Virco Reports Loss of $1.3 Million in Third Quarter as Cyclical Decline Begins to Slow

Rhea-AI Summary

Virco (NASDAQ: VIRC) reported a Q3 net loss of $1.3M on $47.6M sales for the quarter and nine-month net income of $9.6M on $173.5M revenue through Oct. 31, 2025. Gross margin for Q3 fell to 38.0% from 44.4% a year earlier; nine-month gross margin was 43.2%.

Management said lower sales and production drove margin and operating metric deterioration, but incoming orders appear to be stabilizing and unshipped backlog pulled nearly even year-over-year. Liquidity strengthened with a current ratio of 3.98. The Board declared a $0.025 quarterly cash dividend payable Jan. 9, 2026 to holders of record Dec. 19, 2025.

Positive

• Current ratio of 3.98 indicates improved liquidity
• Board declared $0.025 quarterly cash dividend payable Jan 9, 2026
• Nine-month net income of $9.6M despite weaker demand
• Unshipped backlog pulled nearly even year‑over‑year, suggesting stabilization

Negative

• Q3 net loss of $1.3M versus prior-year profit of $8.4M
• Q3 sales declined to $47.6M from $82.6M (~42% drop)
• Nine-month revenue down 27.0% to $173.5M year‑to‑date
• Shipments plus backlog declined 25% from $265M to $199M
• Q3 gross margin fell by 640 basis points to 38.0%
• SG&A rose as a percent of sales to 41.5% in Q3

Key Figures

Q3 net loss $1.3M Third quarter 2025 net loss

Q3 sales $47.6M Third quarter 2025 sales vs $82.6M prior year

Q3 gross margin 38.0% Q3 2025 gross margin vs 44.4% prior year

Nine-month revenue $173.5M Nine months 2025 revenue, down 27.0%

Nine-month net income $9.6M Nine months 2025 net income vs $27.4M prior year

Shipments plus backlog $199M Year-to-date shipments plus backlog vs $265M prior year

Current ratio 3.98 Liquidity metric at end of Q3 2025

Quarterly dividend $0.025/share Cash dividend payable Jan 9, 2026

Market Reality Check

$7.36 Last Close

Volume Volume 34,666 vs 20-day average 41,195 (relative volume 0.84x) indicates muted trading interest pre-announcement. normal

Technical Price $7.36 is trading below the 200-day MA of $8.35, reflecting a weakened intermediate trend ahead of this report.

Peers on Argus 1 Up

Peers show mixed, mostly negative moves: HOFT -6.89%, NVFY -4.78%, KEQU -2.13%, BSET -1.45%, while IRBT is up 2.22% and appeared in momentum scanning with a 10.30% move up. With the scanner not flagging a broad sector move and VIRC’s own modest -0.41% decline, trading appears more stock-specific than part of a coordinated sector rotation.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Sep 05	Quarterly results	Positive	+1.7%	Reported strong margins and income despite notable revenue and backlog declines.

Pattern Detected

Limited data: the last earnings-style release with mixed fundamentals but solid profitability saw a modest positive reaction, suggesting investors had previously focused on margins and income despite revenue pressure.

Recent Company History

On Sep 05, 2025, Virco reported Q2 and H1 2025 results showing revenue pressure but solid profitability, with a 45.2% gross margin, H1 operating income of $15.3M, and H1 net income of $10.9M. That release noted a 25.8% decline in “shipments plus backlog” yet the stock rose 1.73% in 24 hours. Today’s announcement shows deeper revenue and income deterioration but continued dividends and balance sheet strength, extending the same demand-downturn narrative highlighted in prior filings.

Market Pulse Summary

This announcement highlights a clear slowdown, with Q3 revenue at $47.6M, a net loss of $1.3M, and nine-month revenue down to $173.5M. “Shipments plus backlog” declined to $199M from $265M, underscoring demand pressure as stimulus-related funding wanes. At the same time, Virco maintains a strong current ratio of 3.98 and a quarterly dividend of $0.025 per share. Investors may focus on how backlog trends, margins, and dividend policy evolve against this cyclical downturn.

