Virco Mfg. Corporation Reports $2.8 Million Net Loss and 9.1% Sales Decline

Virco Mfg. Corporation reported a net loss of $2.8 million for the three months ended April 30, 2026, compared to a net income of $0.7 million during the same period in the previous year. The company's net sales decreased by 9.1% to $30.7 million, down from $33.8 million in the prior year. This decline was attributed to a significant reduction in disaster recovery and counter-seasonal shipments, which contributed approximately $2.7 million to sales in the previous year but only about $190,000 in the current quarter. Excluding these shipments, the decrease in net sales was 1.7%, reflecting ongoing macroeconomic challenges and uncertainties regarding state and local government budgets.

The cost of goods sold represented 58.6% of net sales for the quarter, an increase from 52.5% in the same period last year, leading to a gross margin decline from 47.5% to 41.4%. The increase in costs was primarily driven by higher material costs, which rose to 31.9% of sales, compared to 29.8% in the prior year. Selling, general, and administrative expenses also increased slightly, totaling $16.4 million, or 53.3% of sales, up from 47.7% in the previous year, due to a shift towards more service-oriented deliveries.

In terms of operational metrics, the company reported a decrease in inventory levels, which fell by $5.7 million compared to the previous year, driven by moderated production levels. Accounts receivable increased by $2.7 million, primarily due to the timing of customer payments. The company continues to manage its production and inventory levels carefully in anticipation of the peak summer sales season, which typically accounts for about 50% of annual sales.

Virco's total assets as of April 30, 2026, were $175.5 million, a slight decrease from $183.8 million a year earlier. The company’s liabilities also decreased, with total current liabilities rising to $37.8 million from $31.2 million in the previous year, largely due to increased accounts payable. The company maintained a strong liquidity position, with $3.7 million in cash at the end of the quarter, down from $14.4 million at the beginning of the fiscal year.

Looking ahead, Virco's management remains cautious about the future, citing ongoing uncertainties in the macroeconomic environment, including potential impacts from geopolitical events and trade policies. The company is focused on maintaining operational flexibility and is prepared to adjust production levels in response to market conditions. Management anticipates that the majority of the current backlog will be delivered and recognized as revenue during the peak months of June, July, and August, while also continuing to monitor incoming order rates closely.