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VIRCO MFG CORPORATION (VIRC)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 delivered a modest profit despite softer demand: net income was $0.732M and diluted EPS was $0.05 as gross margin expanded 400 bps to 47.5% on mix and the absence of last year’s low-margin disaster recovery order .
  • EPS was a significant beat versus Wall Street (-$0.13*) while revenue missed ($41.1M* consensus vs. $33.754M actual); margin outperformance offset revenue shortfall to keep profitability positive .
  • “Shipments plus Backlog” fell 22.9% to $105.6M, signaling a cyclical pause; management still sees mid‑term support from election-related school bonds and remains confident in domestic manufacturing resilience and on‑time deliveries .
  • Capital allocation remained shareholder-friendly: $4.0M buybacks and a maintained quarterly dividend of $0.025 per share (payable July 11, 2025) .
  • Key near-term catalysts: mix-driven margin strength, maintained dividend, and disciplined inventory positioning versus demand normalization; watch trajectory of orders/backlog and freight/installation inflation into peak season .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 47.5% from 43.5% YoY, aided by mix shift toward full-service orders and the absence of last year’s low-margin disaster recovery order .
  • Operational confidence: management reiterated domestic manufacturing mitigates tariff impacts and supports timely peak-season deliveries despite broader supply chain headlines .
  • Shareholder returns and reinvestment: $4.0M in buybacks, $0.4M dividends, and >$2.0M invested in “platform processes” to expand controllable operating leverage across product lines .
  • Quote: “We are maintaining this opportunistic stance and we look forward to successfully navigating whatever challenges and opportunities may develop this year and next.” — Robert A. Virtue, Chairman & CEO .

What Went Wrong

  • Top-line pressure: net sales fell to $33.754M from $46.735M YoY, reflecting demand moderation and the lapping of an unusually large, counter-seasonal disaster recovery order last year .
  • Backlog velocity: Shipments plus Backlog declined 22.9% to $105.6M, indicating a pause in the post‑COVID recovery cycle even as mid‑term bond indicators remain encouraging .
  • Operating leverage in seasonally light quarter: operating income swung to a small loss of -$0.094M versus $2.971M last year, despite SG&A reductions, underscoring seasonality and lower revenue base .

Financial Results

Core Results vs Prior Periods

MetricQ1 2025Q4 2025Q1 2026
Revenue ($USD Millions)$46.735 $28.466 $33.754
Diluted EPS ($)$0.13 -$0.35*$0.05
Gross Margin (%)43.5% 26.2% 47.5%

Notes: *Values retrieved from S&P Global.

Results vs Consensus (Wall Street)

MetricWall St Consensus (Q1 2026)Actual (Q1 2026)Beat/Miss
EPS ($)-$0.13*$0.05 Bold beat
Revenue ($USD Millions)$41.100*$33.754 Bold miss

Notes: *Values retrieved from S&P Global.

Selected Income Statement Detail

MetricQ1 2025Q1 2026
Gross Profit ($USD Millions)$20.347 $16.020
SG&A ($USD Millions)$17.376 $16.114
Operating Income ($USD Millions)$2.971 -$0.094
Net Income ($USD Millions)$2.140 $0.732

KPIs and Balance Sheet Snapshots

KPI / MetricQ1 2026Commentary
Shipments + Backlog ($USD Millions)$105.6 Down 22.9% YoY due to lapping disaster recovery order and demand moderation .
Dividend per Share$0.025 (payable 7/11/2025; record 6/20/2025) Maintained quarterly cadence; subject to Board discretion and lending covenants .
Share Repurchases$4.0M in Q1 Opportunistic buybacks amid strong balance sheet .
Inventories ($USD Millions)$74.029 Positioned to support peak deliveries; domestic make‑to‑order capability emphasized .
Cash ($USD Millions)$0.935 Seasonal working capital usage after strong year-end cash ($26.867M at 1/31/2025) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Revenue GuidanceFY/Q2‑Q3None provided None provided Maintained (no guidance)
Margin GuidanceFY/Q2‑Q3None provided None provided; management notes tariffs unlikely to impact gross margin materially Maintained (no guidance)
OpEx (SG&A) GuidanceFYNone provided None provided Maintained
OI&E / Tax Rate GuidanceFYNone provided None provided Maintained
Dividend per ShareQ2 FY2026$0.025 declared in Q4 FY2025 $0.025 declared for Q2 FY2026 Maintained

Earnings Call Themes & Trends

Note: A Q1 2026 earnings call transcript was not available; themes below reflect disclosures across prior releases and the Q1 2026 8‑K/press release.

