Virco Mfg (VIRC) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2025 were $33.8 million, down 27.8% year-over-year due to the absence of prior year's one-time disaster recovery orders.

• Net income for the quarter was $0.7 million, compared to $2.1 million in Q1 2024.

• Gross margin improved to 47.5% from 43.5% year-over-year, driven by a higher proportion of full-service orders and operational discipline.

• Backlog at April 30, 2025 was $70.4 million, down from $88.5 million a year earlier; shipments plus backlog declined 22.9% to $105.6 million.

• Maintained profitability in a seasonally weak quarter.

Financial highlights

• Operating income was a loss of $0.1 million, compared to income of $3.0 million in Q1 2024.

• SG&A expenses decreased by $1.3 million year-over-year, reflecting lower variable selling costs.

• Unrealized gains on investment in trust account were $1.2 million, partially offsetting lower operating results.

• Net interest expense fell to $60,000 from $208,000 due to lower seasonal borrowings.

• Shareholder returns reached $4.4 million in Q1, including $4.0 million in buybacks and $0.4 million in dividends.

Outlook and guidance

• Management expects the majority of the $70.4 million backlog to be delivered and recognized as revenue in June–August 2025.

• Future growth rates are expected to moderate after recent years' post-COVID recovery, with mid-term growth potential tied to school bond cycles.

• Management believes cash flow and available credit will be sufficient to fund operations, debt service, and capital needs for the next 12 months.

• Confident in ability to deliver during peak season and navigate supply chain disruptions.