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What changed in VIRCO MFG CORPORATION's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of VIRCO MFG CORPORATION's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+254 added−251 removedSource: 10-K (2025-04-14) vs 10-K (2024-04-12)

Top changes in VIRCO MFG CORPORATION's 2025 10-K

254 paragraphs added · 251 removed · 211 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

61 edited+2 added−9 removed138 unchanged
Biggest changeThe Company sells to thousands of customers and no single customer represented more than 10 percent of the Company's consolidated net sales in fiscal 2024. Significant purchases of furniture using public funds often require annual bids or some form of “authorization” to purchase goods or services from a vendor.
Biggest changeThis market includes colleges and universities, preschools, private schools, and office training facilities, which typically purchase furniture through commercial channels. 5 The Company sells to thousands of customers and no single customer represented more than 10 percent of the Company's consolidated net sales in fiscal 2025.
Moreover, Virco has enacted policies for recycling and resource recovery that have earned repeated commendations, including: recognition by the California Department of Resources Recycling and Recovery 12 ("CalRecycle") in 2012 and 2011 as a Waste Reduction Awards Program (“WRAP”) honoree; recognition by the United States Environmental Protection Agency in 2019 as a WasteWise Winner for reducing waste, in 2004 as a WasteWise Hall of Fame Charter Member, in 2003 as a WasteWise Partner of the Year, and in 2002 as a WasteWise Program Champion for Large Businesses; and recognition by the Sanitation Districts of Los Angeles County for compliance with industrial waste water discharge guidelines in 2008 through 2011.
Moreover, Virco has enacted policies for recycling and resource recovery that have earned repeated commendations, including: recognition by the California Department of Resources Recycling and Recovery ("CalRecycle") in 2012 and 2011 as a Waste Reduction Awards Program (“WRAP”) honoree; recognition by the United States Environmental Protection Agency in 2019 as a WasteWise Winner for reducing waste, in 2004 as a WasteWise Hall of Fame Charter Member, in 2003 as a WasteWise Partner of the Year, and in 2002 as a WasteWise Program Champion for Large Businesses; and recognition by the Sanitation Districts of Los Angeles County for compliance with industrial waste water discharge guidelines in 2008 through 2011.
From classrooms to open-office spaces, the Tetra is simple enough to serve as an everyday workstation but can be customized to suit the needs of a fast-paced media lab or seminar training room. Lunada® tables, combining Virco's popular Lunada bi-point bases with a selection of 20 top sizes, make great choices for 7 seminar, conference, and related settings.
From classrooms to open-office spaces, the Tetra is simple enough to serve as an everyday workstation but can be customized to suit the needs of a fast-paced media lab or seminar training room. Lunada® tables, combining Virco's popular Lunada bi-point bases with a selection of 20 top sizes, make great choices for seminar, conference, and related settings.
The manufacturers that Virco competes with include Artcobell, KI Inc., Steelcase, Smith System (owned by Steelcase), V/S America, Scholarcraft, Academia, Alumni, Columbia, Moore Co., Paragon, SICO, Learniture (owned by School Outfitters) and Hon ("HNI"). Our competitors that purchase and re-sell furniture include School Outfitters, School Specialty ("SCHS"), MeTEOR (formerly Contrax), Kay-Twelve, and Hertz.
The manufacturers that Virco competes with include Artcobell, KI Inc., Steelcase, Smith System (owned by Steelcase), V/S America, Scholarcraft, Academia, Alumni, Columbia, Moore Co., Paragon, SICO, Learniture (owned by School Outfitters) and Hon ("HNI"). Our competitors that purchase and re-sell furniture include School Outfitters, School Specialty ("SCHS"), MeTEOR (formerly Contrax), MiEN, Kay-Twelve, and Hertz.
If management underestimates any of these requirements, Virco's ability to meet customer orders in a timely manner or to provide adequate customer service may be diminished. If management overestimates any of these requirements, the Company may have to absorb higher storage, labor, and related costs, each of which may negatively affect the Company's results of operations.
If management underestimates any of these requirements, Virco's ability 10 to meet customer orders in a timely manner or to provide adequate customer service may be diminished. If management overestimates any of these requirements, the Company may have to absorb higher storage, labor, and related costs, each of which may negatively affect the Company's results of operations.
Risk Factors: An inability to protect our intellectual property could have a significant impact on our business. ” To distinguish genuine Virco products from competitors' products, Virco has obtained the rights to certain trademarks and trade names for its products and engages in advertising and sales campaigns to promote its brands and to identify genuine Virco products.
Risk Factors: An inability to protect our intellectual property could have a significant impact on our business. ” 11 To distinguish genuine Virco products from competitors' products, Virco has obtained the rights to certain trademarks and trade names for its products and engages in advertising and sales campaigns to promote its brands and to identify genuine Virco products.
Costs for these imported components can be volatile, impacted by tariffs, freight cost and availability, and price increases by the supplier. 9 The supply chain for components from China is typically interrupted for a short period of time each year during the Chinese New Year in January or February.
Costs for these imported components can be volatile, impacted by tariffs, freight cost and availability, and price increases by the supplier. The supply chain for components from China is typically interrupted for a short period of time each year during the Chinese New Year in January or February.
The Plateau Series was also expanded to include more popular shapes and additional leg options including stand-up, low legs, and casters to broaden height ranges and mobility. Our newest collection, the Topaz Series®, was designed by Peter Glass and Bob Mills with teachers in mind.
The Plateau Series was also expanded to include more popular shapes and additional leg options including stand-up, low legs, and casters to broaden height ranges and mobility. 4 Our newest collection, the Topaz Series®, was designed by Peter Glass and Bob Mills with teachers in mind.
Historically the Company has experienced years where the price of steel, plastic, and wood have spiked significantly, often because of global demand or tariffs on international supply but also in response to domestic supply interruptions. In fiscal 2024, the cost of commodities was relatively stable.
Historically the Company has experienced years where the price of steel, plastic, and wood have spiked significantly, often because of global demand or tariffs on international supply but also in response to domestic supply interruptions. In fiscal 2025 and 2024, the cost of commodities was relatively stable.
Designed for modern learning environments, Virco Butcher Block Tables feature thick-profile legs and a durable, hard maple surface with an easy to clean finish. Virco also carries traditional folding tables and office tables, as well as the technology tables and mobile tables described below.
Designed for modern 7 learning environments, Virco Butcher Block Tables feature thick-profile legs and a durable, hard maple surface with an easy to clean finish. Virco also carries traditional folding tables and office tables, as well as the technology tables and mobile tables described below.
Our manufacturing facility capacity utilization generally remains less than 100% during these off-season months; because physical structure capacity cannot be 10 adjusted as readily as personnel capacity, we have secured sufficient physical structure capacity to accommodate our current needs, as well as for anticipated future growth.
Our manufacturing facility capacity utilization generally remains less than 100% during these off-season months; because physical structure capacity cannot be adjusted as readily as personnel capacity, we have secured sufficient physical structure capacity to accommodate our current needs, as well as for anticipated future growth.
Normal recurring expenses relating to operating our factories in a manner that meets or exceeds environmental laws are matched to the cost of producing inventory. It is possible that the Company's operations may result in noncompliance with, or liability for remediation pursuant to, environmental laws.
Normal recurring expenses relating to operating our factories in a manner that meets or exceeds environmental laws are matched to the cost of producing inventory. It 12 is possible that the Company's operations may result in noncompliance with, or liability for remediation pursuant to, environmental laws.
The Topaz Series Mobile Storage Solutions and Mobile Bookcases offer a variety of options for flexible and convenient storage for the classroom and beyond. 8 STORAGE EQUIPMENT - For moving selected Virco chairs and folding tables, the Company carries a wide range of handling and storage equipment.
The Topaz Series Mobile Storage Solutions and Mobile Bookcases offer a variety of options for flexible and convenient storage for the classroom and beyond. STORAGE EQUIPMENT - For moving selected Virco chairs and folding tables, the Company carries a wide range of handling and storage equipment.
Virco's ZUMA and ZUMAfrd™ products earned the distinction of being the first classroom furniture models to be certified by the GREENGUARD Children & Schools Program, now known as GREENGUARD Gold certification.
Virco's ZUMA 8 and ZUMAfrd™ products earned the distinction of being the first classroom furniture models to be certified by the GREENGUARD Children & Schools Program, now known as GREENGUARD Gold certification.
While Virco's trademarks and trade names play an important role in its success, Virco's business as a whole is not believed to be materially dependent on any one trademark or trade name, except perhaps “Virco,” which the Company has protected and enhanced as an emblem of quality educational furniture for over 74 years.
While Virco's trademarks and trade names play an important role in its success, Virco's business as a whole is not believed to be materially dependent on any one trademark or trade name, except perhaps “Virco,” which the Company has protected and enhanced as an emblem of quality educational furniture for over 75 years.
Item 1. Business Introduction Designing, producing, and distributing high-value furniture for a diverse family of customers is a 74-year tradition at Virco Mfg. Corporation (“Virco” or the “Company”, or in the first person, “we”, “us” or “our”). Virco was incorporated in California in February 1950 and reincorporated in Delaware in April 1984.
Item 1. Business Introduction Designing, producing, and distributing high-value furniture for a diverse family of customers is a 75-year tradition at Virco Mfg. Corporation (“Virco” or the “Company”, or in the first person, “we”, “us” or “our”). Virco was incorporated in California in February 1950 and reincorporated in Delaware in April 1984.
Virco has a number of other design and utility patents in the United States and other countries that provide protection for Virco's intellectual property as well. These patents expire over the next one to 18 years. Virco maintains an active program to protect its investment in technology and patents by monitoring and enforcing its intellectual property rights.
Virco has a number of other design and utility patents in the United States and other countries that provide protection for Virco's intellectual property as well. These patents expire over the next one to 19 years. Virco maintains an active program to protect its investment in technology and patents by monitoring and enforcing its intellectual property rights.
Our physical structure utilization is significantly lower during the first and fourth quarters of each year than it is during the second and third quarters. The Company utilizes a comparable strategy to address warehousing and distribution requirements. During summer months, temporary labor and third party contractor are hired to supplement experienced warehouse, distribution and service personnel.
Our physical structure utilization is significantly lower during the first and fourth quarters of each year than it is during the second and third quarters. The Company utilizes a comparable strategy to address warehousing and distribution requirements. During summer months, temporary labor and third-party contractors are hired to supplement experienced warehouse, distribution and service personnel.
The Choose to Move ("C2M") 4-leg Chair, winner of the EDspaces Innovation in Seating Award and the A4LE LearningSCAPES Industry Partner Award, offers an empowering new twist on flexible seating with a mode selector that allows the same chair to easily transform from fixed to active seating.
The C2M 4-leg Chair, winner of the EDspaces Innovation in Seating Award and the A4LE LearningSCAPES Industry Partner Award, offers an empowering new twist on flexible seating with a mode selector that allows the same chair to easily transform from fixed to active seating.
Virco's major customers include public and private educational institutions, charter schools, convention centers and arenas, hospitality providers, government facilities, and places of worship. No customer exceeded 10% of the Company’s net sales for fiscal years ended January 31, 2024 and January 31, 2023.
Virco's major customers include public and private educational institutions, charter schools, convention centers and arenas, hospitality providers, government facilities, and places of worship. No customer exceeded 10% of the Company’s net sales for fiscal years ended January 31, 2025 and January 31, 2024.
(4) Appointed in 2004; has been employed by the Company for 34 years and has served in a variety of manufacturing, safety, and environmental positions, Vice President - General Manager, Conway Division, and currently as Chief Operating Officer.
(4) Appointed in 2004; has been employed by the Company for 35 years and has served in a variety of manufacturing, safety, and environmental positions, Vice President - General Manager, Conway Division, and currently as Chief Operating Officer.
(2) Appointed President in 2014; has been employed by the Company for 38 years and has served in Production Control, as Contract Administrator, as Manager of Marketing Services, as General Manager of the Torrance Division, as Corporate Executive Vice President and currently as President.
(2) Appointed President in 2014; has been employed by the Company for 39 years and has served in Production Control, as Contract Administrator, as Manager of Marketing Services, as General Manager of the Torrance Division, as Corporate Executive Vice President and currently as President.
(5) Appointed in 2004; has been employed by the Company for 31 years in a variety customer and marketing service positions, Vice President of Logistics, Marketing Services and Information Technology and currently as Chief Administrative Officer.
