What changed in this filing

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Item 1. Financial Statements

2024-12-09 compared with 2024-09-09 · 85 added, 65 removed, 403 unchanged (27% of the section changed)

66 unchanged sentences

Operating income 11,113 14,706

Unrealized gain on investment in trust account ( 597 ) ( 325 )

Unrealized (gain) loss on investment in trust account ( 246 ) 176

Pension expense 106 301

Interest expense 322 1,083

Interest (income) expense, net ( 24 ) 765

Income before income taxes 11,277 13,464

10 unchanged sentences

Unaudited Condensed Consolidated Statements of Income

Six months ended

Nine months ended

10/31/2024 10/31/2023

25 unchanged sentences

Other comprehensive income:

Pension adjustments (net of tax adjustment of $ 21 and $ 0 at July 31, 2024 and 2023, respectively)

Pension adjustments (net of tax adjustment of $( 29 ) and $ 406 at October 31, 2024 and 2023, respectively)

Net comprehensive income $ 8,392 $ 11,323

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Comprehensive Income

Six months ended

Nine months ended

10/31/2024 10/31/2023

2 unchanged sentences

Other comprehensive income:

Pension adjustments (net of tax expense of $ 28 and $ 0 at July 31, 2024 and 2023, respectively)

Pension adjustments (net of tax adjustment of $( 57 ) and $ 406 at October 31, 2024 and 2023, respectively)

Net comprehensive income $ 27,318 $ 25,415

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Cash Flows

Six months ended

Nine months ended

10/31/2024 10/31/2023

2 unchanged sentences

Net income $ 27,374 $ 24,252

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

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

Depreciation and amortization 4,165 3,763

Non-cash lease benefits ( 418 ) ( 340 )

Non-cash lease expense (benefits) 302 ( 517 )

Provision for credit losses 45 45

2 unchanged sentences

Stock-based compensation 333 423

Amortization of net actuarial gain for pension plans ( 75 ) —

Defined pension plan settlement — 372

Amortization of net actuarial gain (loss) for pension plans ( 113 ) 3

Non-cash unrealized gain on investment ( 1,058 ) ( 448 )

7 unchanged sentences

Accounts payable and accrued liabilities 6,286 ( 3,150 )

Net cash provided by (used in) operating activities 7,963 ( 21,150 )

Net cash provided by operating activities 41,420 22,273

Investing activities:

Purchases of property, plant and equipment ( 5,365 ) ( 4,605 )

Purchases of marketable securities in trust accounts ( 1,285 ) —

Proceeds from sale of fixed assets 4 —

Proceeds from sale of marketable securities in trust accounts 1,285 —

Proceeds from surrendering life insurance policies 719 —

7 unchanged sentences

Cash dividends paid ( 1,060 ) —

Net cash (used in) provided by financing activities ( 2,737 ) 24,488

Net cash used in financing activities ( 3,206 ) ( 13,838 )

Net increase in cash 33,572 3,830

3 unchanged sentences

Property, plant and equipment acquired and not yet paid at end of period $ 350 $ 178

Cash paid during the period for interest $ 530 $ 1,795

Cash paid during the period for interest, net of interest income $ 506 $ 2,223

Cash paid during the period for income taxes, net of refunds $ 7,291 $ 4,156

2 unchanged sentences

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Three-Month Period Ended July 31, 2024

Three-Month Period Ended October 31, 2024

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

Balance at April 30, 2024 16,207,612 $ 162 $ 120,048 $ ( 27,235 ) $ ( 1,338 ) $ 91,637

Balance at July 31, 2024 16,289,406 $ 163 $ 119,734 $ ( 10,728 ) $ ( 1,357 ) $ 107,812

Net income — — — 8,401 — 8,401

4 unchanged sentences

Stock repurchase — — — — — —

Balance at July 31, 2024 16,289,406 $ 163 $ 119,734 $ ( 10,728 ) $ ( 1,357 ) $ 107,812