Key Terms

gross margin financial

"Gross profit for the quarter declined to $18.1 million, reflecting a gross margin of 38.0%,"

Gross margin is the difference between how much money a company makes from selling its products and how much it costs to produce them, expressed as a percentage of sales. It shows how efficiently a company is turning sales into profit before other expenses like marketing or salaries. Higher gross margin means the company keeps more money from each sale, which is a good sign of financial health.

backlog financial

"the Company’s unshipped backlog pulled nearly even with the prior year’s backlog by the end of the Third Quarter."

A backlog is the amount of work or orders that a company has received but hasn't completed yet. It’s like a restaurant with many dishes to serve; the backlog shows how many orders are still waiting to be finished. It matters because a large backlog can indicate strong demand or potential delays in delivering products or services.

AI-generated analysis. Not financial advice.

• Revenue through Nine Months Down 27.0% to $173.5 Million
• Net Income through Nine Months is $9.6 Million
• Key Balance Sheet Metrics Continue to Improve as Current Ratio Reaches 3.98
• Backlog Pulls Nearly Even on YOY Basis as Order Rates Begin to Stabilize
• Board Declares Quarterly Cash Dividend of $0.025 per Share, Payable January 9, 2026 to Shareholders of Record as of December 19, 2025
  
  

TORRANCE, Calif., Dec. 08, 2025 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (NASDAQ: VIRC), a leading manufacturer and supplier of moveable furniture and equipment for educational environments and public spaces, announced results for the Company’s Third Quarter and Nine Months ended October 31, 2025.

Virco Mfg. Corporation reported a net loss of $1.3 million on Third Quarter sales of $47.6 million, compared to a net profit of $8.4 million on sales of $82.6 million in the same period of the prior year. Gross profit for the quarter declined to $18.1 million, reflecting a gross margin of 38.0%, compared to gross profit of $36.7 million or 44.4% last year. Selling, General, and Administrative Expenses ("SG&A") in the Third Quarter decreased to $19.8 million or 41.5% of sales compared to $25.6 million or 30.9% of sales in the same period last year.

Through nine months, net income was $9.6 million on sales of $173.5 million, versus net income of $27.4 million on sales of $237.8 million in the same period of the prior year. Gross profit for nine months was $75.0 million, or 43.2% of sales, compared to $107.2 million or 45.1% of sales last year. SG&A through nine months was $61.4 million or 35.4% of sales compared to $71.3 million or 30.0% of sales last year.

Deterioration in operating metrics was driven almost entirely by lower sales and related lower production levels, both in the Company’s factories and its sales and distribution functions. As a percentage of sales, material and labor costs declined slightly as Management adjusted output downward.

Management had warned that year-over-year comparisons were going to be difficult in the current fiscal year given the outsized positive contribution of last year’s counter-seasonal disaster recovery order. Even without that order, which through nine months had contributed $19 million in sales, the market for moveable school furniture, fixtures, and equipment ("FF&E") is experiencing a notable downturn of approximately 30% over the last two years.

The most obvious cause for the general slowdown is the expiration of pandemic recovery stimulus funds, also known as Elementary and Secondary School Emergency Relief ("ESSER") funds, but Management also points to a very cautious mood among many public and private school administrators, tied in part to the end of stimulus but perhaps also related to uncertainty about the future.

Nonetheless, incoming order rates have begun to stabilize as the Company’s unshipped backlog pulled nearly even with the prior year’s backlog by the end of the Third Quarter. On a year-to-date basis, the Company’s preferred measure of overall business velocity—“Shipments Plus Backlog,” which combines actual shipments with the unshipped backlog—declined 25% from $265 million to $199 million.

As bid season progresses through winter and spring, Management will continue to monitor this metric in order to match operating activities to demand. Management does not provide guidance or forecasts, but early indications appear to suggest a stabilization of demand at pre-pandemic levels.