(5) Appointed in 2004; has been employed by the Company for 32 years in a variety customer and marketing service positions, Vice President of Logistics, Marketing Services and Information Technology and currently as Chief Administrative Officer.
The Company is currently in the first of the available two-year extensions. If Virco were unable to sell under this contract, we believe we would be able to sell to the vast majority of our customers under alternative contracts.
The Company is currently in the second of the available two-year extensions. If Virco were unable to sell under this contract, we believe we would be able to sell to the vast majority of our customers under alternative contracts.
(3) Appointed in 1995; has been employed by the Company for 33 years and has served as the Corporate Controller, and currently as Senior Vice President of Finance, Chief Financial Officer and Secretary and Treasurer.
(3) Appointed in 1995; has been employed by the Company for 34 years and has served as the Corporate Controller, and currently as Senior Vice President of Finance, Chief Financial Officer and Secretary and Treasurer.
Virco continues to innovate around its line of healthy movement furniture with the Room to Move ("R2M") collection of flexible seating that take movement and choice to a new level.
Virco continues to innovate around its line of healthy movement furniture with the R2M collection of flexible seating that take movement and choice to a new level.
Executive Officers of the Registrant As of April 1, 2024, the executive officers of the Company, who are elected by and serve at the discretion of the Company’s Board of Directors, were as follows: 13 Name Office Age at January 31, 2024 Has Held Office Since Robert A.
Executive Officers of the Registrant As of April 1, 2025, the executive officers of the Company, who are elected by and serve at the discretion of the Company’s Board of Directors, were as follows: Name Office Age at January 31, 2025 Has Held Office Since Robert A.
Although management prefers to compete on the value of Virco products and services, when market conditions warrant, the Company will compete based on direct prices and may reduce its prices to build or maintain its market share. Backlog 11 Sales order backlog at January 31, 2024 totaled approximately $48.5 million.
Although management prefers to compete on the value of Virco products and services, when market conditions warrant, the Company will compete based on direct prices and may reduce its prices to build or maintain its market share. Backlog Sales order backlog at January 31, 2025 totaled approximately $49.2 million. Sales order backlog at January 31, 2024, totaled approximately $48.5 million.
Virco has no franchises or concessions that are considered to be of material importance to the conduct of its business and has not appraised or established a value for its patents or trademarks. Human Capital Resources As of January 31, 2024, Virco and its subsidiaries employed 776 full-time employees across our facilities.
Virco has no franchises or concessions that are considered to be of material importance to the conduct of its business and has not appraised or established a value for its patents or trademarks. Human Capital Resources As of January 31, 2025, Virco and its subsidiaries employed 810 full-time employees across our facilities.
None of the products from vendor partners accounted for more than 10% of consolidated net sales in fiscal 2024 or 2023.
None of the products from vendor partners accounted for more than 10% of consolidated net sales in fiscal 2025 or 2024.
Risk Factors: The majority of our sales are priced through one contract, under which we are the exclusive supplier of classroom furniture .” Sales priced under this contract represented approximately 64% of sales in fiscal 2024 and 2023.
Risk Factors: The majority of our sales are priced through one contract, under which we are the exclusive supplier of classroom furniture .” Sales priced under this contract represented approximately 59% of sales in fiscal 2025 and 64% in fiscal 2024.
The Company’s education customers typically do not have logistic capabilities and approximately 80% of sales are FOB destination and include freight to customer. Approximately 50% of sales are “full service” and are FOB classroom and include turnkey set-up.
The Company’s education customers typically do not have logistic capabilities and approximately 75% of sales are FOB destination and include freight to customer. Approximately 50%-55% of sales are “full service” and are FOB classroom and include turnkey set-up.
With collaborative environments in mind, these tables were designed to bring groups of people together in schools and the workplace. Featuring a TV mount for screens and built-in USB and Power Ports, students and colleagues can 4 easily exchange ideas and share content.
With collaborative environments in mind, these tables were designed to bring groups of people together in schools and the workplace. These media tables features a TV mount for screens and built-in USB and Power Ports, students and colleagues can easily exchange ideas and share content.
The Company's direct sales force is considered to be an important competitive advantage over competitors who rely primarily upon dealer networks for distribution of their products. Virco's sales force is supported by a project management team which includes interior designers, CAD layout specialists, project management specialists, purchasing specialists, and field service supervisors.
The Company's direct sales force is considered to be an important competitive advantage over competitors who rely primarily upon dealer networks for distribution of their products. Virco's sales force is supported by a project management team which includes field-based project specialists, in-house interior designers, project management specialists, purchasing specialists, and field service supervisors.
During fiscal 2024 and 2023, the Company did not have any long-lived assets outside of the United States.
During fiscal 2025 and 2024, the Company did not have any long-lived assets outside of the United States.
During this same period, Virco elected to significantly reduce its work force, but retain its domestic factory locations. The Company believes that its domestic manufacturing capabilities are a significant strength.
During this same period, Virco elected to significantly reduce its workforce, but retain its domestic factory locations. The Company believes that its domestic manufacturing capabilities are a significant strength.
Substantially all of the current backlog is expected to ship during the fiscal year ending January 31, 2025. Patents and Trademarks In the last 15 years, the United States Patent and Trademark Office (“USPTO”) has issued to Virco more than 29 patents on its various new product lines.
Substantially all of the 2024 backlog shipped in 2025. Substantially all of the current backlog is expected to ship during the fiscal year ending January 31, 2026. Patents and Trademarks In the last 20 years, the United States Patent and Trademark Office (“USPTO”) has issued to Virco more than 29 patents on its various new product lines.
Approximately 57% of the Company’s revenues in fiscal 2024 included this level of service and support. In addition to giving customers the option of purchasing Virco products utilizing our full-service offering, Virco provides two additional levels of delivery service.
Approximately 54% of the Company’s revenues in fiscal 2025 included this level of service and support. In addition to giving customers the option of purchasing Virco products utilizing our full-service offering, Virco provides two additional levels of delivery service.
Scott Bell (4) Senior Vice President – Chief Operating Officer 67 2004 Patricia Quinones (5) Senior Vice President – Chief Administrative Officer 60 2004 Bassey Yau (6) Senior Vice President - Corporate Controller, Assistant Secretary and Assistant Treasurer 65 2004 ________________________ (1) Appointed Chairman in 1990; has been employed by the Company for 67 years and served as the President from 1982 until 2014 and Chief Executive Officer since 1988.
Scott Bell (4) Senior Vice President – Chief Operating Officer 68 2004 Patricia Quinones (5) Senior Vice President – Chief Administrative Officer 61 2004 Bassey Yau (6) Senior Vice President - Corporate Controller, Assistant Secretary and Assistant Treasurer. 66 2004 ________________________ (1) Appointed Chairman in 1990; has been employed by the Company for 68 years and served as the President from 1982 until 2014 and Chief Executive Officer since 1988.
Of this number, 604 are involved in manufacturing and distribution, 112 in sales and marketing and 60 in administration. None of our employees are unionized or represented by collective bargaining agreements. The Company also utilizes temporary workers as necessary to meet seasonal production, warehousing or distribution requirements that cannot be filled by its full-time workforce.
Of this number, 632 are involved in manufacturing and distribution, 115 in sales and marketing and 63 in administration. None of our employees are unionized or represented by collective bargaining agreements. The Company also utilizes temporary workers as necessary to meet seasonal production, warehousing or distribution requirements that cannot be filled by its full-time workforce.
As of January 31, 2024, the Company employed approximately 780 full-time employees, manufacturing its products in 1.1 million square feet of fabrication facilities and 1.2 million square feet of assembly and warehousing facilities in Torrance, California and Conway, Arkansas.
As of January 31, 2025, the Company employed approximately 810 full-time employees, manufacturing its products in 1.1 million square feet of fabrication facilities and 1.2 million square feet of assembly and warehousing facilities in Torrance, California and Conway, Arkansas.
To meet the furniture and equipment needs of our customers, Virco leases a 560,000 sq. ft. office, manufacturing and warehousing facility located on 23.5 acres of land in Torrance, California; this facility includes our corporate headquarters, West Coast showroom, and our West Coast distribution operations. To complement our Torrance-based operations, Virco owns three manufacturing and distribution facilities in Conway, Arkansas.
To meet the furniture and equipment needs of our customers, Virco leases a 560,000 sq. ft. office, manufacturing and warehousing facility located on 23.5 acres of land in Torrance, California; this facility includes our corporate headquarters, West Coast showroom, and our West Coast distribution operations.
During fiscal 2024, Virco derived approximately 4.7% of its revenues from customers located outside of the United States (primarily Canada). During fiscal 2023, Virco derived approximately 4.4% of its revenues from customers located outside of the United States (primarily Canada). The Company determines sales to these markets based upon the customers' principal place of business.
During fiscal 2025, Virco derived approximately 12.3% of its revenues from customers located outside of the United States (primarily Puerto Rico). During fiscal 2024, Virco derived approximately 4.7% of its revenues from customers located outside of the United States (primarily Canada). The Company determines sales to these markets based upon the customers' principal place of business.
The project management team and the sales force utilize the Company's proprietary PlanSCAPE® software when preparing complete package solutions for the FF&E segment of bond-funded public-school construction projects. The PlanSCAPE® software supports classroom by classroom product selection, product specification, pricing, furniture delivery including delivery to and turnkey classroom setup.
The project management team and the sales force utilize the Company's proprietary PlanSCAPE® software in conjunction with Building Information Modeling when preparing complete package solutions for the FF&E segment of bond-bunded public school construction projects. The PlanSCAPE® software supports classroom by classroom product selection, product specification, pricing, and furniture delivery including delivery to and turnkey classroom setup.
Virtue (1) Chairman of the Board and Chief Executive Officer 91 1990 Douglas A. Virtue (2) President 65 2014 Robert E. Dose (3) Senior Vice President of Finance, Chief Financial Officer and Secretary and Treasurer 67 1995 J.
Virtue (1) Chairman of the Board and Chief Executive Officer 92 1990 Douglas A. Virtue (2) President 66 2014 Robert E. Dose (3) Senior Vice President of Finance, Chief Financial Officer and Secretary and Treasurer. 68 1995 J.
Along with serving customers in the education market - which in addition to preschool through 12th grade public and private schools includes: junior and community colleges; four-year colleges and universities; trade, technical and vocational schools - Virco is a furniture and equipment supplier for convention centers and arenas; the hospitality industry with respect to banquet and meeting facilities; government facilities at the federal, state, county and municipal levels; and places of worship.
These include the best-selling ZUMA Series; Analogy and Civitas furniture collections; Metaphor and Sage Series items for educational settings; the wide-ranging Plateau and Text Series; and the new Topaz Series. 3 Along with serving customers in the education market - which in addition to preschool through 12th grade public and private schools includes: junior and community colleges; four-year colleges and universities; trade, technical and vocational schools - Virco is a furniture and equipment supplier for convention centers and arenas; the hospitality industry with respect to banquet and meeting facilities; government facilities at the federal, state, county and municipal levels; and places of worship.
Significant cost increases in providing products during a given contract period can adversely impact operating results and have done so during prior years. The Company typically benefits from any decreases in raw material costs under the contracts described above.
Significant cost increases in providing products during a given contract period can adversely impact operating results and have done so during prior years. The Company typically benefits from any decreases in raw material costs under the contracts described above. Seasonality Historically, Virco ships approximately 50% of its annual revenue in the months of June, July, and August.
Nevertheless, even with respect to these more flexible contracts, the Company may not have the ability to increase prices on orders received prior to any announced price increases in commodities.
The Company has, however, negotiated increased flexibility under many of these contracts, allowing the Company to increase prices on future orders. Nevertheless, even with respect to these more flexible contracts, the Company may not have the ability to increase prices on orders received prior to any 9 announced price increases in commodities.
The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers such as Virco that file electronically with the SEC. The address of that website is www.sec.gov.
Stockholders may also obtain copies of this information by mail from the Public Reference Room at the address set forth above, at prescribed rates. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers such as Virco that file electronically with the SEC. The address of that website is www.sec.gov.
In addition to the raw materials described above, the Company purchases components used in the fabrication and assembly of furniture from a variety of overseas locations, primarily from China, and certain components from domestic suppliers.
These tariffs are likely to result in increased prices for imported components and materials supplied locally for fiscal year ending January 31, 2026. In addition to the raw materials described above, the Company purchases components used in the fabrication and assembly of furniture from a variety of overseas locations, primarily from China, and certain components from domestic suppliers.
