Virco Mfg. 2026 Q1 Earnings Misses Targets as Net Income Falls 65.8%

Virco Mfg.(VIRC) reported its fiscal 2026 Q1 earnings on Jun 06th, 2025. Despite beating the EPS estimate, the company fell short of revenue expectations, signaling a challenging quarter. The company anticipates a transitional year as it adjusts to a slowing demand in the school furniture market while maintaining a focus on profitability and strategic investments. Virco expects ongoing opportunities in school construction supported by favorable school bond environments. The leadership is committed to leveraging its operational capabilities and investing in workforce training to adapt to emerging market needs, emphasizing a cautious yet optimistic outlook for the upcoming periods.

Revenue

Virco Mfg. experienced a significant decline in total revenue, falling by 27.8% to $33.75 million in 2026 Q1 compared to $46.73 million in 2025 Q1. Net sales matched total revenue figures, indicating no additional revenue sources this quarter.

Earnings/Net Income

Virco Mfg.'s EPS plummeted by 61.5%, decreasing to $0.05 in 2026 Q1 from $0.13 in 2025 Q1. The net income also saw a steep decline, dropping 65.8% to $732,000 in 2026 Q1 compared to $2.14 million in 2025 Q1. The earnings results were below expectations, highlighting performance challenges.

Price Action

The stock price of Virco Mfg. has edged up 2.20% during the latest trading day, has edged down 0.36% during the most recent full trading week, and has edged down 0.00% month-to-date.

Post-Earnings Price Action Review

The strategy of acquiring Virco Mfg. stock during periods of revenue misses and holding for 30 days has historically resulted in substantial returns, surpassing benchmark returns significantly. The approach yielded a 179.16% return, compared to the benchmark's 85.73% return, despite experiencing a maximum drawdown of -57.30%. The strategy demonstrated strong risk-adjusted returns, reflected in a Sharpe ratio of 0.37. Although the volatility was high at 61.81%, the compound annual growth rate (CAGR) remained impressive at 22.89%. This indicates that despite the volatility, the strategy provided robust returns, showcasing its effectiveness in capitalizing on earnings surprises.

CEO Commentary

Robert Virtue, Chairman and CEO, acknowledged the challenges faced in matching last year's disaster recovery order, citing the need for a skilled team to handle fabrication and manufacturing equipment. He emphasized the importance of liquidity to manage large receivables and inventories, alongside the necessity for rapid deployment of new technologies. Virtue expressed confidence in navigating upcoming challenges and opportunities, noting that the current year represents a "pause" in the school furniture market's recovery post-COVID. However, he remains hopeful regarding mid-term growth in school construction driven by community investments.

Guidance

The company anticipates a transitional year as it adjusts to a slowing demand in the school furniture market while maintaining a focus on profitability and strategic investments. Virco expects ongoing opportunities in school construction supported by favorable school bond environments. The leadership is committed to leveraging its operational capabilities and investing in workforce training to adapt to emerging market needs, emphasizing a cautious yet optimistic outlook for the upcoming periods.

Additional News

In recent developments, Virco Manufacturing Corporation declared a cash dividend of $0.025 per share for the second fiscal quarter, payable on July 11, 2025. This marks a 25% increase from the previous year, demonstrating confidence in future operations despite facing cash flow challenges. Additionally, Virco repurchased $4 million in common stock during Q1 2025 and authorized an additional $7.5 million for repurchases in fiscal year 2026. This dual approach highlights the company's commitment to returning capital to shareholders. Furthermore, the appointment of Bassey Yau as Chief Financial Officer, Treasurer, and Secretary, succeeding Robert Dose, signals a strategic leadership transition aimed at bolstering financial management.