What changed in this filing

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Item 1. Financial Statements

2023-12-08 compared with 2023-09-11 · 74 added, 59 removed, 376 unchanged (26% of the section changed)

67 unchanged sentences

Operating income 14,706 8,800

Unrealized (gain) loss on investment in trust account ( 325 ) 305

Unrealized loss (gain) on investment in trust account 176 ( 220 )

Pension expense 301 259

11 unchanged sentences

Unaudited Condensed Consolidated Statements of Income

Six months ended

Nine months ended

10/31/2023 10/31/2022

24 unchanged sentences

Other comprehensive income:

Pension adjustments — 135

Pension adjustments (net of tax expense of $ 406 and $ 0 at October 31, 2023 and 2022, respectively)

Net comprehensive income $ 11,323 $ 11,420

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Comprehensive Income

Six months ended

Nine months ended

10/31/2023 10/31/2022

2 unchanged sentences

Other comprehensive income:

Pension adjustments — 270

Pension adjustments (net of tax expense of $ 406 and $ 0 at October 31, 2023 and 2022, respectively)

Net comprehensive income $ 25,415 $ 16,286

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Cash Flows

Six months ended

Nine months ended

10/31/2023 10/31/2022

2 unchanged sentences

Net income $ 24,252 $ 12,471

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 3,763 3,390

4 unchanged sentences

Stock-based compensation 423 509

Defined pension plan settlement 372 64

Amortization of net actuarial loss for pension plans 3 405

8 unchanged sentences

Accounts payable and accrued liabilities ( 3,150 ) 4,578

Net cash used in operating activities ( 21,150 ) ( 19,970 )

Net cash provided by operating activities 22,273 1,455

Investing activities:

7 unchanged sentences

Repayment of long-term debt ( 50,459 ) ( 30,559 )

Payment on deferred financing costs ( 175 ) ( 200 )

Payment of deferred financing costs ( 175 ) ( 200 )

Tax withholding payments on share-based compensation ( 110 ) ( 213 )

Net cash provided by financing activities 24,488 22,314

Net cash (used in) provided by financing activities ( 13,838 ) 1,975

Net increase in cash 3,830 816

1 unchanged sentence

Cash at end of period $ 4,887 $ 2,175

Supplemental disclosures of cash flow information:

Property, plant and equipment acquired and not yet paid at end of period $ 178 $ 291

Cash paid during the year for interest $ 2,223 $ 1,310

Cash paid during the year for income tax, net of refunds $ 4,156 $ 65

See accompanying notes to unaudited condensed consolidated financial statements.

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Three-Month Period Ended July 31, 2023

Three-Month Period Ended October 31, 2023

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

Balance at May 1, 2023 16,210,985 $ 162 $ 120,993 $ ( 52,073 ) $ ( 2,360 ) $ 66,722

Balance at August 1, 2023 16,347,314 $ 164 $ 121,030 $ ( 36,539 ) $ ( 2,360 ) $ 82,295

Net income — — — 10,160 — 10,160

3 unchanged sentences

Stock compensation expense — — 171 — — 171

Balance at July 31, 2023 16,347,314 $ 164 $ 121,030 $ ( 36,539 ) $ ( 2,360 ) $ 82,295

Three-Month Period Ended July 31, 2022

Balance at October 31, 2023 16,347,314 $ 164 $ 121,201 $ ( 26,379 ) $ ( 1,197 ) $ 93,789

Three-Month Period Ended October 31, 2022

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

Balance at May 1, 2022 16,102,023 $ 161 $ 120,745 $ ( 72,262 ) $ ( 5,894 ) $ 42,750

Balance at August 1, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Net income — — — 7,875 — 7,875

3 unchanged sentences

Stock compensation expense — — 103 — — 103

Balance at July 31, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Six-Month Period Ended July 31, 2023

Balance at October 31, 2022 16,210,985 $ 162 $ 120,787 $ ( 54,707 ) $ ( 2,214 ) $ 64,028

Nine-Month Period Ended October 31, 2023

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

5 unchanged sentences

Stock compensation expense — — 423 — — 423

Balance at July 31, 2023 16,347,314 $ 164 $ 121,030 $ ( 36,539 ) $ ( 2,360 ) $ 82,295

Six-Month Period Ended July 31, 2022

Balance at October 31, 2023 16,347,314 $ 164 $ 121,201 $ ( 26,379 ) $ ( 1,197 ) $ 93,789

Nine-Month Period Ended October 31, 2022

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

5 unchanged sentences

Stock compensation expense — — 509 — — 509

Balance at July 31, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Balance at October 31, 2022 16,210,985 $ 162 $ 120,787 $ ( 54,707 ) $ ( 2,214 ) $ 64,028

See accompanying notes to unaudited condensed consolidated financial statements.

