EX-99.1 2 v53714exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
         
FOR IMMEDIATE RELEASE
  Contact:    
 
      Robert A. Virtue, President
 
      Douglas A. Virtue, Executive Vice President
 
      Robert E. Dose, Chief Financial Officer
 
      Virco Mfg. Corporation
 
      (310) 533-0474
Virco Announces Second Quarter Results
Torrance, California — September 9, 2009 — Virco Mfg. Corporation (NASDAQ: VIRC) today announced improved second quarter and year-to-date earnings in the following letter to stockholders from Robert A. Virtue, President and CEO:
Our results for the second quarter and six months ending July 31 reflected the challenging economic conditions and budgetary pressures on state and local governments across much of the country. Revenue for the quarter declined 7.0%, from $80,216,000 to $74,623,000. Pre-tax operating income for the quarter increased, from $5,714,000 to $7,093,000. Through six months, revenue is down 7.1%, from $109,410,000 to $101,672,000. Pre-tax operating income for the first six months increased from $1,167,000 to $2,206,000. Here are the numbers:
                                 
    Three Months Ended   Six Months Ended
    7/31/2009   7/31/2008   7/31/2009   7/31/2008
            (In thousands, except share data)        
 
                               
Net sales
  $ 74,623     $ 80,216     $ 101,672     $ 109,410  
Cost of sales
    48,847       54,327       67,596       73,968  
         
Gross profit
    25,776       25,889       34,076       35,442  
Selling, general administrative & other expense
    18,683       20,175       31,870       34,275  
         
Income before taxes
    7,093       5,714       2,206       1,167  
Income tax provision
    3,047       2,202       1,147       511  
         
Net income
  $ 4,046     $ 3,512     $ 1,059     $ 656  
         
 
                               
Net income per share — basic
  $ 0.29     $ 0.24     $ 0.07     $ 0.05  
Net income per share — diluted
  $ 0.29     $ 0.24     $ 0.07     $ 0.05  
Weighted average shares outstanding — basic
    14,151       14,423       14,170       14,426  
Weighted average shares outstanding — diluted
    14,154       14,451       14,170       14,443  
Cash dividend declared
  $     $     $ 0.05     $ 0.05  
                         
    7/31/2009     1/31/2009     7/31/2008  
 
                       
Current assets
  $ 89,559     $ 57,799     $ 96,171  
Non-current assets
    59,614       60,276       60,144  
Current liabilities
    48,594       27,664       47,268  
Non-current liabilities
    34,126       24,248       38,592  
Stockholders’ equity
    66,453       66,163       70,455  
We are operating in what continues to be a difficult environment for publicly funded markets. While our profits have improved on a 7% decline in sales, we are very concerned about future orders as states continue to lay-off and furlough employees. Our national sales force is in direct contact with school business officials and major dealers on a daily basis. The feedback from school officials and dealers is that there is uncertainty going forward as to the source and amount of funding which will be available for schools. While there has been some activity on the stimulus money for schools, it has not had a significant impact on our business. Year-to-date orders through July 31, 2009, are down approximately 12.0% compared to the same period last year. So, as we have all year, we remain cautious and dedicated to managing the things that we do have control of until the recession ends. Primary among those things is our balance sheet, which remains a point of strength for us: at July 31, 2009, inventories were down $5 million or more than 10% from the prior year, bank borrowings were down $7.6 million or 22% from the prior year. Strategically, we have continued to make progress on our new product initiatives, to which we assign partial credit for our relatively modest decline in revenue. We also continue to build partnerships with vendors and distributors who expand our reach by broadening our product assortment and our channels of distribution.

 


 

One of the things we’re proudest of over the past several years is that we’ve been able to manage fluctuations in demand without layoffs. When people lose their jobs, the pain and instability extend far beyond their immediate family. We consider our employees to be one of the five constituencies critical to our success, along with stockholders, customers, financial partners, and suppliers. When pundits talk about sustainability, we believe one of the first things to look for is a fair balance among these constituents, which sometimes have conflicting goals. Maximizing any single element creates a weaker link in the chain somewhere else, and inevitably it’s that weak link that brings down the enterprise.
Returning to hard metrics, we experienced modest improvements in gross margins as raw material costs remained stable through the summer. This is in stark contrast to last year, when steel, plastic, and fuel costs nearly doubled during our peak delivery months. Stable raw materials allowed us to pass savings along to our educational customers, many of whom are facing dire budgetary crises of their own. Our gross margins improved from 32.4% to 33.5% through six months. Below-the-line efficiencies in freight, installation and project management contributed to a near-doubling of pre-tax income, from $1,167,000 to $2,206,000.
Looking forward, we still see storm clouds on the horizon. Overall weakness in the economy portends several years of strained budgets for school districts and other publicly-funded agencies. Despite the good intentions of the American Recovery and Reinvestment Act (ARRA), we have yet to see many meaningful impacts at operational ground zero for the public schools. Perhaps the first step truly is stabilization, after which everyone can work to re-establish normal operations. We share the President’s belief that the best long-term solution to this recession is education. Our experienced and dedicated American employees continue to develop the products and provide the services to support this important effort.
This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: new business strategies; the cost and availability of steel and other raw materials; the costs of utilities and freight; the continuing impact of our Assemble-to-Ship and Equipment for Educators™ programs on earnings; market demand and acceptance of new products; development of new distribution channels; pricing; and seasonality. Forward-looking statements are based on current expectations and beliefs about future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are out of our control and difficult to forecast. These factors may cause actual results to differ materially from those which are anticipated. Such factors include, but are not limited to: changes in general economic conditions including raw material, energy and freight costs; the seasonality of our markets; the markets for school and office furniture generally; the specific markets and customers with which we conduct our principal business; and the response of competitors to our price increases. See our Annual Report on Form 10-K for the year ended January 31, 2009, and other materials filed with the Securities and Exchange Commission for a further description of these and other risks and uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We nonetheless reserve the right to make such updates from time to time by press release, periodic reports or other methods of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements which are not addressed by such an update remain correct or create an obligation to provide any other updates.
End of filing