Three-Month Period Ended July 31, 2023

Balance at October 31, 2024 16,289,406 $ 163 $ 119,796 $ ( 2,734 ) $ ( 1,366 ) $ 115,859

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 April 30, 2023 16,210,985 $ 162 $ 120,993 $ ( 52,073 ) $ ( 2,360 ) $ 66,722

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

Net income — — — 10,160 — 10,160

4 unchanged sentences

Stock repurchase — — — — — —

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

Six-Month Period Ended July 31, 2024

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

Nine-Month Period Ended October 31, 2024

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

6 unchanged sentences

Stock repurchase ( 139,702 ) ( 2 ) ( 1,497 ) $ — — ( 1,499 )

Balance at July 31, 2024 16,289,406 $ 163 $ 119,734 $ ( 10,728 ) $ ( 1,357 ) $ 107,812

Six-Month Period Ended July 31, 2023

Balance at October 31, 2024 16,289,406 $ 163 $ 119,796 $ ( 2,734 ) $ ( 1,366 ) $ 115,859

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

6 unchanged sentences

Stock repurchase — — — — — —

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

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

See accompanying notes to unaudited condensed consolidated financial statements.

Notes to unaudited Condensed Consolidated Financial Statements

July 31, 2024

October 31, 2024

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, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2025.

Operating results for the three months and nine months ended October 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2025.

The balance sheet at January 31, 2024 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.

All references to the “Company” refer to Virco Mfg.

All references to the “Company”, “we” and “our” refer to Virco Mfg.

Corporation and its subsidiaries.

16 unchanged sentences

Recently Issued Accounting Standards

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

In November 2024, the FASB issued this ASU which requires a public entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis.

The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

A public entity should apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

We are currently evaluating the impact that this guidance will have on our consolidated financial statements and disclosures.

Accounting Standards Updates ("ASUs") 2023-07, Segment Reporting (Topic 280):

37 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, 2024, January 31, 2024 and July 31, 2023:

The following table presents a breakdown of the Company’s inventories as of October 31, 2024, January 31, 2024 and October 31, 2023:

10/31/2024 1/31/2024 10/31/2023

25 unchanged sentences

The quantitative information regarding our leases is as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

10/31/2024 10/31/2023 10/31/2024 10/31/2023

10 unchanged sentences

Weighted-average discount rate 9.80 % 6.36 %

Minimum future lease payments for operating leases in effect as of July 31, 2024, are as follows:

Minimum future lease payments for operating leases in effect as of October 31, 2024, are as follows:

Operating Lease

11 unchanged sentences

Under the Lease, the monthly base rent will be abated for the initial 5-month period from May 1, 2025 to September 30, 2025, then is set at $ 726,700 for October 1, 2025 through April 30, 2026, with subsequent increases of 3.5 % every 12 months thereafter.

The Lease also provides for a tenant improvement allowance of up to $ 1.7 million.

The Lease also provides for a tenant improvement allowance of up to $ 1.7 million to be used by December 31, 2026.

The Landlord has the right to terminate the Lease upon customary events of default.

9 unchanged sentences

The Company and Virco Inc., its wholly-owned subsidiary (collectively, the “Borrowers”) have 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, most recently on April 29, 2024.

The Credit Agreement was amended numerous times since its origination in December 2011, most recently on November 22, 2024.

The Credit Agreement as currently in effect permits the Company to issue cash dividends or make payments with respect to the Company’s capital stock in an aggregate amount up to $ 5.0 million during any fiscal year, provided that no default shall have occurred or is continuing or would result from any such payment, and the Company must demonstrate pro forma compliance with a 12-month trailing fixed charge coverage ratio of not less than 1.20 :1.00 as of the fiscal quarter immediately preceding the date of any such dividend or payment.

13 unchanged sentences

The 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, 2024.

The Company was in compliance with its debt covenants as of October 31, 2024.

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

Approximately $ 68.0 million was available for borrowing as of July 31, 2024.