Despite the challenges of the current year, the Company’s balance sheet continues to improve, providing the flexibility to approach the current competitive moment as both a challenge and an opportunity. At the end of the Third Quarter, the Company’s Current Ratio, a key indicator of liquidity, stood at 3.98. This reflects Management’s assessment of the current business climate and a conscious decision to preserve a portion of the record income from the past two years to weather downturns like the present one. Longer term, Management sees the potential for a recovery similar to those immediately following the pandemic, during which the Company’s domestic U.S. factories and vertical business model afforded good control over multiple operating challenges including:

• Higher interest rates
• Labor shortages
• Supply chain interruptions
• Rapidly shifting tariff environment
• Evolving customer preferences for well-capitalized turnkey suppliers with a proven track record of quality and ongoing customer service
  
  

On December 4, 2025, the Company’s Board of Directors declared a cash dividend for the Company’s fourth fiscal quarter of $0.025 on each outstanding share of common stock. The dividend is payable on January 9, 2026 to stockholders of record of the common stock as of the close of business on December 19, 2025. While the Company currently intends to pay future dividends on a quarterly basis, following review and approval by the Board of Directors, the declaration and payment of future dividends, as well as the amounts thereof, are subject to the discretion of the Board as well as restrictive covenants in the Company’s lending agreements. There can be no assurance that the Company will declare and pay dividends in future periods.

Commenting on the challenging quarter and overall environment for school FF&E, Robert Virtue, Virco’s Chairman and CEO, shared the following observations:

“We heard from our field sales managers that “it feels like COVID out here.” While conditions in the schools weren’t exactly the same—there were no closures or stay-at-home mandates—the general level of uncertainty was very high. The magnitude of pandemic stimulus had been so great that, when it ended, even though it was never intended to support full-time payroll, it had a negative impact on staff morale and related forward planning. Under these conditions, a number of new construction and refurbishment projects were postponed.

“But because many of these types of projects are bond-funded (which is essentially a dedicated form of “earmark”), we anticipated that they would eventually come back online. While the backlog of deferred projects may not be quite as big as it was immediately after COVID, this moment shares some of the same attributes as that event. Our pipeline of projects is beginning to re-fill, along with some positive “surprises” that weren’t on our radar. This might suggest a similar catch-up to normalized business velocity over the next two or three years, again mimicking the pattern after COVID, although likely at a lower degree of magnitude.

“For this reason, we have made a calculated decision to protect the strength of our balance sheet, which was perhaps permanently re-shaped following the pandemic, so that we have the same ability to respond to new opportunities as we did then.

“It is still our opinion that the market for school furniture and equipment is seeking a new equilibrium following the unprecedented disruptions of the pandemic. We don’t know exactly what the “new normal” will look like, but we do believe that education, both public and private, is an essential social function, and that our experience and financial flexibility will allow us to be a reliable partner, whatever form it eventually assumes. We also view this moment as offering similar opportunities for our type of furniture in adjacent public and private markets, and we are actively and enthusiastically exploring those opportunities.”

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
Bassey Yau, 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; our 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: the impacts of tariffs and global trade uncertainties; 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; changes in demographics; and the terms and conditions of available funding sources. See our Annual Report on Form 10-K for the year ended January 31, 2025, 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.

Virco Mfg. Corporation Unaudited Condensed Consolidated Balance Sheets
	10/31/2025			1/31/2025			10/31/2024
	(In thousands)
Assets
Current assets
Cash	$	26,509		$	26,867		$	38,858
Trade accounts receivables, net		13,799			13,004			28,168
Income tax receivable		409			4,060			—
Inventories		53,087			55,647			48,948
Prepaid expenses and other current assets		2,991			2,595			3,479
Total current assets		96,795			102,173			119,453
Non-current assets
Property, plant and equipment, net		35,453			36,428			35,621
Operating lease right-of-use assets		31,655			35,593			36,876
Deferred income tax assets, net		5,947			5,821			6,550
Other assets, net		11,687			11,931			11,645
Total assets	$	181,537		$	191,946		$	210,145