Seasonality Historically, Virco ships approximately 50% of its annual revenue in the months of June, July, and August, and shipments of furniture during peak weeks in July and August can be six times greater than in the seasonally slow winter months.
The company shipped approximately 47% and 49% of annual sales in June, July, and August during fiscal 2025 and 2024, respectively. Shipments of furniture during peak weeks in July and August can be six times greater than in the seasonally slow winter months.
This authorization can include state contracts, local and national buying groups, or local school districts that “piggyback” on the bid of a larger district.
Significant purchases of furniture using public funds often require annual bids or some form of “authorization” to purchase goods or services from a vendor. This authorization can include state contracts, local and national buying groups, or local school districts that “piggyback” on the bid of a larger district.
Principal Products Virco produces the broadest line of furniture for the K-12 school market of any manufacturer in the United States.
Virco's substantial warehouse space allows the Company to build adequate inventories to service this narrow delivery window for the education market. 6 Principal Products Virco produces the broadest line of furniture for the K-12 school market of any manufacturer in the United States.
(6) Appointed in 2004; has been employed by the Company for 26 years and has served as Corporate Controller, and currently as Vice President Accounting, Corporate Controller, Assistant Secretary and Assistant Treasurer. None of the Company’s executive officers have written employment contracts.
(6) Appointed in 2004; has been employed by the Company for 27 years and has served as Corporate Controller, and currently as Vice President Accounting, Corporate Controller, Assistant Secretary and Assistant Treasurer. 13 As previously announced, Robert Dose intends to retire from the Company as of April 30, 2025 and Bassey Yau has been appointed to succeed Mr.
Shipments of furniture during peak weeks in July and August can be six times greater than in the seasonally slow winter months. Virco's substantial warehouse space allows the Company to build adequate inventories to service this narrow delivery window for the education market.
Virco's substantial warehouse space allows the Company to build adequate inventories to service this narrow delivery window for the education market.
With respect to the Company's annual pricing contracts (or those contracts that have longer terms), the Company may have a limited ability to increase prices during the term of the contract. The Company has, however, negotiated increased flexibility under many of these contracts, allowing the Company to increase prices on future orders.
As this is in a seasonally slow period of the Company’s business cycle and is predictable, it has not created supply chain disruptions. With respect to the Company's annual pricing contracts (or those contracts that have longer terms), the Company may have a limited ability to increase prices during the term of the contract.
Virco representatives call directly upon state and local governments, 5 convention centers, individual hospitality venues, and places of worship. This market includes colleges and universities, preschools, private schools, and office training facilities, which typically purchase furniture through commercial channels.
Virco representatives call directly upon state and local governments, convention centers, individual hospitality venues, and places of worship.
Virco has worked with accomplished designers - such as Peter Glass and Bob Mills - to develop additional products for contemporary 3 applications. These include the best-selling ZUMA Series; Analogy and Civitas furniture collections; Metaphor and Sage Series items for educational settings; the wide-ranging Plateau and Text Series; and the new Topaz Series.
Virco has worked with accomplished designers - such as Peter Glass and Bob Mills - to develop additional products for contemporary applications.
Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Stockholders may also obtain copies of this information by mail from the Public Reference Room at the address set forth above, at prescribed rates.
Stockholders may read and copy this information at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Available Information Virco files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Stockholders may read and copy this information at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
Dose as Chief Financial Officer, Treasurer and Secretary.” None of the Company’s executive officers have written employment contracts. Available Information Virco files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”).
In fiscal 2023, the Company started to return to the traditional seasonality and delivered approximately 47% of annual sales in June, July, and August. In 2024 the Company continued to the traditional seasonality and delivered approximately 49% of annual sales in June, July, and August.
The company shipped approximately 47% and 49% of annual sales in June, July, and August during fiscal 2025 and 2024, respectively. Shipments of furniture during peak weeks in July and August can be six times greater than in the seasonally slow winter months.
Removed
Historically, Virco ships approximately 50% of its annual revenue in the months of June, July, and August. In fiscal 2022, the seasonal peak was distorted due to severe supply chain interruptions, labor shortages, and COVID-19 related employee absences and the Company delivered less than 40% of sales during June, July, and August.
Added
In the 2nd quarter of fiscal 2025, the Company executed a five-year extension of this lease expiring in September 30, 2030. To complement our Torrance-based operations, Virco owns three manufacturing and distribution facilities in Conway, Arkansas.
Removed
In fiscal 2023, the Company started to return to the traditional 6 seasonality and delivered approximately 47% of annual sales in June, July, and August. In fiscal 2024, the Company continues to return to the traditional seasonality and delivered approximately 49% of annual sales in June, July, and August.
Added
In early 2025, there have been significant changes and proposed changes to U.S. trade policies. For example, effective March 4, 2025, the U.S. implemented a 25% additional tariff on imports from Canada and Mexico and a 20% additional tariff on imports from China. The U.S. also reinstated the steel import tariff to 25% effective March 12, 2025.
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In fiscal 2023, the cost of commodities was volatile, but the volatility dampened noticeably compared to fiscal 2022. Some commodities decreased in cost, but others increased, resulting in a net modest increase in cost.
Removed
Subsequent to fiscal year end 2024, the Company is anticipating that the global sanctions on Russia and other geopolitical challenges may impact steel, plastic and fuel-related costs.
Removed
As this is in a seasonally slow period of the Company’s business cycle and is predictable, it has not created supply chain disruptions. In fiscal 2022, the Company has experienced supply chain disruption caused primarily by availability of freight from China to the United States.
Removed
During fiscal 2022, freight costs for containers from China increased by a factor of nearly eight. Cost for ocean freight moderated during fiscal 2023, and by the end of the year had returned to more normal levels. Cost and availability of ocean freight was stable during 2024.
Removed
While we currently do not believe there will be a recurrence of material supply chain disruptions, our suppliers in China may experience material disruptions in the future, whether due to COVID-19 or otherwise.
Removed
In fiscal 2022, due primarily to the COVID-19 pandemic, the seasonal peak was distorted due to severe supply chain interruptions, labor shortages, and employee absences, and the Company delivered less than 40% of sales during June, July, and August.
Removed
Sales order backlog at January 31, 2023, totaled approximately $58.6 million. The sales order backlog was higher at January 31, 2023 due in large part to a significant number of orders received in January 2023 for delivery in the Company’s second quarter ended July 31, 2023. Substantially all of the 2023 backlog shipped in 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeReduced levels of spending on education may significantly impact spending on furniture and increase price competition in the furniture market. If price competition increases, we may need to reduce our prices to build or maintain our market share, which in turn could lower our profit margins.
Biggest changeIf price competition increases, we may need to reduce our prices to build or maintain our market share, which in turn could lower our profit margins. 14 The educational furniture market is characterized by price competition, as many sales occur on a bid basis and are based on demand related to educational funding available to schools.
Some specific factors that may have a significant effect on our common stock market price include: • actual or anticipated fluctuations in our operating results or future prospects; • our announcements or our competitors’ announcements of new products; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by us or our competitors, such as acquisitions or restructurings; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in our growth rates or our competitors’ growth rates; • our inability to raise additional capital; • conditions of the school furniture industry as a result of changes in funding or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events; and • changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or the education furniture industry generally.
Some specific factors that may have a significant effect on our common stock market price include: • actual or anticipated fluctuations in our operating results or future prospects; • our announcements or our competitors’ announcements of new products; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by us or our competitors, such as acquisitions or restructurings; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in our growth rates or our competitors’ growth rates; 21 • our inability to raise additional capital; • conditions of the school furniture industry as a result of changes in funding or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events; and • changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or the education furniture industry generally.
Inability to obtain adequate third-party freight on a timely basis during the summer delivery season can adversely affect cost to deliver products to customers and the level of customer service, which can in turn adversely impact future sales. The Company imports component parts from international sources (primarily China).
Inability to obtain adequate third-party freight on a timely basis during the summer delivery season can adversely affect the cost to deliver products to customers and the level of customer service, which can in turn adversely impact future sales. 15 The Company imports component parts from international sources (primarily China).
As discussed above, in the short term, rapid changes in raw 17 material costs can be very difficult for us to offset with price increases because, in the case of many of our contracts, we have committed to selling prices for goods and services for periods of one year, and occasionally longer.
As discussed above, in the short term, rapid changes in raw material costs can be very difficult for us to offset with price increases because, in the case of many of our contracts, we have committed to selling prices for goods and services for periods of one year, and occasionally longer.
The frequency and severity of severe weather conditions affecting our business 20 may be impacted by climate change, although it is currently impossible to predict with accuracy the scale of such impact. These impacts could have a material adverse effect on our business, results of operations and financial condition.
The frequency and severity of severe weather conditions affecting our business may be impacted by climate change, although it is currently impossible to predict with accuracy the scale of such impact. These impacts could have a material adverse effect on our business, results of operations and financial condition.
With respect to any of the contracts described above, if the costs 16 of providing our products or services increase between the date the orders are received and the shipping date, we will likely not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs.
With respect to any of the contracts described above, if the costs of providing our products or services increase between the date the orders are received and the shipping date, we will likely not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs.
Due to this automatic liquidating nature, if we breach any covenant, violate any representation or warranty or suffer any deterioration in our ability to borrow pursuant to the borrowing base calculation contained in the credit facility, we may not have access to cash liquidity unless provided by the lender in its discretion.
Due to this automatic liquidating nature, if we breach any covenant, violate any representation or warranty or suffer any deterioration in our ability to borrow pursuant to the borrowing base calculation contained in the credit facility, we may not have access to cash liquidity unless provided by the lender at its discretion.
RISKS RELATED TO SCHOOL FUNDING 14 Our product sales are significantly affected by education funding, which is a function of tax revenues and general economic conditions. If the economy weakens, funding for education may fail to improve or decrease, which would adversely affect our business and results of operations.
RISKS RELATED TO SCHOOL FUNDING Our product sales are significantly affected by education funding, which is a function of tax revenues and general economic conditions. If the economy weakens, funding for education may fail to improve or decrease, which would adversely affect our business and results of operations.
Our capital requirements depend on many factors, including capital improvements, tooling and new product development. To the extent that our existing capital is insufficient to meet these requirements and cover any losses, we may need to raise 18 additional funds through financings or curtail our growth and reduce our assets.
Our capital requirements depend on many factors, including capital improvements, tooling and new product development. To the extent that our existing capital is insufficient to meet these requirements and cover any losses, we may need to raise additional funds through financings or curtail our growth and reduce our assets.
Management expends a significant amount of time in the fourth quarter of the prior year and the first quarter of each year developing a stocking plan and estimating the number of temporary summer employees, the amount of raw materials and the types of components and products that will be required during the peak season.
Management expends a significant amount of time in the fourth quarter of the prior year and the first quarter of each year developing a stocking plan and estimating the number of temporary summer employees, the amounts of raw materials and the types of components and products that will be required during the peak season.
The success of our operations is highly dependent upon our ability to attract and retain qualified employees and upon the ability of our senior management and other key employees to implement our business strategy. We believe there are only a limited number of qualified executives in the industry in which we compete.
The success of our operations is highly dependent upon our ability to attract and retain qualified employees and upon the ability of our senior management and other key employees to implement our business strategy. We believe there are only a limited 20 number of qualified executives in the industry in which we compete.
Because the recent economic environment was characterized by historically low interest rates, we may be required to make additional cash contributions to the Employee Plan and recognize further increases in our net pension cost to satisfy our funding requirements.
Because the recent economic environment was characterized by historically low interest rates, we may be required to make additional cash contributions to the Employee Plan 18 and recognize further increases in our net pension cost to satisfy our funding requirements.
These suppliers may not continue to provide raw materials and components to us at attractive prices, or at all, 15 and we may not be able to obtain the raw materials we need in the future from these or other providers on the scale and within the time frames we require.
These suppliers may not continue to provide raw materials and components to us at attractive prices, or at all, and we may not be able to obtain the raw materials we need in the future from these or other providers on the scale and within the time frames we require.
Aspects of these new laws and their interpretation and enforcement remain uncertain, and their potential effects are far-reaching and may require us to modify our data processing practices and policies and incur substantial costs and expenses in order to 21 comply.
Aspects of these new laws and their interpretation and enforcement remain uncertain, and their potential effects are far-reaching and may require us to modify our data processing practices and policies and incur substantial costs and expenses in order to comply.
If new environmental laws and regulations are introduced and enforced domestically, but not implemented or enforced internationally, we will operate at a competitive disadvantage 19 compared to competitors who source product primarily from international sources.
