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Virco Announces Third Quarter Results



Virco Announces Third Quarter Results

TORRANCE, Calif., Dec. 7, 2012 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation
(Nasdaq:VIRC) today announced third quarter and year-to-date results in the
following letter to stockholders from Robert A. Virtue, President and CEO:

For the three months ended October 31, 2012, traditionally the tail end of our
summer delivery season, revenue increased 6.7% from $53,074,000 last year to
$56,642,000 this year. For the nine months ended October 31, 2012, revenue
increased from $140,147,000 last year to $140,702,000 this year.

Reflecting our lower cost structure following last year's voluntary staff
reductions, net income improved even further. In this year's third quarter,
net income was $2,908,000 compared to a loss of $3,299,000 last year. Through
nine months, net income was $5,128,000 versus a loss of $5,967,000 last year.

Despite these encouraging operating results, our core market for public
education furniture and equipment continues to face serious funding
challenges. Incoming order rates are slightly lower this year than last (down
2.6% through nine months) resulting in a lower backlog as we begin our slow
winter season. However, this slight decline in the absolute size of our
backlog has been offset by an increase in "flow" or "turns business" that is
booked and shipped in the same quarter. Further, our agile domestic factories
allow us to respond very quickly to short lead-time orders, even when they
involve customization. For both of these reasons, actual shipments have
consistently tracked at or above last year's levels while the backlog has
lagged. And, as noted above, profitability on actual shipments has improved
significantly.

Here are our results for the three and nine months ended October 31, 2012 and
the comparable periods last year: 

Virco Mfg. Corporation
Condensed Consolidated Statements of Operations
(In thousands, except share data)
Unaudited 
 
                         Three Months Ended          Nine Months Ended
                         10/31/2012    10/31/2011    10/31/2012   10/31/2011
Net sales                $ 56,642      $ 53,074      $ 140,702    $ 140,147
Cost of sales            37,324        37,033        91,550       97,446
Gross profit             19,318        16,041        49,152       42,701
Selling, general
administrative & other   16,561        19,165        43,953       48,422
expense
Income (Loss) before     2,757         (3,124)       5,199        (5,721)
income taxes
Income tax (benefits)    (151)         175           71           246
expense
Net income (loss)        $ 2,908       $ (3,299)     $ 5,128      $ (5,967)
                                                                   
Cash dividend declared   $ —           $ —           $ —          $ 0.05
                                                                   
Net income (loss) per                                              
common share (a)
Net income (loss) per    $ 0.20        $ (0.23)      $ 0.36       $ (0.42)
share - basic
Net income (loss) per    0.20          (0.23)        0.35         (0.42)
share - diluted
                                                                   
Weighted average shares                                            
outstanding
Basic                    14,441        14,285        14,369       14,241
Diluted                  14,629        14,285        14,474       14,241
                                                                   
(a) Net loss per share was calculated based on basic shares outstanding due to
the anti-dilutive effect on the inclusion of common stock equivalent shares.

 
 
Virco Mfg. Corporation
Condensed Consolidated Balance Sheets
(In thousands)
Unaudited
 
 
                        10/31/2012 1/31/2012 10/31/2011
Current assets          $ 43,591   $ 45,808  $ 46,968
Non-current assets      46,432     48,417    48,726
Current liabilities     23,475     26,840    26,214
Non-current liabilities 30,053     36,489    27,712
Stockholders' equity    36,495     30,896    41,768
 

As previously discussed in our Annual Report on Form 10-K for the fiscal year
ended January 31, 2012 and in prior quarterly reports, last year we executed a
restructuring based on voluntary early retirement. Approximately 150 employees
accepted this offer and, combined with normal attrition, our headcount
declined from 1,045 at February 1, 2011 to 825 at February 1, 2012. Subsequent
to this, we made use of overtime and temporary workers to meet peak season
demand. This approach contributed to our operating improvement in 2012.

Given the uncertainty that still surrounds our market, we recently took
additional temporary measures to seasonalize our activities and
expenses. Unlike last year's third quarter ended October 31, 2011, which
included $3.9 million of expense related to voluntary retirement, this year's
measures (shorter work weeks and additional days of plant furlough) generated
no one-time expenses and will result instead in immediate savings between now
and our fiscal year-end on January 31, 2013. We regularly evaluate all of our
activities for contributions, process improvements, and possible additional
cost controls.

Our efforts are not only limited to cost controls. We note with interest the
renewed enthusiasm for what has been variously termed 'onshoring' or
'insourcing.' As a manufacturer who never left, we continue to seek innovative
ways to add value for our customers through new product development, the use
and control of safe, high-quality raw materials, and on-time delivery and
installation. All of these activities are easier for us to manage with the
shorter supply chain of our domestic factories and direct distribution
model. As this trend strengthens, we believe it will favor our strategic
decision to maintain and invest in our U.S. factories and
employees. Furthermore, with our current low cost structure, we believe we're
ideally positioned to profit from even modest improvements in demand as our
market recovers. 

Looking forward, we're encouraged by signs of economic stabilization,
especially in the housing market. New home construction and community
development have long been two of the best proxies for future school furniture
and equipment demand. During the peak of this country's suburban expansion
from the 1950s through the 1990s, new housing starts averaged about 1.5
million per year. In the depths of the recent recession that number dropped by
two thirds, to about 500,000 starts per year. Now new housing starts are
starting to inch back towards 1.0 million per year. If past patterns are any
indication, this stabilization will eventually translate into new school
construction and growth in our market. 

We're especially encouraged by the broad financial support for public
education reflected in the recent election. California's passage of a
voluntary tax to support public education is consistent with less-heralded but
similar decisions by taxpayers across the country. We saw a number of
successful bond issues to support new school construction and/or
refurbishments, especially those involving 21^st Century Classrooms and
technology upgrades. Many of our new products specifically support these
initiatives. We continue to believe that progressive public education offers
the best path forward for our country, and we're proud to participate by
supplying quality, American-made classroom furniture and equipment.

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: business strategies; market
demand and product development; economic conditions; the educational furniture
industry; international markets; product sourcing; raw material costs; state
and municipal bond funding; order rates; operating efficiencies; supply
chains; the Company's domestic factories; new school construction 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; state and municipal bond funding; state,
local and municipal tax receipts; 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; our ability to access cash under
the credit facility; and the competitive landscape, including responses of our
competitors to changes in our prices. See our Annual Report on Form 10-K for
the year ended January 31, 2012, 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.               

The Virco Mfg. Corporation Logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=521

CONTACT: Robert A. Virtue, President
         Douglas A. Virtue, Executive Vice President
         Robert E. Dose, Vice President Finance
         Virco Mfg. Corporation
         (310) 533-0474

Virco Mfg. Corporation Logo
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