Approximately $ 18.7 million was available for borrowing as of October 31, 2024.

The interest rate is determined as a sum of the applicable margin rate, which is 3.00 % from January through July and 2.50 % from August through December, plus the Secured Overnight Financing Rate (SOFR).

The Company did not have an outstanding amount under this note as of July 31, 2024.

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

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 4.0 % per year and 20 -year term.

The outstanding amount under this note was $ 4.3 million as of July 31, 2024.

The Company did not have an outstanding amount under the Credit Agreement as of October 31, 2024.

The Company also incurred a fee on the unused portion of the revolving line of credit at a rate of 0.375 % through September 30, 2024 and 0.250 % thereafter.

On November 22, 2024, the Company entered into Amendment No.

5 to Amended and Restated Revolving Credit and Security Agreement (“Amendment No.

5”) with PNC, with an effective date of October 1, 2024.

Amendment No.

5 amended the Credit Agreement and the secured revolving line of credit provided to the Company by PNC to reflect the following material changes:

Reduced the facility fee on the unused portion of the revolving line of credit to 0.250 % from 0.375 % per annum, commencing October 1, 2024;

Increased limits on permitted acquisitions (as defined in the Credit Agreement) from $ 5 million to $ 8 million during the term of the Credit Agreement;

Increased limits on cash dividends and common stock repurchase payments from $ 5 million to $ 8 million in the aggregate during any fiscal year.

The Company also carries a mortgage on its manufacturing building in Conway, Arkansas.

The original note was dated August 2017 with a principal balance of $ 5.8 million, at a fixed rate of 4.0 % per year and 20 -year term.

The outstanding amount under this note was $ 4.2 million as of October 31, 2024.

On April 29, 2024, the Company entered into Amendment No.

2 unchanged sentences

Amendment No.4 amended the Credit Agreement to reflect the following material changes:

Maximum size of the PNC line of credit has been lowered from $ 72.5 million to $ 70.0 million during the months of June through August, and

Maximum size of the PNC line of credit was lowered from $ 72.5 million to $ 70.0 million during the months of June through August, and

Maximum amount allowed for the Company to issue dividends or repurchase stock has been increased from $ 3.0 million to $ 5.0 million in the aggregate during any fiscal year.

Management believes that the carrying value of debt approximated fair value at July 31, 2024, 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 4.0 % per year.

Management believes that the carrying value of debt approximated fair value at October 31, 2024, 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 4.0 % 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.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible.

carrybacks, 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 $ 218,000 , $ 251,000 and $ 390,000 as of July 31, 2024, January 31, 2024 and July 31, 2023, 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.

The net change in the valuation allowance for the three months and six months ended July 31, 2024 was an increase of $ 1,000 and a decrease of $ 33,000 , respectively.

The net change in the valuation allowance for the three months and six months ended July 31, 2023 was a decrease of $ 185,000 and a decrease of $ 474,000 , respectively.

For the three months ended July 31, 2024 and 2023, the effective income tax rates were 23.7 % and 23.6 %, respectively.

For the six months ended July 31, 2024 and 2023, the effective income tax rates were 23.9 % and 23.6 %, respectively.

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 carrybacks, 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 $ 218,000 , $ 251,000 and $ 255,000 as of October 31, 2024, January 31, 2024 and October 31, 2023, 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.

The net change in the valuation allowance for the three months and nine months ended October 31, 2024 was $ 0 and a decrease of $ 33,000 , respectively.

The net change in the valuation allowance for the three months and nine months ended October 31, 2023 was a decrease of $ 135,000 and a decrease of $ 609,000 , respectively.

For the three months ended October 31, 2024 and 2023, the effective income tax rates were 25.5 % and 24.5 %, respectively.

For the nine months ended October 31, 2024 and 2023, the effective income tax rates were 24.4 % and 24.0 %, respectively.

Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

3 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

10/31/2024 10/31/2023 10/31/2024 10/31/2023

11 unchanged sentences

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 period ended July 31, 2024, the Company granted 16,066 awards, vested 164,110 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of July 31, 2024, there were approximately 521,859 shares available for future issuance under the 2019 Plan.

The following table summarizes the stock-based compensation expense related to restricted stock units and awards recognized in the Company's statements of operations for the three months ended July 31, 2024 and 2023:

Three Months Ended Six Months Ended

During the nine-month period ended October 31, 2024, the Company granted 16,066 awards, vested

164,110 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of October 31, 2024, there were approximately 521,859 shares available for future issuance under the 2019 Plan.

Three Months Ended Nine Months Ended

10/31/2024 10/31/2023 10/31/2024 10/31/2023

3 unchanged sentences

Total stock-based compensation expense $ 63 $ 171 $ 333 $ 423

As of July 31, 2024, there was $ 208,000 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 one year .

As of October 31, 2024, there was $ 146,000 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 one year .

Retirement Plans

5 unchanged sentences

There is no service cost incurred under the VIP Plan.

The following table summarizes the net periodic pension cost for the Pension Plan and the VIP Plan for the three months ended July 31, 2024 and 2023:

Three Months Ended Six Months Ended

The following table summarizes the net periodic pension cost for the Pension Plan and the VIP Plan for the three and nine months ended October 31, 2024 and 2023:

Three Months Ended Nine Months Ended

10/31/2024 10/31/2023 10/31/2024 10/31/2023

5 unchanged sentences

Amortization of prior service cost — — — —

Recognized net actuarial loss — — —

Recognized net actuarial (gain) loss ( 38 ) 26 ( 113 ) 26

Benefit cost $ 106 $ 301 $ 320 $ 623

3 unchanged sentences

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

At July 31, 2024 and 2023, the plan held 1,154,305 shares and 1,415,111 shares of Virco stock, respectively.

For the three months ended July 31, 2024 and 2023, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 337,000 and $ 319,000 respectively.

For the six months ended July 31, 2024 and 2023, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 778,000 and $ 722,000 respectively.

At October 31, 2024 and 2023, the plan held 1,105,376 shares and 1,404,774 shares of Virco stock, respectively.

For the three months ended October 31, 2024 and 2023, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 387,000 and $ 356,000 respectively.

For the nine months ended October 31, 2024 and 2023, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 1,165,000 and $ 1,078,000 respectively.

Warranty Accrual

4 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 months ended July 31, 2024 and 2023:

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, 2024 and 2023:

Three Months Ended Nine Months Ended

10/31/2024 10/31/2023 10/31/2024 10/31/2023

11 unchanged sentences

Delivery Costs

For the three months ended July 31, 2024 and 2023, shipping and classroom delivery costs of approximately $ 10.1 million and $ 10.0 million, respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the six months ended July 31, 2024 and 2023, shipping and classroom delivery costs of approximately $ 14.3 million and $ 13.3 million, respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the three months ended October 31, 2024 and 2023, shipping and classroom delivery costs of approximately $ 8.8 million and $ 8.6 million, respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the nine months ended October 31, 2024 and 2023, shipping and classroom delivery costs of approximately $ 23.1 million and $ 22.0 million, respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

Subsequent Events

On September 3, 2024, the Company’s Board of Directors declared a cash dividend for the Company’s third fiscal quarter of

On November 22, 2024, the Company executed Amendment No.

5 to the Restated Credit Agreement, with an effective date of October 31, 2024.

On December 5, 2024, the Company’s Board of Directors declared a cash dividend for the Company’s fourth fiscal quarter of

$ 0.025 on each outstanding share of common stock.

The dividend is payable on October 11, 2024 to stockholders of record of the common stock as of the close of business on September 20, 2024.

The dividend is payable on January 10, 2025 to stockholders of record of the common stock as of the close of business on December 20, 2024.

While the Company currently 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.

1 unchanged sentence

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