheless, management is encouraged by the
robustness of current trends. Management also believes that given
the concurrent challenges of global supply chain interruptions, raw
material shortages and cost increases, and ongoing tariff impacts,
the Company’s vertical business model positions it to operate
efficiently in such an environment.
Reflecting on the year’s results and the prospects for
nationwide school re-opening, Virco Chairman and CEO Robert Virtue
said: “In my many years at Virco serving the public school market,
I’ve never experienced anything quite as challenging as what we’ve
just been through. At times our stubborn insistence on maintaining
our U.S. factories might have been seen as old-fashioned, but last
year we believe it delivered better control of finances,
inventories, and customer support than any other alternative. We
appreciate the positive role we’ll be able to play in this crucial
year of recovery, and we thank our shareholders for their loyalty,
understanding, and support.”
Virco President Doug Virtue thanked the Company’s employees:
“There was a great deal of uncertainty in March 2020, when
lockdowns were first announced and schools emptied out.
Nevertheless, our diverse portfolio of direct school customers
located in all 50 states and in foreign countries has managed to
buffer the impact on revenues, and our outstanding workforce came
together—remotely in many instances—to control variable expenses
and deliver an operating profit despite a 21% reduction in revenue.
We kept our factories open, paid all of our bills on time, didn’t
borrow to finance our losses and reduced overall borrowings, while
avoiding layoffs and keeping our facilities safer overall than the
communities where they’re located.”
“I’m proud and humbled by the performance of our employees
during the pandemic. Forty percent of our employees have more than
20 years of service with the company. The trust and support they’ve
built together was severely tested last year but it proved equal to
the challenge. It will be especially rewarding to turn that
strength toward the positive aspects of re-opening.”
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:
the impact of the COVID-19 pandemic on our business, customers,
supply chain and workforce; 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:
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, 2021 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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