If new environmental laws and regulations are introduced and enforced domestically, but not implemented or enforced internationally, we will operate at a competitive disadvantage compared to competitors who source product primarily from international sources.
In addition, the resurgence of COVID-19 or its variants, as well as an outbreak of other widespread public health epidemics or pandemics, could cause new disruptions to our product sales, manufacturing and distribution operations, supply chains and demand for our products by our customers, which could adversely affect our business, financial condition, and results of operations.
The resurgence of COVID-19 or its variants, as well as an outbreak of other widespread public health epidemics or pandemics, could cause new disruptions to our product sales, manufacturing and distribution operations, supply chains and demand for our products by our customers, which could adversely affect our business, financial condition, and results of operations.
Cost and availability of third-party freight can adversely affect our profitability and results of operations. Approximately 80% our sales are FOB destination and include freight from Virco’s facilities to the customer location. Virco depends upon third-party carriers for more than 90% of customer deliveries.
Cost and availability of third-party freight can adversely affect our profitability and results of operations. Approximately 75% of our sales are FOB destination and include freight from Virco’s facilities to the customer location. Virco depends upon third-party carriers for more than 90% of customer deliveries.
The profitability of our operations is sensitive to the cost of fuel, which materially affects our transportation costs, the costs of petroleum-based materials (like plastics) and the costs of energy (including electricity and natural gas) used in operating our manufacturing facilities. Petroleum prices have fluctuated significantly in recent years and are expected to rise from current levels.
The profitability of our operations is sensitive to the cost of fuel, which materially affects our transportation costs, the costs of petroleum-based materials (like plastics) and the costs of energy (including electricity and natural gas) used in operating our manufacturing facilities. Petroleum prices have fluctuated significantly in recent years and could rise from current levels.
Although Virco sells direct to hundreds of individual schools and school districts, these schools and school districts can purchase our products and services under several bids and contracts available to them. Approximately 64% of Virco's sales in fiscal 2024 and 64% of Virco's sales in fiscal 2023 were priced under this nationwide contract/price list.
Although Virco sells direct to hundreds of individual schools and school districts, these schools and school districts can purchase our products and services under several bids and contracts available to them. Approximately 59% of Virco's sales in fiscal 2025 and 64% of Virco's sales in fiscal 2024 were priced under this nationwide contract/price list.
In addition, public health emergencies such as COVID-19, geopolitical uncertainties, terrorist attacks, acts of war, natural disasters, increases in energy and other costs or combinations of such factors and other factors that are outside of our control could at any time have a significant effect on the economy, which in turn would affect government revenues and allocations of government spending.
In addition, public health emergencies such as epidemics or pandemics, geopolitical uncertainties, terrorist attacks, acts of war, natural disasters, increases in energy and other costs or combinations of such factors and other factors that are outside of our control could at any time have a significant effect on the economy, which in turn would affect government revenues and allocations of government spending.
Companies operating in the furniture industry routinely seek protection of the intellectual property for their product designs, and our principal competitors may have large intellectual property portfolios. Our efforts to identify and avoid infringing third parties' intellectual property rights may not be successful.
Companies operating in the furniture industry routinely seek protection of the intellectual property for their product designs, and our principal competitors may have large intellectual property portfolios. Our efforts to identify and avoid infringing a third party’s intellectual property rights may not be successful.
These factors are further complicated by the substantial intervention in the U.S. credit markets by the Federal Reserve Board and Treasury Department in response to the COVID-19 pandemic, which could have the effect of artificially affecting market interest rates. LEGAL AND REGULATORY RISKS An inability to protect our intellectual property could have an adverse effect on our business.
These factors are further complicated by the substantial intervention in the U.S. credit markets by the Federal Reserve Board and Treasury Department, which could have the effect of artificially affecting market interest rates. LEGAL AND REGULATORY RISKS An inability to protect our intellectual property could have an adverse effect on our business.
If third parties claim that we infringe upon their intellectual property rights, we may incur liability and costs and may have to redesign or discontinue the infringing products. We face the risk of claims that we have infringed third parties' intellectual property rights.
If third parties claim that we infringe upon their intellectual property rights, we may incur liability and costs and may have to redesign or discontinue the infringing products. We face the risk of claims that we have infringed a third party’s intellectual property rights.
In fiscal 2024 the cost of commodities was relatively stable. In fiscal 2023, the cost of commodities was volatile, but the volatility dampened noticeably compared to fiscal 2022.
In fiscal 2025 and 2024, the cost of commodities was relatively stable. In fiscal 2023, the cost of commodities was volatile, but the volatility dampened noticeably compared to fiscal 2022.
In a deteriorating economic environment, including the current economic disruption caused by COVID-19 and global supply chain disruptions, many of the Company's suppliers may experience difficulty obtaining financing and may go out of business. The Company may have difficulty replacing these suppliers, especially if the supplier fails as the Company is entering the seasonal summer shipping season.
In a deteriorating economic environment, including the economic disruption caused by the pandemic, tariffs, and global supply chain disruptions, many of the Company's suppliers may experience difficulty obtaining financing and may go out of business. The Company may have difficulty replacing these suppliers, especially if the supplier fails as the Company is entering the seasonal summer shipping season.
The price of commodities, raw materials and components, including steel and plastics, our largest raw material categories, have been volatile in prior years, and the cost, quality and availability of such commodities have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, public health issues such as the current COVID-19 pandemic (or other future pandemics), labor disputes, terrorism and political unrest or instability.
The price of commodities, raw materials and components, including steel and plastics, our largest raw material categories, have been volatile in prior years, and the cost, quality and availability of such commodities have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, public health issues, labor disputes, terrorism and political unrest or instability.
There can be no assurance that our suppliers in China will not experience material disruptions in the future, whether due to COVID-19 or otherwise. The majority of our sales are priced through one contract, under which we are the exclusive supplier of classroom furniture. We utilize a nationwide contract/price list for the pricing of a significant portion of our sales.
There can be no assurance that our suppliers in China will not experience material disruptions in the future. The majority of our sales are priced through one contract, under which we are the exclusive supplier of classroom furniture. We utilize a nationwide contract/price list for the pricing of a significant portion of our sales.
Increases in basic commodity, raw material and component costs could adversely affect our profitability. Fluctuations in the price, availability and quality of the commodities, raw materials and components used in manufacturing our products could have an adverse effect on our costs of sales, profitability and our ability to meet customers' demand.
Fluctuations in the price, availability and quality of the commodities, raw materials and components used in manufacturing our products could have an adverse effect on our costs of sales, profitability and our ability to meet customers' demand.
Our profit margins could be adversely affected if commodity, raw material, and component costs remain high or escalate further, and we are unable to pass along a portion of the higher costs to our customers.
Our profit margins could be adversely affected if commodity, raw material, and component costs remain high or escalate further, and we are unable to pass along a portion of the higher costs to our customers. In early 2025, there have been significant changes and proposed changes to U.S. trade policies.
None of our work force is represented by unions, and while we believe that we have good relations with our work force, we may experience work stoppages or other labor problems in the future. Any prolonged work stoppage could have an adverse effect on our reputation, our vendor relations and our customers.
We are subject to potential labor disruptions, which could have an adverse effect on our business. 19 None of our work force is represented by unions, and while we believe that we have good relations with our work force, we may experience work stoppages or other labor problems in the future.
The Company sells products that are subject to the Consumer Product Safety Improvement Act of 2008 and the California Air Resources Board rule and Toxic Control Substances Act rule, concerning formaldehyde emissions from composite wood products. We are subject to potential labor disruptions, which could have an adverse effect on our business.
The Company sells products that are subject to the Consumer Product Safety Improvement Act of 2008 and the California Air Resources Board rule and Toxic Control Substances Act rule, concerning formaldehyde emissions from composite wood products.
If we breach any of our financial covenants without receiving a corresponding waiver or amendment, the Agent and Lender may accelerate our credit facility and impose default interest and other fees, any of which could have a material adverse effect on our financial condition and results of operations.
If we breach any of our financial covenants without receiving a corresponding waiver or amendment, the Agent and Lender may accelerate our credit facility and impose default interest and other fees, any of which could have a material adverse effect on our financial condition and results of operations. 16 Health crisis events, such as epidemics or pandemics, have adversely impacted, and may continue to impact, the economy and disrupt our operations and supply chains, which may have an adverse effect on our results of operations.
Our insurance coverage may not adequately cover for any product liability claims. We maintain product liability and other insurance coverage that we believe to be generally in accordance with industry practices.
Any prolonged work stoppage could have an adverse effect on our reputation, our vendor relations and our customers. Our insurance coverage may not adequately cover for any product liability claims. We maintain product liability and other insurance coverage that we believe to be generally in accordance with industry practices.
In addition, when market conditions warrant, we may need to reduce prices to build or maintain our market share. If we are unable to increase or maintain prices for our products, our profit margins could decline.
This price competition could impact our ability to implement price increases or, in some cases, such as during an industry downturn, maintain prices. In addition, when market conditions warrant, we may need to reduce prices to build or maintain our market share. If we are unable to increase or maintain prices for our products, our profit margins could decline.
The limited “float” of shares available for purchase or sale of Virco stock can magnify this volatility. These broad market fluctuations may negatively affect the market price of our common stock.
There has been significant volatility in the market price and trading volume of equity securities, which may be unrelated to the financial performance of the companies issuing the securities. The limited “float” of shares available for purchase or sale of Virco stock can magnify this volatility. These broad market fluctuations may negatively affect the market price of our common stock.
The Company has increased list prices for its products in fiscal 2024 and 2025 in an effort to recover anticipated increases in material costs. We are affected by the cost of petroleum-based products and increases in petroleum prices could reduce our margins and profits.
Both availability and volatility in cost were moderate in fiscal 2025 and 2024. We are affected by the cost of petroleum-based products and increases in petroleum prices could reduce our margins and profits.
The COVID-19 pandemic and the actions taken by various governments and third parties to combat the spread of COVID-19, including mandatory quarantines and other suspensions of non-essential business operations, caused significant disruptions in our product sales and marketing, manufacturing and distribution operations, and supply chains during fiscal 2021 and 2022.
Health crisis events, including epidemics or pandemics such as COVID-19,and the actions taken by various governments and third parties to combat such events, have caused significant disruptions in our product sales and marketing, manufacturing and distribution operations, and supply chains.
The educational furniture market is characterized by price competition, as many sales occur on a bid basis and are based on demand related to educational funding available to schools. When funding for education declines, schools typically reduce spending on all budget line items prior to reducing teacher and administrator salaries and benefits.
When funding for education declines, schools typically reduce spending on all budget line items prior to reducing teacher and administrator salaries and benefits. This in turn can result in reduced demand for school furniture, which in turn can intensify price competition in our industry.
FINANCING RISKS We may not be able to renew our credit facility on favorable terms, or at all, which would adversely affect our results of operations. We have historically relied on third-party bank financing to meet our seasonal cash flow requirements. Our current credit facility with PNC Bank was originally scheduled to mature on March 19, 2023.
We have historically relied on third-party bank financing to meet our seasonal cash flow requirements. In fiscal 2023, our credit facility with PNC Bank was extended to April 2027.
Removed
This in turn can result in reduced demand for school furniture, which in turn can intensify price competition in our industry. This price competition could impact our ability to implement price increases or, in some cases, such as during an industry downturn, maintain prices.
Added
Reduced levels of spending on education may significantly impact spending on furniture and increase price competition in the furniture market.
Removed
In fiscal 2022, the cost of raw materials and components, including steel and plastic, was extremely volatile and unfavorably impacted our results of operations. In addition, the current conflict in Ukraine and global sanctions recently placed on Russia have increased the cost and negatively impacted the availability of fuel, plastic and other materials.
Added
The cost of ocean freight was relatively stable in 2025 and 2024.
Removed
During fiscal 2022, freight costs for containers from China increased by a factor of nearly eight. The cost of ocean freight declined during fiscal 2023, nearly returning to more typical levels and remained stable in 2024.
Added
Our recent revenue growth may not be sustainable The Company’s recent revenue growth since 2023 was partly a result of the recovery from COVID-related school closures and subsequent supply chain disruptions, and future growth rates are unlikely to match those of the past several years.
Removed
INDUSTRY AND ECONOMIC RISKS The COVID-19 pandemic may continue to adversely affect our operations and financial performance.
Added
As with the unpredictable outcomes of school closures and supply chain disruptions, future events beyond the Company’s control, such as tariffs and trade realignments, may have both negative and positive impacts on the Company’s revenue and operating margins.