Notes to unaudited Condensed Consolidated Financial Statements

July 31, 2023

October 31, 2023

Basis of Presentation

4 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

Operating results for the three months and six months ended July 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2024.

Operating results for the three months and nine months ended October 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2024.

The balance sheet at January 31, 2023 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

46 unchanged sentences

The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

The following table presents a breakdown of the Company’s inventories as of July 31, 2023, January 31, 2023 and July 31, 2022:

The following table presents a breakdown of the Company’s inventories as of October 31, 2023, January 31, 2023 and October 31, 2022:

10/31/2023 1/31/2023 10/31/2022

7 unchanged sentences

All of the Company’s leases are classified as operating leases.

Pursuant to ASC 842 - Leases , the Company uses the implicit rate when readily determinable, or the incremental borrowing rate.

The Company uses the implicit rate when readily determinable, or the incremental borrowing rate.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments using Company specific credit spreads.

1 unchanged sentence

Lease expense for our operating leases is recognized on a straight-line basis over the lease term.

The Company has an operating lease for its corporate office and manufacturing and distribution facility located in Torrance, CA, currently with a remaining lease term through April 2025.

The Company has an operating lease for its corporate office and manufacturing and distribution facility located in Torrance, California, currently with a remaining lease term through April 2025.

The Company's lease terms include options to extend or terminate the lease only when it is reasonably certain that we exercise that option.

5 unchanged sentences

The Company records lease expense on a straight-line basis based on the contractual lease payments.

In accordance with ASC 842, the Company recognizes the present value of the future lease commitments as an operating lease liability, and a corresponding right-of-use asset (“ROU asset”), net of tenant allowances.

The Company recognizes the present value of the future lease commitments as an operating lease liability, and a corresponding right-of-use asset (“ROU asset”), net of tenant allowances.

Tenant improvements and related tenant allowances are recorded as a reduction to the ROU asset.

4 unchanged sentences

The quantitative information regarding our leases is as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

10/31/2023 10/31/2022 10/31/2023 10/31/2022

10 unchanged sentences

Weighted-average discount rate 6.36 % 6.34 %

Minimum future lease payments for operating leases in effect as of July 31, 2023, are as follows:

Minimum future lease payments for operating leases in effect as of October 31, 2023, are as follows:

Operating Lease

14 unchanged sentences

Non-current portion $ 7,946 $ 14,384 $ 14,444

The Company and Virco Inc., its wholly-owned subsidiary (the “Borrowers”) have a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”).

The Company and Virco Inc., its wholly-owned subsidiary (the “Borrowers”) has a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”).

The Credit Agreement was amended numerous times since its origination in December 2011.

11 unchanged sentences

The Restated Credit Agreement also contains certain financial covenants, including covenants requiring a minimum fixed charge coverage ratio and limits on capital expenditures.

The Company was in compliance with its debt covenants as of July 31, 2023.

The Company was in compliance with its debt covenants as of October 31, 2023.

The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season.

Approximately $ 30.5 million was available for borrowing as of July 31, 2023.

The interest rate range for outstanding loan balances during the quarter ended July 31, 2023 was 8.19 % to 10.25 %.

Approximately $ 23.1 million was available for borrowing as of October 31, 2023.

The interest rate for outstanding loan balances during the quarter ended October 31, 2023 was 10.00 %.

The Company also incurs a fee on the unused portion of the revolving line of credit at a rate of 0.375 %.

In addition to the outstanding debt balance of $ 3.7 million on the Company's revolving credit line, the Company also carries a mortgage on a manufacturing building in Conway Arkansas.

The original note was dated August 2017 for $ 5.8 million, at a fixed rate of 4 % per year and 20 years term.

The outstanding amount under this note was $ 4.5 million as of July 31, 2023.

The original note was dated August 2017 for $ 5.8 million, at a fixed rate of 4 % per year and 20 year term.

