Overview

• US school furniture maker's Q1 revenue fell 9.1% yr/yr as demand slowed

• Company posted Q1 net loss versus profit last year; gross margin declined to 41.4%

• Q1 shareholder returns reached $0.6 mln, including buybacks and dividends

Outlook

• Company says order rates are roughly flat year-over-year with a slightly higher backlog

• Company expects seasonality to return to traditional pattern with sharper summer peak

• Company sees growing demand for full-service orders as a positive trend

Result Drivers

• SLOWING DEMAND - Co said underlying demand for school furniture is seeking a new baseline after pandemic-related market dislocations

• BACKLOG OVERHANG GONE - Last year's Q1 benefited from shipping lingering backlog, making this year's comparison more challenging

• LOWER FACTORY OUTPUT - Gross margin declined due to reduced revenue and related lower factory output and overhead absorption

Company press release: ID:nGNX5t7q6D

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Sales		$30.69 mln
Q1 Net Income		-$2.78 mln
Q1 Operating Income		-$3.66 mln

Analyst Coverage

• The one available analyst rating on the shares is "buy"

• The average consensus recommendation for the business support supplies peer group is "buy"

• Wall Street's median 12-month price target for Virco Mfg Corp is $7.00, about 16.5% above its June 2 closing price of $6.01

• The stock recently traded at 36 times the next 12-month earnings vs. a P/E of 8 three months ago

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