Removed
While the disruption to demand for our products from the COVID-19 pandemic is currently expected to be temporary, there remains a great deal of uncertainty around the long-term structural effects of the pandemic on in-person learning in the United States.
Added
Management intends to position the Company to respond to these uncertainties by continuing to reinvest in operating systems, employee skills, and customer development and retention. INDUSTRY AND ECONOMIC RISKS Increases in basic commodity, raw material and component costs could adversely affect our profitability.
Removed
In fiscal 2022, the Company incurred material increases in commodity costs and shortages in commodity availability that were material and adversely impacted the results of operations. Both availability and volatility in cost moderated in fiscal 2024 and 2023. Total material costs for fiscal 2025, as a percentage of sales, could be higher than in fiscal 2024.
Added
On April 2, 2025, President Trump announced new tariffs on foreign imported goods, including a baseline duty of 10% on foreign imports and additional tariffs on imports from China of an additional 34%. The U.S. also reinstated the steel import tariff to 25% effective March 12, 2025.
Removed
Subsequent to fiscal 2022, the Company extended the final maturity date of the credit line with PNC Bank to April 2027. At various times during the COVID-19 pandemic, we were in non-compliance with certain financial covenants under our credit facility with PNC Bank, and in each case, we received a waiver of such violations from PNC Bank.
Added
These tariffs are likely to result in increased prices for the Company’s imported components, steel and other material costs. The Company has increased list prices for its products in fiscal 2025 and 2026 in an effort to recover anticipated increases in material costs.
Removed
In addition, the SEC has published proposed rules that would require companies to provide significantly expanded climate-related disclosures in their periodic reporting, which may require us to incur significant additional costs to comply, including the implementation of significant additional internal controls processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and Board of Directors.
Added
The increase in cost of obtaining raw materials and components in excess of our ability to pass along such costs to customers, any of which could have a negative impact on our reputation, sales and profitability. Total material costs for fiscal 2026, as a percentage of sales, could be higher than in fiscal 2025.
Removed
There has been significant volatility in the market price and trading volume of equity securities, which may be unrelated to the financial performance of the companies issuing the securities. The economic impact and uncertainty of the COVID-19 pandemic has exacerbated this volatility in both our common stock and the overall stock markets.
Added
Evolving trade policies that increase tariffs may have a material adverse effect on the Company’s business and results of operations. 17 The occurrence of an international trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for products, costs, customers, suppliers, and the United States economy generally, which could have a material adverse effect on the Company’s business, operating results, and financial condition.
Added
In early 2025, there have been significant changes and proposed changes to U.S. trade policies, including new tariffs on foreign imported goods announced by President Trump on April 2, 2025. These tariffs are likely to result in increased prices for imported components and materials supplied locally.
Added
The Company cannot predict the extent to which the United States or other countries will impose quotas, duties, tariffs, taxes, or other similar restrictions upon the import or export of products in the future, nor can the Company predict their impact on the business.
Added
The Company may be challenged in effectively increasing the prices of its products to offset these factors, and its business and results of operations may be adversely affected. FINANCING RISKS We may not be able to renew our credit facility on favorable terms, or at all, which would adversely affect our results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed22 unchanged
Biggest changeIn addition, the cybersecurity team provides training to applicable members and ongoing cybersecurity education. The Company also maintains cyber risk insurance to help cover costs associated with data breaches and cyberattacks.
Biggest changeIn addition, the cybersecurity team provides training to applicable members and ongoing cybersecurity education. The Company also maintains cyber risk insurance to help cover costs associated with data breaches and cyberattacks. We evaluate and assess the capabilities of third-party service providers depending on the products and services provided and the potential for data exchange and technology risk.
In addition, we use a combination of technology tools with outside managed security service providers designed to capture, analyze and respond to security anomalies. • Patch management – we use a network vulnerability scanning tool that continually scans, and reports identified vulnerabilities in servers and workstations in certain networks.
In addition, we use a combination of technology tools with outside managed security service providers designed to capture, analyze and respond to security anomalies. 22 Table of Contents • Patch management – we use a network vulnerability scanning tool that continually scans, and reports identified vulnerabilities in servers and workstations in certain networks.
Cybersecurity Threats As of the date of this Annual Report, we are not aware of any cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us. We acknowledge that 23 Table of Contents cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.
Cybersecurity Threats As of the date of this Annual Report, we are not aware of any cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us. We acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.
We regularly assess, identify and manage our material risks from cybersecurity threats by employing the following: • Identification of critical systems – we seek to identify which operational or information technology, if compromised or exploited, would result in operational disruption or data compromise.
We also receive and review independent assessments of security threats from our major service providers. We regularly assess, identify and manage our material risks from cybersecurity threats by employing the following: • Identification of critical systems – we seek to identify which operational or information technology, if compromised or exploited, would result in operational disruption or data compromise.
Removed
We evaluate and assess the capabilities of third-party service providers depending on the 22 Table of Contents products and services provided and the potential for data exchange and technology risk. We also receive and review independent assessments of security threats from our major service providers.

Item 2. Properties

Properties — owned and leased real estate

6 edited+1 added−0 removed0 unchanged
Biggest changeIn addition to the complex described above, the Company operates two other facilities in Conway, Arkansas. The first is a 375,000 sq. ft. fabrication facility that was acquired in 1954 and expanded and modernized over subsequent years. The Company manufactures fabricated steel components, chrome plates, and fabricates injection-molded plastic components at this facility.
Biggest changeThe first is a 375,000 sq. ft. fabrication facility that was acquired in 1954 and expanded and modernized over subsequent years. The Company manufactures fabricated steel components, chrome plates, and fabricates injection-molded plastic components at this facility. These components are transferred to other facilities for assembly into finished goods.
This facility - which is equipped with high-density storage systems, features 70 dock doors dedicated to outbound freight, and has substantial yard capacity to store and stage trailers - has enabled the Company to consolidate the warehousing function and implement the Assemble-to-Ship inventory stocking program.
This facility - which is equipped with high-density storage systems, features 70 doors dedicated to outbound freight, and has substantial yard capacity to store and stage trailers - has enabled the Company to consolidate the warehousing function and implement the Assemble-to-Ship inventory stocking program.
These components are transferred to other facilities for assembly into finished goods. The second is a 175,000 sq. ft. manufacturing facility that is used to fabricate and store compression-molded components. This building was occupied under a series of leases for approximately 20 years. In August 2017, the Company purchased this building.
The second is a 175,000 sq. ft. manufacturing facility that is used to fabricate and store compression-molded components. This building was occupied under a series of leases for approximately 20 years. In August 2017, the Company purchased this building.
Management believes that this facility supports Virco's ability to handle increased sales during the peak delivery season and enhances the efficiency with which orders are filled. This facility and the underlying real estate, along with the rest of the Company’s assets, secure the Company’s obligations under its credit facility.
Management believes that this facility supports Virco's ability to handle increased sales during the peak delivery season and enhances the efficiency with which orders are filled.
This facility also includes the corporate headquarters, the West Coast showroom, and all West Coast distribution operations. Conway, Arkansas The Company owns 100 acres of land in Conway, Arkansas, containing 1.2 million sq. ft. of manufacturing, warehousing, and office space.
Conway, Arkansas The Company owns 100 acres of land in Conway, Arkansas, containing 1.2 million sq. ft. of manufacturing, warehousing, and office space.
Item 2. Properties Torrance, California Virco leases a 560,000 sq. ft. office, manufacturing and warehousing facility located on 23.5 acres of land in Torrance, California. This facility is occupied under a lease expiring on April 30, 2025 with two renewal options to extend the lease term for an additional term of five (5) years.
Item 2. Properties Torrance, California Virco leases a 560,000 sq. ft. office, manufacturing and warehousing facility located on 23.5 acres of land in Torrance, California. This facility is occupied under a lease expiring on September 30, 2030. This facility also includes the corporate headquarters, the West Coast showroom, and all West Coast distribution operations.
Added
This facility and the underlying real estate, along with the rest of the Company’s assets, secure the Company’s obligations under its credit facility. 23 Table of Contents In addition to the complex described above, the Company operates two other facilities in Conway, Arkansas.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+13 added−1 removed2 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The NASDAQ Global Market is the principal market on which Virco Mfg. Corporation common stock (trading symbol VIRC) is traded. As of March 31, 2024, there were approximately 140 registered stockholders of the common stock according to the Company's transfer agent records.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The NASDAQ Global Market is the principal market on which Virco Mfg. Corporation common stock (trading symbol VIRC) is traded.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of January 31, 2024, with respect to compensation plans under which our equity securities are authorized for issuance. There were no securities issued under equity compensation plans not approved by security holders.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of January 31, 2025, with respect to compensation plans under which our equity securities are authorized for issuance. There were no securities issued under equity compensation plans not approved by security holders.
In addition, under the Credit Agreement we must demonstrate pro forma compliance with a fixed charge coverage ratio of not less than 1.20:1.00 for the most recent twelve-month period ending as of the fiscal quarter immediately preceding the date of such dividend. The Company declared a quarterly dividend of $0.02 per share in the fourth quarter of fiscal 2024.
In addition, under the Credit Agreement we must demonstrate pro forma compliance with a fixed charge coverage ratio of not less than 1.20:1.00 for the most recent twelve-month period ending as of the fiscal quarter immediately preceding the date of such dividend. The Company declared a quarterly dividend of $0.025 per share in the fourth quarter of fiscal 2025.
In addition, our Amended and Restated Credit Agreement with PNC Bank limits our ability to pay cash dividends to $3.0 million in the aggregate during any fiscal year, provided that no default or event or default shall have occurred or be continuing under the Credit Agreement or result from any such dividend.
In addition, our Amended and Restated Credit Agreement with PNC Bank limits our ability to pay cash dividends and repurchase stock up to $8.0 million in the aggregate during any fiscal year, provided that no default or event or default shall have occurred or be continuing under the Credit Agreement or result from any such dividend.
Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans - excluding securities reflected in column Plan category (#) ($) (#) Equity compensation plans approved by security holders 93,600 $ 4.40 537,925 (1) (1) Represents the number of shares available for issuance as of January 31, 2024 under the Company’s 2019 Omnibus Equity Stock Incentive Plan.
Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans - excluding securities reflected in column Plan category (#) ($) (#) Equity compensation plans approved by security holders — $ — 521,859 (1) (1) Represents the number of shares available for issuance as of January 31, 2025 under the Company’s 2019 Omnibus Equity Stock Incentive Plan.
Subsequent to year end, in the first quarter of fiscal 2025, the Company declared a dividend of $0.02 per share.
Subsequent to year end, in the first quarter of fiscal 2026, the Company declared a dividend of $0.025 per share.
There can be no assurance that the Company will declare and pay dividends in future periods. Stock Repurchases The Company did not repurchase any shares of its stock during the fourth quarter of fiscal 2024.
There can be no assurance that the Company will declare and pay dividends in future periods.
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No shares remain available for issuance under the Company’s 2011 Stock Incentive Plan. Item 6. [Reserved]
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As of March 31, 2025, there were approximately 130 registered stockholders of record of the common stock according to the Company's transfer agent records. The number of record holders does not include persons who hold such shares in nominee or “street name” accounts through brokers.
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Stock Repurchases On December 5, 2023, the Board of Directors authorized the repurchase of up to $5.0 million of the Company's common stock, and on January 17, 2025, the Board authorized the repurchase of an additional amount of up to $10.0 million of the Company's common stock.
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During the fiscal year ended January 31, 2025,we spent $3.8 million to repurchase an aggregate of 342,026 shares of common stock. As of January 31, 2025, $11.2 million remained available for repurchase pursuant to the board authorizations. The repurchase program does not obligate the Company to acquire a minimum amount of shares.
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Under the repurchase program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. The repurchase program has no time limit and may be suspended or discontinued at any time.
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The actual dollar value of shares that may be repurchased in any fiscal year plus cash dividends during such fiscal year is limited to an aggregate of $8,000,000 under our Credit Agreement with PNC Bank, as further discussed above under “Note 7. Debt” to our Unaudited Consolidated Financial Statements.
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With the operating cash flows we anticipate generating in fiscal 2026, we expect to continue repurchasing Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.
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On April 9, 2025, the Company entered into Amendment No. 6 to the Credit Agreement with PNC Bank, which established a new category of permitted share repurchases in an amount up to $7.5 million, which is in addition to the dollar limits on permitted share repurchases under the Credit Agreement discussed above.
