Virco Announces Second Quarter Results

Virco Announces Second Quarter Results

TORRANCE, Calif., Sept. 13, 2013 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation
(Nasdaq:VIRC) today announced second quarter results in the following letter
to stockholders from Robert A. Virtue, President and CEO:

The uneven recovery of our core K-12 furniture business continued during the
second quarter of 2013. Despite this continued volatility, we were able to
generate profits during this quarter. We believe this is largely a result of
the operational flexibility we have achieved due to our restructuring efforts
over the past several years.

Revenues for the three months ended July 31, 2013 declined 5.7% from
$60,392,000 for the three months ended July 31, 2012 to $56,933,000 this year.
Gross profit as a percentage of sales was flat at 37.9% for the three months
ended July 31, 2013 and the comparable period last year. For the six months
ended July 31, 2013, revenues declined 8.6% from $84,060,000 for the six
months ended July 31, 2012 to $76,823,000 this year. Gross profit as a
percentage of sales improved in the first half of fiscal 2013, from 35.5% in
the first half of fiscal 2012 to 36.4% this year. We believe this improvement
is attributable to the efficiencies resulting from our recent restructurings,
including from our employee headcount reductions in May 2013.

To further illustrate the volatility we are facing, order rates for the first
three months of 2013 were 24.1% below the comparable period last year.
However, in the second quarter, order rates improved and ended 5.6% higher
than the comparable period in 2012. Given the heavy seasonality of our annual
cycle, this strong uptick resulted in a higher backlog heading into the summer
of 2013 than the summer of 2012. As a result, our backlog at July 31, 2013 was
11.5% higher than at July 31, 2012. As of the date of this release, daily
order rates are still trending slightly ahead of 2012, giving us some hope
that we might make up the early season revenue shortfall by year end.

Here are our results for the three and six months ended July 31, 2013, and the
comparable periods last year:


                                  Three Months Ended  Six Months Ended
                                  7/31/2013 7/31/2012 7/31/2013 7/31/2012
                                  (In thousands, except share data)
                                                             
Net sales                          $56,933 $60,392 $76,823 $84,060
Cost of sales                      35,347    37,525    48,828    54,226
Gross profit                       21,586    22,867    27,995    29,834
Selling, general administrative &  15,301    15,608    26,194    27,392
other expense
Income before income taxes         6,285     7,259     1,801     2,442
Income tax expense                 75        206       38        222
Net income                         $6,210  $7,053  $1,763  $2,220
                                                             
Net income per share - basic       $0.43   $0.49   $0.12   $0.15
Net income per share - diluted     $0.42   $0.49   $0.12   $0.15
                                                             
Weighted average shares            14,570    14,369    14,506    14,333
outstanding - basic
                                                             
Weighted average shares            14,647    14,395    14,591    14,358
outstanding - diluted
                                                                           



                       7/31/2013 1/31/2013 7/31/2012
Current assets          $ 73,506  $ 37,037  $ 75,937
Non-current assets      44,821    45,201    46,810
Current liabilities     52,775    24,511    52,831
Non-current liabilities 36,651    30,707    36,470
Stockholders' equity    28,901    27,020    33,446


As discussed more fully in our annual report on Form 10-K for the year ended
January 31, 2013, we made substantial changes in our cost structure and
operating model over the last two years.At July 31, 2013, we were operating
with 30% fewer employees than at July 31, 2011.This reduction in force was
concentrated in manufacturing, and was offset with a more aggressive
engagement of seasonal staffing.The benefits of this more seasonal structure
were very apparent in the first quarter of 2013, when we reduced our operating
losses despite lower revenue.We're also pleased to have accomplished this
restructuring while keeping both of our U.S. factories fully operational.We
are and continue to be committed to manufacturing in the U.S.

During the last decade, many other manufacturers have moved their operations
offshore in an effort to reduce costs.We elected instead to invest in
automation, new products, and new service technologies.We believe this
approach is finally yielding the financial performance benefits we originally
envisioned.Specifically, the shorter, more responsive supply chains of our
own factories and distribution centers allow us to offer a wider range of
product choices with shorter lead times to support the rapidly evolving
environments of 21^st century classrooms and campuses.This responsiveness is
enhanced by our direct sales and service force, which isn't compromised by the
short-term concerns or multiple linkages of extended supply chain models,
which most of our competitors rely upon.

This year's results have also benefited from relatively stable commodity
costs, especially in steel and plastic.Two years ago these materials
experienced 25% spikes just as we entered the summer delivery season. This
year, the efficiencies of our new structure weren't masked by volatile
commodity costs.

We caution that publicly-funded entities continue to suffer serious budget
challenges.Despite evidence that tax-based fill-in orders may finally be
recovering somewhat in 2013, many of our largest public school district
customers are still confronting pension and structural cost issues that impede
their ability to buy all the replacement furniture they would
like.Furthermore, the stability of commodity costs and supplies may not be
permanent.

Given these cautions, we still believe we're well positioned for the
foreseeable future.As the risks of extended supply chains become more evident
to customers and suppliers alike, our modern and almost fully-depreciated
domestic factories seem likely to offer meaningful advantages in quality,
choice, and accountability.We intend to emphasize and profit from these
advantages as we work with educators to equip the learning environments of the
future.

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; revenues; the educational
furniture industry; public school district customers; raw material and
commodity costs; state and municipal bond funding; order rates (including
those relating to tax-based fill-in orders); operating efficiencies; supply
chains; the Company's domestic factories and distribution centers; 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; raw material,
commodity, 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; 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, 2013, 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.

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

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