The outstanding amount under this note was $ 4.4 million as of October 31, 2023.

On May 19, 2023, the Company entered into Amendment No.

7 unchanged sentences

Increase in the Applicable Margin (as defined in the Credit Agreement) of 25 basis points.

Management believes that the carrying value of debt approximated fair value at July 31, 2023, as all of the long-term debt bears interest at variable rates based on prevailing market conditions.

Management believes that the carrying value of debt approximated fair value at October 31, 2023, as all of the long-term debt bears interest at variable rates based on prevailing market conditions ,except mortgage on a manufacturing building in Conway Arkansas at a fixed rate of 4 % per year.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized.

1 unchanged sentence

As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, the availability of tax carry backs, tax-planning strategies, and results of recent operations, to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

Valuation allowances of $ 390,000 , $ 864,000 and $ 9,241,000 as of July 31, 2023, January 31, 2023 and July 31, 2022, respectively, are needed for federal deferred tax assets and certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized.

For the three months ended July 31, 2023 and 2022, the effective income tax rates were 23.6 % and 3.0 %, respectively.

For the six months ended July 31, 2023 and 2022, the effective income tax rates were 23.6 % and 0.3 %, respectively.

The change in effective tax rates for the three and six months ended July 31, 2023 was primarily due to the change in forecasted mix of income before federal and state income taxes and estimated permanent differences.

The effective tax rate for the three and six months ended July 31, 2022 was primarily due to the recording of a valuation allowance needed for federal deferred tax assets and certain state net operating loss carryforwards.

Valuation allowances of $ 255,000 , $ 864,000 and $ 8,893,000 as of October 31, 2023, January 31, 2023 and October 31, 2022, respectively, are needed for federal deferred tax assets and certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized.

For the three months ended October 31, 2023 and 2022, the effective income tax rates were 24.5 % and 3.9 %, respectively.

For the nine months ended October 31, 2023 and 2022, the effective income tax rates were 24.0 % and 2.6 %, respectively.

The change in effective tax rates for the three and nine months ended October 31, 2023 was primarily due to the change in forecasted mix of income before federal and state income taxes and estimated permanent differences.

The lower effective tax rate for the three and nine months ended October 31, 2022 was primarily due to the recording of a valuation allowance needed for federal deferred tax assets and certain state net operating loss carryforwards.

The January 31, 2018 and subsequent fiscal years remain open for examination by the IRS and state tax authorities.

2 unchanged sentences

The following table sets forth the computation of basic and diluted net income per share:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

10/31/2023 10/31/2022 10/31/2023 10/31/2022

8 unchanged sentences

Stock Incentive Plan

Under the Company's 2019 Omnibus Equity Incentive Plan (the “2019 Plan”), the Company may grant an aggregate of up to 1,000,000 shares to its employees and non-employee directors in the form of restricted stock units, restricted stock awards and stock options.

Under the Company's 2019 Omnibus Equity Incentive Plan (the “2019 Plan”), the Company may grant an aggregate of up to 1.0 million shares to its employees and non-employee directors in the form of restricted stock units, restricted stock awards and stock options.

Restricted stock units and awards granted under the 2019 Plan are expensed ratably over the vesting period of the awards.

The Company determines the fair value of its restricted stock units or awards and related compensation expense as the difference between the market value of the units or awards on the date of grant less the exercise price of the units or awards granted.

During the three-month and six-month periods ended July 31, 2023, the Company granted 70,510 awards, vested 93,600 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of July 31, 2023, there were approximately 537,925 shares available for future issuance under the 2019 Plan.

The following table summarizes the stock-based compensation expense related to restricted stock awards recognized in the Company's statements of operations for the three and six months ended July 31, 2023 and 2022:

Three Months Ended Six Months Ended

There were no awards grant and vested during the three-month period ended October 31, 2023.

During the nine-month period ended October 31, 2023, the Company granted 70,510 awards, vested 93,600 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of October 31, 2023, there were approximately 537,925 shares available for future issuance under the 2019 Plan.

Three Months Ended Nine Months Ended

10/31/2023 10/31/2022 10/31/2023 10/31/2022

3 unchanged sentences

Total stock-based compensation expense $ 171 $ 103 $ 423 $ 509

As of July 31, 2023, there was $ 572,000 of unrecognized compensation expense related to unvested restricted stock units and/or awards, which is expected to be recognized over a weighted average period of approximately 1 year.