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The share repurchases under the new category must occur during the fiscal year ended January 31, 2026, may not occur while any Default or Event of Default exists or would result from such repurchases, and must be made solely from cash on hand and not from the proceeds of advances under the Credit Facility.
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The permitted share repurchases under this new category are also not counted as “Restricted Payments” when calculating the Company’s compliance with the Fixed Charge Coverage Ratio covenants in the Credit Agreement.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides the repurchases of our common stock during the fourth quarter ended January 31, 2025: 25 Period Total Number of Shares Purchased Average Price Paid per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (b) November 2024 — — — $ 3,502,000 December 2024 170,731 $ 11.71 170,731 $ 1,502,000 January 2025 31,593 $ 9.86 31,593 $ 11,190,000 Total 202,324 $ 11.42 202,324 (a) The average price paid per share includes any broker commissions.
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(b) The Company may purchase shares of its common stock on a discretionary basis from time to time through open market repurchases, including by entering into Rule 10b5-1 trading plans, and during an “open window” when the Company does not possess material non-public information.
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The timing and actual number of shares repurchased will depend on a variety of factors, including stock price, trading volume, market conditions, corporate and regulatory requirements and other general business considerations. The repurchase program has no time limit.
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The actual dollar value of shares that may be repurchased in any fiscal year plus cash dividends during such fiscal year is limited to an aggregate of $8 million under our Credit Agreement with PNC Bank, as further discussed above under “Note 3. Debt” to our Consolidated Financial Statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Company markets and sells direct to the schools and provides project management and logistics. The Company primarily sells to schools FOB destination, with approximately 80% of sales delivered FOB classroom destination. As part of this integrated business model, the Company has developed several competencies to enable superior service to the markets in which Virco competes.
Biggest changeAs part of this integrated business model, the Company has developed several competencies to enable superior service to the markets in which Virco competes. Virco's sales force is supported by a project management team which includes field-based project specialists, in-house interior designers, project management specialists, purchasing specialists, and field service supervisors.
As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, the availability of tax carry backs, tax-planning strategies, and results of recent operations (including cumulative losses in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.
As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, the availability of tax carry backs, tax-planning strategies, and results of recent operations (including cumulative income (losses) in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.
Investing activities include two distinct categories. Financial transactions are related to the purchase or sale of investments held in the Rabbi Trust which funds and secures employee benefits related to the non-qualified VIP pension and Split Dollar Life Insurance programs. The net investing activity from these transactions were immaterial.
Investing activities. Investing activities include two distinct categories. Financial transactions are related to the purchase or sale of investments held in the Rabbi Trust which funds and secures employee benefits related to the non-qualified VIP pension and Split Dollar Life Insurance programs. The net investing activity from these transactions were immaterial.
Environmental and Contingent Liabilities Environmental Compliance and Government Regulation Virco is subject to numerous federal, state and local environmental laws and regulations in the various jurisdictions in which it operates that (a) govern operations that may have adverse environmental effects, such as the discharge of materials into the environment, as well as handling, storage, transportation and disposal practices for solid and hazardous wastes, and (b) impose liability for response costs and certain damages resulting from past and current spills, disposals or other releases of hazardous materials.
Environmental and Contingent Liabilities 35 Environmental Compliance and Government Regulation Virco is subject to numerous federal, state and local environmental laws and regulations in the various jurisdictions in which it operates that (a) govern operations that may have adverse environmental effects, such as the discharge of materials into the environment, as well as handling, storage, transportation and disposal practices for solid and hazardous wastes, and (b) impose liability for response costs and certain damages resulting from past and current spills, disposals or other releases of hazardous materials.
The clean-down provision allows the Company to maintain the minimum outstanding balance of $10.0 million to be carried on an uninterrupted period extending beyond one year and ultimately due at the scheduled maturity. The Company 33 believes that normal operating cash flow will continue to allow it to meet the clean-down requirement with no adverse impact on the Company's liquidity.
The clean-down provision allows the Company to maintain the minimum outstanding balance of $10.0 million to be carried on an uninterrupted period extending beyond one year and ultimately due at the scheduled maturity. The Company believes that normal operating cash flow will continue to allow it to meet the clean-down requirement with no adverse impact on the Company's liquidity.
Domestic production facilitates our product development process, enabling the Company to more rapidly develop new products, release extensions of product families, and offer customized variants of our product offerings. Virco views its domestic factories as a strategic resource for providing its 27 customers with timely delivery of a broad selection of colors, finishes, laminates, and product styles.
Domestic production facilitates our product development process, enabling the Company to more rapidly develop new products, release extensions of product families, and offer customized variants of our product offerings. Virco views its domestic factories as a strategic resource for providing its customers with timely delivery of a broad selection of colors, finishes, laminates, and product styles.
Customers with large projects may require architect sign off, school board approval prior to payment, or punch list completion, all of which can delay payment. 32 Because of the seasonality of our business, our manufacturing and distribution capacity is dictated by the capacity requirement during the months of June, July, and August.
Customers with large projects may require architect sign off, school board approval prior to payment, or punch list completion, all of which can delay payment. Because of the seasonality of our business, our manufacturing and distribution capacity is dictated by the capacity requirement during the months of June, July, and August.
During fiscal 2024 the cost of commodities was reasonably stable. For fiscal 2025, the Company anticipates continued volatility in costs, particularly with respect to imported components from China, freight from China, certain raw materials including steel, transportation, energy, and potential impacts of escalating labor costs.
During fiscal 2025 and 2024 the cost of commodities was reasonably stable. For fiscal 2026, the Company anticipates continued volatility in costs, particularly with respect to imported components from China, freight from China, certain raw materials including steel, transportation, energy, and potential impacts of escalating labor costs.
Our manufacturing facility capacity utilization generally remains less than 100% during these off-season months; because physical structure capacity cannot be adjusted as readily as personnel capacity, we have secured sufficient physical structure capacity to accommodate our current needs, as well as for anticipated future growth.
Our manufacturing facility capacity utilization generally remains less than 100% during these off-season months because physical structure capacity cannot be adjusted as readily as personnel capacity, and we have secured sufficient physical structure capacity to accommodate our current needs, as well as for anticipated future growth.
On December 22, 2011, the Company and Virco Inc., a wholly owned subsidiary of the Company (“Virco” and, together with the Company, the “Borrowers”) entered into a Revolving Credit and Security Agreement (“Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”).
On December 22, 2011, the Company and Virco Inc., a 33 wholly owned subsidiary of the Company (“Virco” and, together with the Company, the “Borrowers”) entered into a Revolving Credit and Security Agreement (“Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”).
Given the relatively short term over which the known losses and IBNR losses are discounted, the sensitivity to the discount rate is not significant. Estimated workers' compensation and auto losses (including IBNR) were funded during the insurance year and subject to retroactive loss adjustments.
Given the relatively short term over which the known losses and IBNR losses are discounted, the sensitivity to the discount rate 29 is not significant. Estimated workers' compensation and auto losses (including IBNR) were funded during the insurance year and subject to retroactive loss adjustments.
New Accounting Pronouncements See disclosure of recently adopted and recently issued but not yet adopted accounting standards in Note 2 to the Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" to this Annual Report on Form 10-K.
New Accounting Pronouncements 36 See disclosure of recently adopted and recently issued but not yet adopted accounting standards in Note 2 to the Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" to this Annual Report on Form 10-K.
During fiscal 2024 the Company utilized all of its federal NOL’s and a significant portion of its state NOL’s. The effective tax rate for 2024 is more representative of rates that will affect fiscal 2025.
During fiscal 2024 the Company utilized all of its federal NOL’s and a significant portion of its state NOL’s. The effective tax rate for 2025 is more representative of rates that will affect fiscal 2026.
Anticipated adverse volatility for fiscal 2025 could be severe in light of global supply chain and economic sanctions, tariffs imposed or threatened on imported commodities and other disruptions affecting our suppliers. There is continued uncertainty with respect to steel and other raw material costs, including plastics, that are affected by the price of oil.
Anticipated adverse volatility for fiscal 2026 could be severe in light of global supply chain and economic sanctions, tariffs imposed or threatened on imported commodities and other disruptions affecting our suppliers. There is continued uncertainty with respect to steel and other raw material costs, including plastics, that are affected by the price of oil.
Due to the intensely seasonal nature of our business, the Company may receive significant orders during the first and second quarters for delivery in the second and third quarters.
Due to the seasonal nature of our business, the Company may receive significant orders during the first and second quarters for delivery in the second and third quarters.
Capital expenditures will continue to focus on automation, both in the factory and software applications, and new product development along with the tooling and new processes required to produce new products. The Company has identified several opportunities for capital expenditures during the next five years. The Company anticipates capital spending of approximately $5.0 million for fiscal 2025.
Capital expenditures will continue to focus on automation, both in the factory and software applications, and new product development along with the tooling and new processes required to produce new products. The Company has identified several opportunities for capital expenditures during the next five years. The Company anticipates capital spending of approximately $5.0 million for fiscal 2026.
Distribution and service has become a more meaningful component of our business as most deliveries are to school sites, and nearly 50% include delivery into the classroom. This evolution adds to the seasonal challenges of our business, but also creates opportunities to suppliers that can execute during the short summer delivery window.
Distribution and service has become a more meaningful component of our business as most deliveries are to school sites, and over 50% include delivery into the classroom. This evolution adds to the seasonal challenges of our business, but also creates opportunities to suppliers that can execute during the short summer delivery window.
The Company did not carry material amounts of vendor inventory during the fiscal years ended January 31, 2024 and 2023. In addition, Virco finances its largest balance of accounts receivable during the peak season. This occurs for three primary reasons. First, accounts receivable balances naturally increase during the peak season as shipments of products increase.
The Company did not carry material amounts of vendor inventory during the fiscal years ended January 31, 2025 and 2024. In addition, Virco finances its largest balance of accounts receivable during the peak season. This occurs for three primary reasons. First, accounts receivable balances naturally increase during the peak season as shipments of products increase.
The Company has renewed health insurance contracts for its employees through December 2024, but costs after that date may be adversely impacted by current legislation, claim costs and industry consolidation. To recover the cumulative impact of increased costs, the Company has increased published list prices for fiscal 2025.
The Company has renewed health insurance contracts for its employees through December 2025, but costs after that date may be adversely impacted by current legislation, claim costs and industry consolidation. To recover the cumulative impact of increased costs, the Company has increased published list prices for fiscal 2026.
Our Revolving Credit Facility with PNC Bank provides a $2.0 million line for equipment and covenants allow for anticipated capital expenditures for fiscal 2025. Retirement Obligations The Company provides retirement benefits to employees under two defined benefit retirement plans; the Employee Plan and the VIP Plan.
Our Revolving Credit Facility with PNC Bank provides a $2.0 million line for equipment and covenants allow for anticipated capital expenditures for fiscal 2026. Retirement Obligations The Company provides retirement benefits to employees under two defined benefit retirement plans; the Employee Plan and the VIP Plan.
For the Employee Plan, the Company estimated a 6.0% return on plan assets for 2024 and 6.0% for fiscal 2023. The VIP Plan is unfunded and has no plan assets. These rate assumptions can vary due to changes in interest rates and expected returns in the stock market.
For the Employee Plan, the Company estimated a 6.0% return on plan assets for fiscal 2025 and 2024. The VIP Plan is unfunded and has no plan assets. These rate assumptions can vary due to changes in interest rates and expected returns in the stock market.
To increase or maintain market share during fiscal 2025, when market conditions warrant, the Company may selectively compete based on direct prices to build or maintain its market share. Estimates of sales volume for the next year may continue to be impacted by global events.
To increase or maintain market share during fiscal 2026, when market conditions warrant, the Company may selectively compete based on direct prices to build or maintain its market share. Estimates of sales volume for the next year may continue to be impacted by global events.
Self-Insured Retention : For fiscal 2024 and 2023, the Company was self-insured for product liability losses up to $250,000 per occurrence, workers' compensation losses up to $250,000 per occurrence, and auto and general liability losses up to $50,000 per occurrence. The Company obtains quarterly or semi-annual actuarial valuations for the self-insured retentions.
Self-Insured Retention : For fiscal 2025 and 2024, the Company was self-insured for product liability losses up to $250,000 per occurrence, workers' compensation losses up to $250,000 per occurrence, and auto and general liability losses up to $50,000 per occurrence. The Company obtains quarterly or semi-annual actuarial valuations for the self-insured retentions.
Valuation allowances of $251,000 are needed for certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more-likely-than-not to be realized.
