10-Q · June 3, 2026
Virco reported a decrease in revenue of 9.1% year-over-year, totaling $30.7 million, alongside a net loss of $2.8 million in its first quarter. The gross margin decreased to 41.4% from 47.5% a year prior, influenced by…
Earnings analysis · 10-Q
VIRC earnings analysis
Filed September 4, 2026 · Our reading of the company's report
The latest report
Virco delivered a seasonally strong second quarter with $87.5 million of revenue and $8.6 million of net income, but both sales and gross margin declined year over year. Backlog improved 13% year over year and inventory…
Read full summary
Virco delivered a seasonally strong second quarter with $87.5 million of revenue and $8.6 million of net income, but both sales and gross margin declined year over year. Backlog improved 13% year over year and inventory fell $6.8 million, supporting a more favorable near-term setup despite continued demand uncertainty. Liquidity appears adequate, with no outstanding borrowings as of July 31, 2026 and an amended credit facility providing $40.0 million of revolver capacity, although tariff, input-cost, and government-funding risks remain material.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Gross margin
- 40.0%
What stood out
-
Seasonal revenue rebound, but sales declined YoY
Second-quarter net sales were $87.5 million, down $4.6 million, or 5.0%, from $92.1 million in the prior-year quarter. Sequentially, revenue increased from $31.0 million in Q1 2027 to $87.5 million in Q2.
-
Profitable quarter despite margin compression
Net income was $8.6 million versus $10.2 million in the prior-year quarter, while gross margin declined to 40.0% from 44.4%, primarily due to lower volume and higher material and overhead costs.
-
Backlog supports near-term revenue
Backlog at July 31, 2026 was approximately 13% higher than a year earlier, although shipments plus backlog were approximately 2% lower. Management believes the majority of backlog will be recognized as revenue in Q3.
-
Working capital was actively managed
Inventory decreased by $6.8 million year over year and accounts receivable decreased by $1.3 million, reflecting lower production and shipments. Accounts payable increased by $3.0 million due primarily to vendor-payment timing and higher material costs.
-
Capital spending remains conservative
Six-month capital expenditures were $1.3 million on a cash basis, versus $2.8 million of accrual-basis capital expenditures in the prior-year period, and remain restricted to $8.0 million annually by covenant.
-
Liquidity facility strengthened
The amended credit agreement provides a $40.0 million revolving facility and a $3.0 million equipment line, extends maturity to September 3, 2031, and raises the receivables advance rate from 85% to 90%.
What to watch
-
Demand remains below prior-year levels
Net sales declined 5.0% year over year in the quarter and 6.1% for the six months, as state and local government budget uncertainty weakened school-furniture demand. Shipments plus backlog were approximately 2% below the prior year.
-
Tariff recovery and input-cost risk
The company paid approximately $1.0 million of IEEPA-related tariffs and had not recognized any refund as of July 31, 2026; it also had not received any requested refund by the filing date. Management may not be able to fully pass through higher transportation, energy, steel, and plastics costs.
-
Margin pressure from volume and costs
Gross margin fell to 40.0% from 44.4%, while SG&A was 28.0% of sales versus 27.7% a year earlier. Lower production created an unfavorable overhead variance, and higher delivery costs increased operating expense as a percentage of sales.
Management's outlook
The 10-Q provides no explicit quantitative revenue or EPS guidance. Management expects the majority of the backlog to be delivered and recognized as revenue during the third quarter, and believes operating cash flow, cash on hand, and unused borrowing capacity will fund requirements for the next twelve months.
Earlier filings 4
10-K · April 8, 2026
Virco emphasizes a U.S.-based manufacturing and full-service delivery strategy targeted at the K-12 and education FF&E market, supported by proprietary PlanSCAPE software and a broad product roadmap (Room to Move®,…
10-Q · December 8, 2025
Virco reported net sales of $47,636,000 and a net loss of $1,325,000 (diluted EPS $(0.08)) for the three months ended October 31, 2025, driven by a $1,693,000 operating loss. Year-to-date (nine months) the company…
10-Q · June 6, 2025
Virco reported net sales of $33,754,000 and diluted EPS of $0.05 for the quarter ended April 30, 2025, with gross margin expanding to ~47.5% but operating income turning into a slight loss of $(94,000). Cash and…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.