Virco Mfg. Corporation Unaudited Condensed Consolidated Balance Sheets
	10/31/2025				1/31/2025				10/31/2024
	(In thousands, except share and par value data)
Liabilities
Current liabilities
Accounts payable	$	5,715			$	11,593			$	15,381
Accrued compensation and employee benefits		6,069				11,064				12,439
Income tax payable		—				—				1,463
Current portion of long-term debt		266				258				256
Current portion of operating lease liability		6,389				1,673				863
Other accrued liabilities		5,875				9,687				11,142
Total current liabilities		24,314				34,275				41,544
Non-current liabilities
Accrued self-insurance retention		927				780				1,033
Accrued pension expenses		6,389				6,746				9,345
Income tax payable, less current portion		287				200				261
Long-term debt, less current portion		3,678				3,878				3,943
Operating lease liability, less current portion		31,467				36,007				37,380
Other long-term liabilities		840				795				780
Total non-current liabilities		43,588				48,406				52,742
Commitments and contingencies
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 15,761,141 shares at 10/31/2025, 16,087,082 shares at 1/31/2025, and 16,289,406 shares at 10/31/2024		157				161				163
Additional paid-in capital		113,714				117,549				119,796
Accumulated deficit		(456	)			(8,867	)			(2,734	)
Accumulated other comprehensive income (loss)		220				422				(1,366	)
Total stockholders’ equity		113,635				109,265				115,859
Total liabilities and stockholders’ equity	$	181,537			$	191,946			$	210,145

Virco Mfg. Corporation Unaudited Condensed Consolidated Statements of Operations
	Three Months Ended								Nine Months Ended
	10/31/2025				10/31/2024				10/31/2025				10/31/2024
	(In thousands, except per share data)
Net sales	$	47,636			$	82,620			$	173,476			$	237,774
Costs of goods sold		29,544				45,942				98,490				130,531
Gross profit		18,092				36,678				74,986				107,243
Selling, general and administrative expenses		19,785				25,565				61,402				71,265
Operating (loss) income		(1,693	)			11,113				13,584				35,978
Unrealized loss (gain) on investment in trust account		49				(246	)			(158	)			(1,058	)
Pension expense		27				106				81				320
Interest expense (income), net		40				(24	)			305				506
(Loss) income before income taxes		(1,809	)			11,277				13,356				36,210
Income tax (benefit) expense		(484	)			2,876				3,764				8,836
Net (loss) income	$	(1,325	)		$	8,401			$	9,592			$	27,374
Cash dividends declared per common share:	$	0.025			$	0.025			$	0.075			$	0.065
Net (loss) income per common share:
Basic	$	(0.08	)		$	0.52			$	0.61			$	1.67
Diluted	$	(0.08	)		$	0.52			$	0.61			$	1.67
Weighted average shares of common stock outstanding:
Basic		15,761				16,289				15,761				16,379
Diluted		15,761				16,296				15,766				16,382

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/6e6b6388-5088-4f77-a6f5-71c3171530fb

FAQ

What caused Virco (VIRC) to report a Q3 2025 net loss of $1.3M?

Management attributed the loss to significantly lower sales and related lower production levels, reducing margins and operating leverage.

How did Virco’s nine‑month revenue through Oct. 31, 2025 compare year‑over‑year?

Nine‑month revenue declined 27.0% to $173.5M versus the prior year.

What liquidity metric did Virco report and what does it mean for investors?

Virco reported a current ratio of 3.98, indicating strengthened short‑term liquidity and balance sheet flexibility.

When is Virco’s declared dividend payable and what is the amount per share?

The Board declared a cash dividend of $0.025 per share, payable Jan. 9, 2026 to holders of record as of Dec. 19, 2025.

How much did Virco’s combined shipments plus backlog decline and why is that important?

Shipments plus backlog fell 25% to $199M, a metric management uses to track business velocity and capacity planning.

Is there evidence Virco’s order rates are improving for 2026?

The company reported incoming order rates have begun to stabilize and backlog pulled nearly even year‑over‑year, suggesting early signs of stabilization.