Valuation allowances of $236,000 are needed for certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more-likely-than-not to be realized.
Due to current economic conditions, the Company anticipates increased price competition in fiscal 2025 and may not be able to raise prices further in response to increased commodity costs without risk of losing market share.
Due to current economic conditions, the Company anticipates increased price competition in fiscal 2026 and may not be able to raise prices further in response to increased commodity costs without risk of losing market share.
The Company's exposure to self-insured retentions varies depending upon the market conditions in the insurance industry and the availability of cost-effective insurance coverage. Self-insured retentions for fiscal 2025 will be comparable to the retention levels for fiscal 2024.
The Company's exposure to self-insured retentions varies depending upon the market conditions in the insurance industry and the availability of cost-effective insurance coverage. Self-insured retentions for fiscal 2026 will be comparable to the retention levels for fiscal 2025.
For the insurance year beginning April 1, 2024, the Company will be self-insured for product liability losses up to $250,000 per occurrence, general liability losses up to $50,000 per occurrence, workers' compensation losses up to $250,000 per occurrence, and auto liability up to $50,000 per occurrence.
For the insurance year beginning April 1, 2025, the Company will be self-insured for product liability losses up to $250,000 per occurrence, general liability losses up to $50,000 per occurrence, workers' compensation losses up to $250,000 per occurrence, and auto liability up to $50,000 per occurrence.
The Company has served the education industry for over 74 years and over this time developed products to address a variety of classroom management trends, from collaborative learning to individual and combination desks facilitating distancing and classroom control. The pandemic caused a noticeable change in the types of products requested by educators.
The Company has served the education industry for over 75 years and over this time developed products to address a variety of classroom management trends, from collaborative learning to individual and combination desks facilitating distancing and classroom control. The pandemic caused 27 a noticeable change in the types of products requested by educators.
In fiscal 2023, the cost of commodities was volatile, but not as severe as experienced in 2022. Increased selling prices covered increases in commodity prices during fiscal 2023. In 2024, the Company increased selling prices in anticipation of additional cost increases.
In fiscal 2023, the cost of commodities was volatile, but not as severe as experienced in 2022. Increased selling prices covered increases in commodity prices during fiscal 2023. In 2024 and 2025, the Company increased selling prices in anticipation of additional cost increases.
The cost of materials in 2024 were reasonably stable compared to the volatility in prior years – especially the years impacted by COVID. Approximately 80% of Virco’s sales include freight to the customer facility and the cost or availability of transportation equipment can adversely impact both profitability and customer service.
The cost of materials in 2024 and 2025 were reasonably stable compared to the volatility in prior years – especially the years impacted by COVID. Approximately 75% of Virco’s sales include freight to the customer facility and the cost or availability of transportation equipment can adversely impact both profitability and customer service.
Product liability, workers' compensation, and auto reserves for known and unknown incurred but not reported (“IBNR”) losses are recorded at the net present value of the estimated losses using a risk-free discount rate of 4% for fiscal 2024 and fiscal 2023.
Product liability, workers' compensation, and auto reserves for known and unknown incurred but not reported (“IBNR”) losses are recorded at the net present value of the estimated losses using a risk-free discount rate of 4.0% for fiscal 2025 and fiscal 2024.
The Company has effectively increased selling prices under its largest contracts to recover volatile commodity, energy, freight, and labor costs. The Company does not anticipate material margin growth as recent price increases have restored profitability.
The Company has effectively increased selling prices under its largest contracts to recover volatile commodity, energy, freight, and labor costs incurred in recent years. The Company does not anticipate material margin growth as recent price increases have restored profitability.
Accrued interest with respect to principal amounts outstanding under the Restated Credit Agreement is payable in arrears on a monthly basis for Alternative Base Rate loans, and at the end of the applicable interest period but at most every three months for Eurodollar Currency Rate loans. The interest rate at January 31, 2024 was 10.5%.
Accrued interest with respect to principal amounts outstanding under the Restated Credit Agreement is payable in arrears on a monthly basis for Alternative Base Rate loans, and at the end of the applicable interest period but at most every three months for Eurodollar Currency Rate loans. The interest rate at January 31, 2025 was 9.5%.
Off-Balance Sheet Arrangements The Company did not enter into any material off-balance sheet arrangements during fiscal 2024, nor did the Company have any material off-balance sheet arrangements outstanding at January 31, 2024.
Off-Balance Sheet Arrangements The Company did not enter into any material off-balance sheet arrangements during fiscal 2025, nor did the Company have any material off-balance sheet arrangements outstanding at January 31, 2025.
Contingent Liabilities 35 In fiscal 2024 and 2023,the Company was self-insured for product liability losses of up to $250,000 per occurrence, general liability losses of up to $50,000 per occurrence, workers' compensation losses up to $250,000 per accident and auto liability up to $50,000 per accident.
Contingent Liabilities In fiscal 2025 and 2024, the Company was self-insured for product liability losses of up to $250,000 per occurrence, general liability losses of up to $50,000 per occurrence, workers' compensation losses up to $250,000 per accident and auto liability up to $50,000 per accident.
Full service orders typically generate greater margins, but also result in increased service costs which are included in selling, general, and administrative expenses. The material portion of our costs as a percentage of sales was 34.7% of net sales in fiscal 2024 and 39.2% of net sales in fiscal 2023.
Full service orders typically generate greater margins, but also result in increased service costs which are included in selling, general, and administrative expenses. The material portion of our costs as a percentage of sales was 33.2% of net sales in fiscal 2025 and 34.7% of net sales in fiscal 2024.
There have been no changes to our policies for establishing adjustments throughout the year, and we do not expect significant changes to our historical obsolescence levels. A 10% increase in our year-end inventory adjustments would decrease our net income by approximately $480,000, on an after-tax basis.
There have been no changes to our policies for establishing adjustments throughout the year, and we do not expect significant changes to our historical obsolescence levels. A 10% increase in our year-end inventory adjustments would decrease our net income by approximately $0.4 million, on an after-tax basis.
The net income would increase by similar amounts if the inventory adjustments was to decrease by a comparable percentage. As of January 31, 2024 and January 31, 2023, our inventory obsolescence adjustments were $6.0 million and $5.0 million, respectively, representing 10.8% and 7.8%, respectively, of our inventories on a FIFO basis.
The net income would increase by similar amounts if the inventory adjustments was to decrease by a comparable percentage. As of January 31, 2025 and January 31, 2024, our inventory obsolescence adjustments were $5.6 million and $6.0 million, respectively, representing 9.1% and 10.8%, respectively, of our inventories on a FIFO basis.
At January 31, 2024, the Company recorded a partial valuation allowances of $251,000 on certain state NOL to reduce the carrying amount of deferred tax assets to an amount that is more-likely-than-not to be realized. The net change in the valuation allowance for the year ended January 31, 2024, was a decrease of $613,000.
At January 31, 2025, the Company recorded a partial valuation allowances of $236,000 on certain state NOL to reduce the carrying amount of deferred tax assets to an amount that is more-likely-than-not to be realized. The net change in the valuation allowance for the year ended January 31, 2025, was a decrease of $15,000.
Provision for Income Taxes Our effective tax rate is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a partial valuation allowance on net deferred tax asset.
Provision for Income Taxes Our effective tax rate was 23.9% for fiscal 2025, and is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a partial valuation allowance on net deferred tax asset.
Virco discounted the pension obligations for the two plans using the following discount rates for the fiscal years ended January 31: 2024 2023 Employee Plan 5.15% 4.85% VIP Plan 5.20% 4.85% 28 Because new benefit accruals for both plans were frozen by the Company effective December 31, 2003, the assumed rate of increase in compensation has no effect on the accounting for the plans.
Virco discounted the pension obligations for the two plans using the following discount rates for the fiscal years ended January 31: 2025 2024 Employee Plan 5.55% 5.15% VIP Plan 5.60% 5.20% Because new benefit accruals for both plans were frozen by the Company effective December 31, 2003, the assumed rate of increase in compensation has no effect on the accounting for the plans.
In effort to “de-risk” the Employee Plan, the Company intends to continue to reach out to and offer lump sum benefits to terminated and retired employees, which may result in settlement costs in the future.
In effort to de-risk the Employee Plan, the Company intends to continue to reach out to and offer lump sum benefits to terminated and retired employees, which may result in settlement costs in the future.
The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season. Approximately $30.0 million and $12.9 million were available for borrowing as of January 31, 2024 and 2023, respectively. Long-Term Capital Requirements In addition to short-term liquidity considerations, the Company continually evaluates long-term capital requirements.
The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season. Approximately $30.0 million was available for borrowing as of January 31, 2025 and 2024. Long-Term Capital Requirements In addition to short-term liquidity considerations, the Company continually evaluates long-term capital requirements.
Factors that could cause or contribute to these differences include the factors discussed above under “Item 1, Business” , and elsewhere in this Annual Report on Form 10-K.
Factors that could cause or contribute to these differences include the factors discussed above under “Item 1A. Risk Factors” , and elsewhere in this Annual Report on Form 10-K.
In the current and prior years, due to a large number of lump-sum benefits paid to retired and terminated employees, the Company has incurred settlement costs for the Employee Plan.
In fiscal 2024, the Company has incurred settlement costs for the Employee Plan due to a large number of lump-sum benefits paid to retired and terminated employees.
The Company has developed a comprehensive product offering for the furniture , fixtures and equipment (“FF&E”) needs of the K-12 education market, enabling a school to procure all of its FF&E requirements from one source.
The Company has developed a comprehensive product offering for the FF&E needs of the K-12 education market, enabling a school to procure all of its FF&E requirements from one source.
If the Company were to have used different assumptions in the fiscal year ended January 31, 2024, a 1% reduction in investment return would have increased expense by approximately $163,000, a 1% change in the rate of compensation increase would have no impact, and a 1% reduction in discount rates would cause obligations under the Plans to increase by approximately $3.0 million and increase pension expense by approximately $352,000.
If the Company were to have used different assumptions in the fiscal year ended January 31, 2025, a 1% reduction in investment return would have increased pension expense by approximately $180,000, a 1% change in the rate of compensation increase would have no impact, and a 1% reduction in discount rates would cause obligations under the Plans to increase by approximately $2.7 million and increase pension expense by approximately $190,000.
In fiscal 2024, approximately 49% of the Company's total sales were delivered in June, July, and August. 26 During periods of traditional seasonality, average weekly shipments during July and August can be as great as six times the level of average weekly shipments in the winter months.
The educational sales market is extremely seasonal. In fiscal 2024 and 2025, approximately 47% - 49% of the Company's total sales were delivered in June, July, and August. During periods of traditional seasonality, average weekly shipments during July and August can be as great as six times the level of average weekly shipments in the winter months.
Contributions to the Qualified Plan Trust and benefit payments under the VIP Plan totaled $676,000 and $595,000 in fiscal 2024 and 2023, respectively. 34 Contributions during fiscal 2025 will depend upon actual investment results and benefit payments but are anticipated to be less than $0.5 million.
Contributions to the Qualified Plan Trust and benefit payments under the VIP Plan totaled $623,000 and $676,000 in fiscal 2025 and 2024, respectively. Contributions during fiscal 2026 will depend upon actual investment results and benefit payments but are anticipated to be less than $500,000.
Significant cost increases in manufacturing or distributing products during a given contract period can adversely impact operating results and have done so during prior years. The Company typically benefits from any decreases in raw material or distribution costs under the contracts described above.
Significant cost increases in manufacturing or distributing products during a given contract period can adversely impact operating results and have done so during prior years. The Company typically benefits from any decreases in raw material or distribution costs under the contracts described above. In early 2025, there have been significant changes and proposed changes to U.S. trade policies.
In prior years, the discount rate has decreased, causing pension expense and pension obligations to increase. Because the plans have been frozen for many years, there is no service cost related to the plans. In the current year, the Plan purchased approximately $5.0 million of annuities for retired employees.
In prior years, the discount rate has decreased, causing pension expense and pension obligations to increase. Because the plans have been frozen for many years, there is no service cost related to the plans. During fiscal year 2024, the Plan purchased approximately $5.0 million of annuities for retired employees. The Company did not incur settlement costs in fiscal 2025.
Based on the Company’s current projections, including COVID-19 related costs, raw material costs and its ability to introduce price increases, management believes it will maintain compliance with the financial covenants within Amendment No. 2, although there are uncertainties therewithin, such as raw material costs and supply chain challenges.