TopicPrevious Mentions (Q3 2025 and Q4 2025)Current Period (Q1 2026)Trend
Guidance philosophy“We have never offered guidance… prefer preparedness” Reaffirms preference for operational preparedness over formal guidance Unchanged
Supply chainReturn to traditional seasonality; make‑to‑order improves inventory/AR; debt‑free in Q3 Confident in peak-season deliveries despite headline disruptions Stable/positive execution
Tariffs/macroPossible input cost increases; potential short‑term margin pressure Tariffs unlikely to materially impact gross margins given domestic manufacturing Tariff risk viewed as manageable
Demand/backlogShipments+Backlog ~+1% YoY as of Dec 9, 2024; moderation observed Shipments+Backlog down 22.9% to $105.6M; “pause” in recovery Softer near term
Service mix (PlanSCAPE/full service)SG&A % up on freight/installation; closer customer engagement Higher proportion of full‑service orders supported margin mix Mix favorable to margins
Capital allocationPositive cash, no revolver usage; dividend $0.025; repurchase authorization remaining $4.0M buybacks; $0.025 dividend; >$2.0M platform process investments Ongoing returns + reinvestment

Management Commentary

  • “Because the Company manufactures the majority of its products domestically, Management believes tariffs are unlikely to have significant impacts on gross margins going forward… confident in its ability to perform timely peak-season deliveries despite headline supply chain disruptions in other markets.” — Q1 2026 press release .
  • “We are maintaining this opportunistic stance and we look forward to successfully navigating whatever challenges and opportunities may develop this year and next.” — Robert A. Virtue, Chairman & CEO .
  • “This current year looks like it will represent a ‘pause’ in the recent rapid recovery of the school furniture market… we see hopeful signs in the mid-term school bond environment” — Robert A. Virtue .

Q&A Highlights

  • No Q1 2026 earnings call transcript was available in our document catalog; therefore Q&A themes and any clarifications cannot be assessed for this quarter [earnings-call-transcript search returned none].

Estimates Context

  • Wall Street (S&P Global) expected a quarterly loss, but Virco delivered profitability: EPS actual $0.05 vs. -$0.13* consensus; revenue missed consensus ($33.754M actual vs. $41.100M*) .
  • Only one estimate was available for both EPS and revenue, limiting the robustness of consensus; still, the magnitude of the EPS beat suggests margins surprised positively due to mix and cost control .

Notes: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin execution is the near-term differentiator: 47.5% gross margin amid lower sales underscores pricing/service mix and domestic production advantages; this can buffer earnings even as orders normalize .
  • Revenue headwinds are primarily cyclical and comp‑driven (lapping disaster recovery order); watch Shipments+Backlog and spring order cadence for signs of reacceleration tied to school bonds .
  • Capital returns remain active: maintained $0.025 dividend and $4.0M buybacks in Q1; supports total shareholder return while management invests in platform processes for operating leverage .
  • Tariff and supply chain risks appear contained given domestic manufacturing footprint; focus risk instead on service cost inflation (freight/installation) into peak season per prior disclosures .
  • Seasonality matters: Q1 and Q4 are light; expect operating leverage to improve in Q2/Q3 with deliveries, contingent on backlog/order timing .
  • Estimate resets: sell-side likely raises EPS assumptions versus prior loss expectations given margin performance but may trim near-term revenue trajectories; monitor consensus evolution and backlog updates .
  • Strategic posture: management is positioning for opportunistic demand with liquidity and upgraded manufacturing platforms, suggesting medium-term readiness for larger projects or adjacent market entries .