Executive Summary
Virco Mfg Corporation reported a significant sequential acceleration in QQ2 2026, with revenue of $92.1 million up 172.8% QoQ from $33.8 million in QQ1, while year-over-year revenue declined 15.1%. The quarter delivered a robust gross margin of 44.4%, translating to gross profit of $40.9 million and an operating income of $15.37 million (operating margin 16.7%). Net income reached $10.19 million (net margin 11.1%), and earnings per share stood at $0.65. EBITDA was $15.93 million (EBITDA margin ~17.3%). Despite the YoY revenue decline, the QoQ rebound reflects lumpy order cycles typical in the education-furniture sector and a favorable mix and pricing dynamics in QQ2. Management commentary was not provided in the data, but the quarter shows meaningful cash generation with operating cash flow of $3.21 million and free cash flow of $1.83 million. The balance sheet remains solid, featuring a current ratio near 3x, total liquidity of $2.61 million cash and low net debt (~$39.28 million) against $115.38 million in equity, and a net-debt-to-EBITDA of roughly 2.46x. These fundamentals position Virco to weather seasonal procurement cycles and to capitalize on incremental demand in education-facility modernization if education budgets stabilize or expand.
Key Performance Indicators
QoQ: 172.82% | YoY:-15.06%
QoQ: 155.14% | YoY:-18.61%
QoQ: 16 452.13% | YoY:-29.79%
QoQ: 1 291.53% | YoY:-39.49%
QoQ: 1 297.85% | YoY:-37.50%
Key Insights
Revenue: $92.086m; YoY -15.1%; QoQ +172.8%
Gross Profit: $40.874m; YoY -18.6%; Gross Margin: 44.39% (0.4439)
Operating Income: $15.371m; YoY -29.8%; QoQ +substantial gain from a negative prior quarter; Operating Margin: 16.69% (0.1669)
Net Income: $10.186m; YoY -39.5%; QoQ +1,291.5% (reflecting a swing from negative prior quarter); Net Margin: 11.06% (0.1106)
EPS: $0.65; YoY -37.5%; QoQ +1,297.9%
EBITDA: $15.928m; EBITDA Margin: 17.3%
Interest Expense: $0.205m; Depreciation & Amortization: $...
Financial Highlights
Revenue: $92.086m; YoY -15.1%; QoQ +172.8%
Gross Profit: $40.874m; YoY -18.6%; Gross Margin: 44.39% (0.4439)
Operating Income: $15.371m; YoY -29.8%; QoQ +substantial gain from a negative prior quarter; Operating Margin: 16.69% (0.1669)
Net Income: $10.186m; YoY -39.5%; QoQ +1,291.5% (reflecting a swing from negative prior quarter); Net Margin: 11.06% (0.1106)
EPS: $0.65; YoY -37.5%; QoQ +1,297.9%
EBITDA: $15.928m; EBITDA Margin: 17.3%
Interest Expense: $0.205m; Depreciation & Amortization: $1.552m
Weighted Average Shares Outstanding: 15.741m; EPS Diluted: $0.65
Cash Flow: Net cash from operating activities $3.205m; Free cash flow $1.833m; Capex $1.372m; Operating cash flow yield and FCF supportive of a modest capex trajectory going forward
Balance Sheet Highlights: Cash and cash equivalents $2.61m; Total current assets $111.89m; Total assets $198.64m; Total liabilities $83.27m; Long-term debt $36.84m; Short-term debt $5.05m; Total debt $41.89m; Net debt $39.28m; Total stockholders’ equity $115.38m; Current ratio ~2.97x; Asset turnover ~0.46x; Net debt to EBITDA ~2.46x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
92.09M |
-15.06% |
172.82% |
| Gross Profit |
40.87M |
-18.61% |
155.14% |
| Operating Income |
15.37M |
-29.79% |
16 452.13% |
| Net Income |
10.19M |
-39.49% |
1 291.53% |
| EPS |
0.65 |
-37.50% |
1 297.85% |
Management Commentary
Note: The dataset provided does not include an earnings call transcript. As a result, thematic highlights and quotes from management cannot be extracted or quoted directly. The following themes are inferred from the reported results and typical investor concerns for Virco’s segment:
- Strategy and market positioning: Virco remains exposed to the educational sector with a diversified product suite (seating, tables, classroom furniture, and related equipment). The QQ2 2026 improvement in revenue and margins suggests the company benefited from favorable mix and pricing discipline, even as YoY revenue declined.
- Operations and efficiency: Gross margin at 44.4% indicates strong product mix and potentially favorable sourcing or pricing; leverage on fixed costs appears to be contributing to a meaningful operating margin recovery QoQ.
- Market conditions: The education-furniture market is characterized by lumpiness and procurement cycles; management commentary would likely emphasize backlog, order book, and visibility into H2, along with any cost-control initiatives.
- Cash flow and balance sheet: Positive operating cash flow and free cash flow amid a modest capex level support a stable financial position; liquidity appears solid with a current ratio well above 2x.
Forward Guidance
No formal forward guidance was provided in the data. Given Virco’s QQ2 2026 results, the firm exhibits a favorable margin profile and positive near-term cash generation, but the revenue trend remains uneven on a YoY basis due to typical school procurement cycles and budget variability. Our view is that Virco would benefit from: (1) stabilizing or modestly increasing annual revenue through expanded contracts with educational institutions and government facilities; (2) preserving gross margin through mix optimization and cost discipline; (3) maintaining low to moderate leverage and continued positive free cash flow. Key factors to monitor include: education budget appropriations and capital expenditure cycles, order backlog and delivery cadence in H2 2026, receivables collection dynamics, and any changes to working capital efficiency that could impact cash conversion.