Based on the Company’s current projections, raw material costs and its ability 34 to introduce price increases, management believes it will maintain compliance with these financial covenants, although there are uncertainties therewithin, such as raw material costs and supply chain challenges.
At January 31, 2024, the Company has no operating loss carryforwards for U.S. federal, and $9.0 million for state income tax purposes, expiring at various dates through January 31, 2042.
At January 31, 2025, the Company has no operating loss carryforwards for U.S. federal, and $6.3 million for state income tax purposes, expiring at various dates through January 31, 2041.
With respect to any of the contracts described above, if the costs of providing our products or services increase between the date the orders are received and the shipping date, we may not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs. 31 In fiscal 2023, the cost of commodities was volatile, but not as severe as years during the peak of COVID.
With respect to any of the contracts described above, if the costs of providing our products or services increase between the date the orders are received and the shipping date, we may not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs.
At January 31, 2024, the Company has no NOL for U.S. federal tax purposes and $9.0 million for state income tax purposes, expiring at various dates through January 31, 2042.
At January 31, 2025, the Company has no NOL for U.S. federal tax purposes and $6.3 million for state income tax purposes, expiring at various dates through January 31, 2041.
Virco management believes that there is a pent-up demand for quality school furniture (though it is unclear when and to what extent that pent-up demand will be converted into a meaningful increase in purchases). Second, management believes that parents and voters will make quality education an ongoing priority for future government spending.
Virco management believes that there is a pent-up demand for quality school furniture (though it is unclear when and to what extent that pent-up demand will be converted into a meaningful increase in purchases).
At January 31, 2024, accumulated other comprehensive loss of approximately $1.3 million, net of tax, is attributable to the pension plans. The Company does not anticipate making any significant changes to the pension assumptions in the near future.
At January 31, 2025, accumulated other comprehensive income of $422,000, net of tax, is attributable to the pension plans. The Company does not anticipate making any significant changes to the pension assumptions in the near future.
The Company incurred settlement costs in the third and fourth quarters of fiscal 2024. The Company incurred settlement costs in the third, and fourth quarters of fiscal 2023.
The Company did not incur settlement costs in fiscal 2025. The Company incurred settlement costs in the third and fourth quarters of fiscal 2024.
Results of Operations (fiscal 2024 vs. 2023) Financial Highlights The Company earned a pre-tax profit of $29.2 million on net sales of $269.1 million for fiscal 2024, compared to pre-tax profit of $8.0 million on net sales of $231.1 million in fiscal 2023, an improvement of $21.2 million.
Results of Operations (fiscal 2025 vs. 2024) Financial Highlights The Company earned a pre-tax profit of $28.4 million on net sales of $266.2 million for fiscal 2025, compared to pre-tax profit of $29.2 million on net sales of $269.1 million in fiscal 2024.
The Company remedied this by providing significant raises to its hourly work force, and for fiscal years 2023 and 2024 our ability to support the seasonal business model returned to pre-COVID capabilities.
The Company remedied this by providing significant raises to its hourly work force, and for fiscal years 2023, 2024, and 2025 our ability to support the seasonal business model returned to pre-COVID capabilities, with the Company delivering 47% - 49% of annual revenue during June, July, and August.
While the Company anticipates challenging economic conditions to continue to impact its core customer base in the near term, there are certain underlying demographics, customer responses and changes in the competitive landscape that provide opportunities.
The Company may be challenged in effectively increasing the prices of its products, and its business and results of operations may be adversely affected. While the Company anticipates challenging economic conditions to continue to impact its core customer base in the near term, there are certain underlying demographics, customer responses and changes in the competitive landscape that provide opportunities.
Capital expenditures have been financed using borrowings under our line of credit with PNC Bank. There were no material commitments for capital expenditures as of January 31, 2024. Financing activities. Our financing activities primarily consist of the proceeds and repayments of borrowings under our line of credit with PNC Bank.
Our net investments primarily consist of investments in our factories and technology to support our business activities. Capital expenditures have been financed using borrowings under our line of credit with PNC Bank. There were no material commitments for capital expenditures as of January 31, 2025. Financing activities.
Cash Flows The following table shows summary cash flows information for the fiscal years ended January 31, 2024 and 2023: Year ended January 31, 2024 2023 (In thousands) Net cash provided by (used in) operating activities $ 26,960 $ (3,788) Net cash used in investing activities $ (4,759) $ (3,332) Net cash (used in) provided by financing activities $ (17,972) $ 6,818 Net increase (decrease) in cash $ 4,229 $ (302) Operating activities.
Cash Flows The following table shows summary cash flows information for the fiscal years ended January 31, 2025 and 2024: 31 Year ended January 31, 2025 2024 (In thousands) Net cash provided by operating activities $ 33,128 $ 26,960 Net cash used in investing activities (5,563) (4,759) Net cash used in financing activities (5,984) (17,972) Net increase in cash $ 21,581 $ 4,229 Operating activities.
This program has continued through fiscal 2024 and has resulted in reductions in product liability claims and litigated product liability cases. In addition, the Company has active safety programs to improve plant safety and control workers' compensation losses. As of January 31, 2024, the Company has incurred no significant workers compensation claims related to COVID-19.
This program has continued through fiscal 2025 and has resulted in reductions in product liability claims and litigated product liability cases. In addition, the Company has active safety programs to improve plant safety and control workers' compensation losses.
For the year ending January 31, 2025 ("fiscal 2025"), the Company anticipates continued uncertainty and volatility in commodity costs, particularly with respect to steel, plastic, and other raw materials, transportation, and energy.
These tariffs are likely to result in increased prices for imported components and materials supplied locally. For the year ending January 31, 2026 ("fiscal 2026"), the Company anticipates continued uncertainty and volatility in commodity costs, particularly with respect to steel, plastic, and other raw materials, transportation, and energy.
More than 90% of the Company's freight is provided by third-party carriers. The Company has secured sufficient warehouse capacity to accommodate our current needs as well as anticipated future growth.
More than 90% of the Company's freight is provided by third-party carriers. The Company has secured sufficient warehouse capacity to accommodate our current needs as well as anticipated future growth. Additionally, the Company may elect to opportunistically purchase shares based on excess cash generation and share price considerations.
During fiscal 2021, the demand for school furniture declined primarily due to the COVID-19 pandemic disruption, order rates declined by 20%, and the Company reduced production levels. Because of the traditional dependence on temporary seasonal labor, the Company was able to reduce seasonal hiring to match production to demand.
The Company has traditionally met the seasonal needs with significant overtime and by hiring seasonal temporary labor. During fiscal 2021, the demand for school furniture declined primarily due to the COVID-19 pandemic disruption, order rates declined by 20%, and the Company reduced production levels.
The markets that Virco serves include the education market (the Company's primary market), which is made up of public and private schools (preschool through 12th grade), junior and community colleges, four-year colleges and universities and trade, technical and vocational schools.
Virco is one of the few domestic manufacturers of school furniture that call on and sell direct to school customers, with approximately 70% to 80% of sales being direct to customers. 26 The markets that Virco serves include the education market (the Company's primary market), which is made up of public and private schools (preschool through 12th grade), junior and community colleges, four-year colleges and universities and trade, technical and vocational schools.
A one percent decrease in return on Plan assets would increase pension expense by $160,000 and have no impact on retirement obligations. The retirement obligations would decrease by similar amounts if discount rate were to increase by a comparable percentage. The Company obtains annual actuarial valuations for both plans.
The retirement obligations would decrease by similar amounts if discount rate were to increase by a comparable percentage. The Company obtains annual actuarial valuations for both plans.
During fiscal 2025, the Company anticipates continued uncertainty and volatility in commodity costs, particularly with respect to certain raw materials, transportation, energy, and tariffs due to potential macroeconomic events, including global economic sanctions and the lingering effect of the global pandemic caused by COVID-19.
During fiscal 2025, the Company anticipates continued uncertainty and volatility in commodity costs, particularly with respect to certain raw materials, transportation, energy, and tariffs due to potential macroeconomic events, including global economic sanctions. The Company also anticipates continued and possibly increased supply chain disruptions from both domestic and international suppliers.
The disruption related to COVID-19 school closures reinforced the need for learning in classroom settings. Third, many schools have responded to the budget strains by reducing their support infrastructure.
Second, management believes that parents and voters will make quality education an ongoing priority for future government spending. 28 The disruption related to COVID-19 school closures reinforced the need for learning in classroom settings. Third, many schools have responded to the budget strains by reducing their support infrastructure.
The increase in SG&A was primarily attributable to variable service expenses and variable selling expenses. Pension expense increased due to Plan settlement expenses. Interest expense was $700,000 higher in fiscal 2024 compared to fiscal 2023 because of increased levels of seasonal borrowing and higher interest rates.
The increase in SG&A was primarily attributable to an increase in variable selling and other compensation expenses. Pension expense decreased due to increased discount rates and because prior year included plan settlement expenses. Interest expense was $2.3 million lower in fiscal 2025 compared to fiscal 2024 because of decreased levels of borrowing.
The Company's working capital requirements during and in anticipation of the peak summer season oblige management to make estimates and judgments that affect Virco's assets, liabilities, revenues and expenses.
The Company's core business of selling furniture to publicly-funded educational institutions is extremely seasonal. The seasonal nature of this business permeates most of Virco's operational, capital and financing decisions. The Company's working capital requirements during and in anticipation of the peak summer season oblige management to make estimates and judgments that affect Virco's assets, liabilities, revenues and expenses.
In fiscal 2021 we experienced an increase in the demand for individual desks. In fiscal 2022, demand began to return to products supporting collaborative learning. This trend continued through fiscal 2023 and 2024. Our product offerings are continually enhanced with an ongoing new product development program that incorporates internally developed products as well as product lines developed with accomplished designers.
In fiscal 2021, we experienced an increase in the demand for individual desks. In fiscal 2022, demand began to return to products supporting collaborative learning. This trend continued through fiscal 2023, 2024, and 2025.
The Company’s direct sales force is supported by interior designers, project managers and field service professionals. An important element of Virco's business model is the Company's emphasis on developing and maintaining key manufacturing, warehousing, distribution, delivery, project management and service capabilities.
PlanSCAPE® software also enables the entire Virco sales force to prepare quotations for less complicated projects. An important element of Virco's business model is the Company's emphasis on developing and maintaining key manufacturing, warehousing, distribution, delivery, project management and service capabilities.
This was primarily due to price increases in 2023 and 2024 combined with relatively stable commodity costs. Direct labor costs decreased slightly as a percentage of sales. Overhead costs as a percentage of sales increased, primarily due to reduced levels of production.
This was primarily due to relatively stable commodity costs in 2025 and 2024. Direct labor costs increased slightly as a percentage of sales. Overhead costs as a percentage of sales increased slightly. The net result of all activity was no change in COS as a percentage of sales.
In fiscal 2024 the Company materially reduced its year end borrowings under the line of credit, primarily due to cash flows from operations. Inflation and Future Change in Prices We commit to annual contracts that determine selling prices for goods and services for periods of six months and occasionally longer.
Inflation and Future Change in Prices We commit to annual contracts that determine selling prices for goods and services for periods of six months and occasionally longer.
Due to the seasonal nature of our business, the Company typically borrows material amounts under the line to finance seasonal building of inventory and financing of accounts receivable. The Company typically repays the seasonal borrowings at the conclusion of the summer busy season.
Our financing activities primarily consist of the proceeds and repayments of borrowings under our line of credit with PNC Bank, payment of cash dividends, and repurchases of Company stock. Due to the seasonal nature of our business, the Company typically borrows material amounts under the line to finance seasonal building of inventory and financing of accounts receivable.
As a portion of Virco's business is obtained through competitive bids, the Company is carefully considering material and transportation costs as part of the bidding process. The Company is working to control and reduce costs by improving production and distribution methodologies, investigating new packaging and shipping materials, and searching for new sources of purchased components and raw materials.
As a portion of Virco's business is obtained through competitive bids, the Company is carefully considering material and transportation costs as part of the bidding process.
In effort to “de-risk” the Employee Plan, the Company intends to continue to reach out to and offer lump sum benefits to terminated and retired employees, which may result in settlement costs in the future. The Company incurred settlement costs in the third and fourth quarters of fiscal 2024 and the third, and fourth quarters of fiscal 2023.
In effort to de-risk the Employee Plan, the Company intends to continue to reach out to and offer lump sum benefits to terminated and retired employees, which may result in settlement costs in the future. Due to the size of the Company's pension obligations, a one percent change in discount rates can cause a material change in the pension obligations.

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