VIRCO Profit Falls to $8.6 Million as School Furniture Demand Cools
Second-quarter net sales slipped to $87.5 million and six-month revenue fell 6.1% to $118.2 million, while the board kept its quarterly dividend at $0.025.
Virco Mfg. Corporation (VIRC) reported lower sales and profit for its second quarter and first half ended July 31, 2026, as what the company calls the ongoing rebalancing of the school furniture market weighed on orders. Quarterly net sales came in at $87.5 million versus $92.1 million a year earlier, with net income of $8.6 million against $10.2 million, a 15.4% decline. The board declared a quarterly dividend of $0.025 per share, payable October 9 to holders of record on September 18.
Through six months, net sales totaled $118.2 million, down 6.1% from $125.8 million. Operating income fell to $6.9 million from $15.3 million, and net income was $5.8 million versus $10.9 million, a decline of 46.5%. Diluted earnings per share were $0.37 for the half, against $0.69 last year.
Margins held up better than volumes. Gross margin was 40.0% for the quarter and 40.4% year to date, while selling, general and administrative expenses rose to 34.5% of revenue from 33.1%. Interest expense was flat at $0.3 million over six months.
Shipments plus backlog stood at $162.5 million, 2.1% below the same period last year. The company tied the softness to caution among school administrators during the just-ended budget cycle; most public schools run fiscal years from July 1 through June 30. Management said very recent trends show a slight improvement in demand after new budgets were approved, but cautioned that they come at a low point in the annual revenue cycle and are unlikely to meaningfully improve full-year results.
The balance sheet showed cash of $9.2 million and total stockholders' equity of $110.5 million at July 31, with long-term debt of $3.5 million. The current ratio was 2.5, which the company said supports development of existing and new revenue streams. Capital spending on new products and what management terms platform processes is expected to stay within the usual $4 million to $6 million annual budget.
Chairman and CEO Robert Virtue said the compressed school delivery season makes the response time of the company's U.S. factories more of a competitive advantage, and that Virco can operate with virtually no debt. He added that the current year will prove to be challenging in comparison to our recent years of record financial performance, while the company works to gain share and win new customers.
Management also pointed to adjacent markets, arguing that domestic manufacturers are nearing cost parity with overseas supply chains. It cautioned that supplier relationships tend to be sticky and that any shift in Virco's favor may take several years.
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