As of October 31, 2023, there was $ 400,000 of unrecognized compensation expense related to unvested restricted stock units and/or awards, which is expected to be recognized over a weighted average period of approximately 1 year.

Retirement Plans

5 unchanged sentences

There is no service cost incurred under the VIP Plan.

The following table summarizes t he net periodic pension cost for the Pension Plan and the VIP Plan for the three and six months ended July 31, 2023 and 2022:

Three Months Ended Six Months Ended

The following table summarizes t he net periodic pension cost for the Pension Plan and the VIP Plan for the three and nine months ended October 31, 2023 and 2022:

Three Months Ended Nine Months Ended

10/31/2023 10/31/2022 10/31/2023 10/31/2022

11 unchanged sentences

The plan includes Virco stock as one of the investment options.

At July 31, 2023 and 2022, the plan held 1,415,111 shares and 1,221,095 shares of Virco stock, respectively.

For the three-month period ended July 31, 2023 and 2022, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 319,000 and $ 322,000 respectively.

For the six-month period ended July 31, 2023 and 2022, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 722,000 and $ 652,000 respectively.

At October 31, 2023 and 2022, the plan held 1,404,774 shares and 1,250,468 shares of Virco stock, respectively.

For the three-month period ended October 31, 2023 and 2022, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 356,000 and $ 333,000 respectively.

For the nine-month period ended October 31, 2023 and 2022, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 1,078,000 and $ 985,000 respectively.

Warranty Accrual

6 unchanged sentences

The Company accrues an estimate of its exposure to warranty claims based upon both product sales data and an analysis of actual warranty claims incurred.

The following is a summary of the Company’s warranty-claim activity for the three and six months ended July 31, 2023 and 2022:

Three Months Ended Six Months Ended

The following is a summary of the Company’s warranty-claim activity for the three and nine months ended October 31, 2023 and 2022:

Three Months Ended Nine Months Ended

10/31/2023 10/31/2022 10/31/2023 10/31/2022

5 unchanged sentences

Contingencies

The Company has a self-insured retention for product losses up to $ 250,000 per occurrence, workers’ compensation liability losses up to $ 250,000 per occurrence, general liability losses up to $ 50,000 per occurrence and automobile liability losses up to $ 50,000 per occurrence.

The Company has purchased insurance to cover losses in excess of the self-insurance retention or

deductible up to a limit of $ 30,000,000 .

$ 50,000 per occurrence.

The Company has purchased insurance to cover losses in excess of the self-insurance retention or deductible up to a limit of $ 30,000,000 .

The Company has obtained an actuarial estimate of its total expected future losses for liability claims and recorded a liability equal to the net present value.

2 unchanged sentences

Delivery Costs

For the three months ended July 31, 2023 and 2022, shipping and classroom delivery costs of approximately $ 9,991,000 and $ 7,129,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the six months ended July 31, 2023 and 2022, shipping and classroom delivery costs of approximately $ 13,334,000 and $ 10,383,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the three months ended October 31, 2023 and 2022, shipping and classroom delivery costs of approximately $ 8,634,000 and $ 8,393,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the nine months ended October 31, 2023 and 2022, shipping and classroom delivery costs of approximately $ 21,968,000 and $ 18,776,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

Subsequent Events

On December 5, 2023, the Company’s Board of Directors declared a cash dividend for the Company’s fourth fiscal quarter of $ 0.02 on each outstanding share of common stock.

The dividend is payable on January 10, 2024 to stockholders of record of the common stock as of the close of business on December 22, 2023.

While the Company intends to pay future dividends on a quarterly basis, following review and approval by the Board of Directors, the declaration and payment of future dividends, as well as the amounts thereof, are subject to the discretion of the Board as well as restrictive covenants in the Company’s lending agreements.

There can be no assurance that the Company will declare and pay dividends in future periods.

In addition, the Board of Directors has authorized the repurchase of up to $ 5,000,000 of the Company’s common stock.

Repurchases may be made at management’s discretion from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate, legal and regulatory requirements, prevailing stock prices, trading volume, and other considerations.

The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

The Company expects to utilize its existing cash and cash equivalents to fund repurchases under the share repurchase program .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements