Virco Manufacturing Corporation VIRC reported dismal results in the third quarter of fiscal 2024 (ended Oct. 31, 2024). Earnings and net sales missed the Zacks Consensus Estimate and declined on a year-over-year basis.
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The quarter’s performance was primarily hurt by the tragic weather conditions, which affected several areas of the United States, along with the timing of shipments. Furthermore, increased costs and expenses hurt the bottom line of the company.
VIRC stock plunged 17.7% during the trading session on Monday, post the announcement of the quarterly results.
Delving Deeper Into Virco’s Numbers
The company reported earnings of 52 cents per share, which lagged the Zacks Consensus Estimate of 87 cents by 40.2%. In the last reported quarter, it reported earnings of 62 cents per share.
Net sales of $82.6 million also missed the consensus mark of $97 million by 14.7% and declined 2% from the prior-year quarter’s level.
Virco Manufacturing Corporation Price, Consensus and EPS Surprise
Virco Manufacturing Corporation price-consensus-eps-surprise-chart | Virco Manufacturing Corporation Quote
Order backlog at the end of Oct. 31, 2024, was down to approximately $25 million from $42.6 million in the prior year. Shipments plus Backlog (a non-GAAP metric that combines actual shipments with the unshipped backlog) was up about 1% year over year, attributable to the moderation in the rate of order growth and a return to more traditional seasonal patterns.
VIRC’s Operating Highlights
During the quarter, Virco’s gross profit declined 4% year over year to $36.7 million. The gross margin contracted 100 basis points (bps) to 44.4% compared with the year-ago value of 45.4%. The downturn was due to a slight increase in levels of overhead expense relative to sales.
Selling, general and administrative expenses – as a percentage of sales – expanded 300 bps to 30.9% compared with 27.9% reported a year ago. The increase was due to higher freight and installation costs.
The company reported an operating profit of $11.1 million (13.5% of net sales) compared with $14.7 million (17.5% of net sales) in the prior-year quarter.
Virco’s Financials
At the fiscal third-quarter end, Virco had cash of $38.9 million, significantly up from $5.3 million at fiscal 2023-end. As of Oct. 30, 2024, long-term debt (less current portion) was $3.9 million, down from $4.1 million at fiscal 2023-end.
VIRC’s Zacks Rank & Key Picks
Virco currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Consumer Discretionary sector.
Choice Hotels International, Inc. CHH currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHH has a trailing four-quarter earnings surprise of 8.3%, on average. The stock has gained 26% in the past year. The Zacks Consensus Estimate for CHH’s 2025 sales and earnings per share (EPS) indicates growth of 3.1% and 4.7%, respectively, from the year-ago levels.
Interface, Inc. TILE presently sports a Zacks Rank of 1. TILE has a trailing four-quarter earnings surprise of 73.3%, on average. The stock has risen 134.2% in the past year.
The Zacks Consensus Estimate for TILE’s 2025 sales and EPS indicates an increase of 3% and 13.1%, respectively, from the year-ago levels.
Flexsteel Industries, Inc. FLXS currently sports a Zacks Rank of 1. FLXS has a trailing four-quarter earnings surprise of 12.7%, on average. The stock has surged 219.5% in the past year.
The Zacks Consensus Estimate for FLXS’ fiscal 2025 sales and EPS indicates an increase of 4.9% and 54%, respectively, from the year-ago levels.
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