Virco Provides Update on Current Impact of COVID-19

TORRANCE, Calif., March 24, 2020 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (NASDAQ: VIRC) issued this press release to update its shareholders and the public about its current operational and financial assessment of, and responses to, the COVID-19 pandemic:

In accordance with State of California and local orders, the Company temporarily closed its Torrance, California, manufacturing and distribution facility on March 20, 2020.  Because business activity and demand for the Company’s education furniture have remained steady at approximately last year’s volume, it will continue to operate its Conway, Arkansas, manufacturing and distribution facility unless future developments require temporary closure of that facility as well.

Because the Company operates on a slightly staggered fiscal year (ending January 31), this press release is being issued just before it announces the audited year-end results for FYE 2020.  Management has chosen to wait until the audited results are final before discussing actual financial performance for the year ended January 31, 2020.  However, at a high level, net sales last year declined by mid- single digits—-but gross and net profit both improved significantly, reflecting in part the increase in value-added services being provided by the Company’s project management teams. 

Transactional “fill in” business for school furniture has slowed significantly as schools scramble to organize distance-learning platforms for the tens of millions of students now being home-schooled.  However, project business for new school construction has remained relatively unaffected, since it is funded differently and administered separately from ordinary classroom functions.  This is an important distinction, because as the overall share of project business continues to grow, strength in this segment has kept overall business activity roughly equal with last year.  Profit margins are still continuing to climb. 

Management measures overall business activity with its own non-GAAP metric of actual year-to-date shipments plus unshipped backlog.  This measure smooths our assessment of business activity for one-time events like tornados or hurricanes, but it may not yield the same degree of reliability this year given the magnitude of the current pandemic.

Quote and bid activity are steady to slightly higher than last year, leading Management to believe that when schools re-open they expect to be on the front lines of active social recovery.  For this reason the Company is continuing to operate its Arkansas facility at full capacity, servicing immediate West Coast deliveries from this central location. Reports suggest that overseas supply chains may not return to full capacity until after summer, by which time deliveries for the upcoming school year will already need to have been completed.  Management believes that by making furniture now, it can support America’s public schools in what is likely to be an unusual shipping season ahead of next year’s very important school term.