Virco Mfg. 2026 Q3 Earnings Net Loss of $1.3M as EPS Deteriorates 115.4%

Virco Mfg. (VIRC) reported a significant decline in its fiscal 2026 Q3 performance, marked by a sharp drop in revenue and a net loss. The results fell short of expectations, reflecting ongoing challenges in the school FF&E market. Management indicated a cautious outlook, with demand stabilizing at pre-pandemic levels but no immediate recovery expected.

Revenue

Total revenue and net sales both declined by 42.3% year-over-year to $47.64 million in 2026 Q3, down from $82.62 million in 2025 Q3. This represents a substantial contraction in the company’s core educational furniture segment, driven by reduced demand and the expiration of pandemic-era ESSER funds.

Earnings/Net Income

The company swung to a net loss of $1.32 million in 2026 Q3, a 115.8% deterioration from the $8.40 million net income in 2025 Q3. Earnings per share (EPS) also plummeted to a loss of $0.08, a 115.4% negative change from the prior year’s profit of $0.52. The sharp decline underscores the cyclical challenges in the school furniture market.

Price Action

Following the earnings release, the stock experienced mixed short-term performance: a 14.87% gain in the latest trading day, a 3.15% drop in the subsequent week, and a 0.79% decline month-to-date.

Post-Earnings Price Action Review

The strategy of buying Virco Mfg. (VIRC) shares after a quarter-over-quarter revenue increase on the financial report date and holding for 30 days showed favorable performance over the past three years. While the initial 30-day holding period included a brief dip, the strategy ultimately recovered, achieving a 24.77% return—surpassing the SPY ETF’s 14.16% return over the same period.

CEO Commentary

Robert A. Virtue, Chairman and CEO, attributed the downturn to the expiration of pandemic-era ESSER funds and cautious school administration planning. He noted deferred projects are beginning to re-enter the pipeline, suggesting a potential catch-up in demand over two to three years. Management emphasized preserving balance sheet strength to capitalize on recovery opportunities.

Guidance

The company did not provide traditional financial guidance but indicated demand stabilization at pre-pandemic levels, with a potential gradual recovery over two to three years. Management highlighted the importance of monitoring bid season metrics and exploring adjacent public/private markets. The Board declared a $0.025 quarterly dividend, though future payouts remain subject to Board discretion.

Additional News

1. Dividend and Buyback Updates: On February 1, 2025, Virco announced a $10 million share repurchase program, funded by existing cash reserves. The Board also authorized a $0.025 quarterly dividend in December 2025, payable January 9, 2026.

2. Operational Resilience: In September 2025, the company reported improved liquidity with a current ratio of 3.98 and a $38.86 million cash position, underscoring its ability to weather market downturns.

3. Strategic Reinvestment: In April 2025, Virco marked its 75th anniversary with $6 million in strategic capital expenditures, focusing on domestic fabrication capabilities to enhance operational efficiency.