UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~July~~October 31, 2025


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File number 1-8777


VIRCO MFG. CORPORATION (Exact Name of Registrant as Specified in its Charter)


Delaware						95-1613718
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

2027 Harpers Way, Torrance, CA						90501
(Address of Principal Executive Offices)						(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 533-0474

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

VIRC

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The number of shares outstanding for each of the registrant’s classes of common stock, as of the latest practicable date:

Common Stock, $.01 par value — 15,761,141 shares as of ~~September~~December 58, 2025.

TABLE OF CONTENTS

Part I. Financial Information		3
	Item 1. Financial Statements	3
	Unaudited condensed consolidated balance sheets - July 31, 2025, January 31, 2025 and July 31, 2024	3
	Unaudited condensed consolidated balance sheets - October 31, 2025, January 31, 2025 and October 31, 2024	3
	Unaudited condensed consolidated statements of income - Three and six months ended July 31, 2025 and 2024	5
	Unaudited condensed consolidated statements of operations - Three and nine months ended October 31, 2025 and 2024	5
	Unaudited condensed consolidated statements of comprehensive income - Three and six months ended July 31, 2025 and 2024	6
	Unaudited condensed consolidated statements of comprehensive (loss) income - Three and nine months ended October 31, 2025 and 2024	6
	Unaudited condensed consolidated statements of cash flows - Six months ended July 31, 2025 and 2024	7
	Unaudited condensed consolidated statements of cash flows - Nine months ended October 31, 2025 and 2024	7
	Unaudited condensed consolidated statements of changes in stockholders' equity - Three and six months ended July 31, 2025 and 2024	8
	Unaudited condensed consolidated statements of changes in stockholders' equity - Three and nine months ended October 31, 2025 and 2024	8
	Notes to unaudited condensed consolidated financial statements - July 31, 2025	10
	Notes to unaudited condensed consolidated financial statements - October 31, 2025	10
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	2223
	Item 4. Controls and Procedures	2223
Part II. Other Information		2325
	Item 1. Legal Proceedings	2325
	Item 1A. Risk Factors	2325
	Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	2325
	Item 3. Defaults Upon Senior Securities	2325
	Item 4. Mine Safety Disclosures	2325
	Item 5. Other Information	2425
	Item 6. Exhibits	2425

PART I. Financial Information

Item 1. Financial Statements

Virco Mfg. Corporation

Unaudited Condensed Consolidated Balance Sheets

7/31/2025

1/31/2025

7/31/2024

10/31/2025

1/31/2025

10/31/2024

(In thousands)

Assets

Current assets

Cash

226,~~610~~509

26,867

738,~~771~~858

Trade accounts receivables, net

4613,~~817~~799

13,004

5628,~~065~~168

Income tax receivable

—409

4,060

—

Inventories

5953,~~866~~087

55,647

5848,~~574~~948

Prepaid expenses and other current assets

2,~~592~~991

2,595

23,~~921~~479

Total current assets

~~111~~96,~~885~~795

102,173

~~125~~119,~~331~~453

Non-current assets

Property, plant, and equipment, net

36,120

36,428

34,980

Property, plant and equipment, net

35,453

36,428

35,621

Operating lease right-of-use assets

3331,~~019~~655

35,593

3736,~~988~~876

Deferred income tax assets, net

5,~~847~~947

5,821

6,~~682~~550

Other assets, net

11,~~770~~687

11,931

11,~~367~~645

Total assets

~~198~~181,~~641~~537

191,946

~~216~~210,~~348~~145

See accompanying notes to unaudited condensed consolidated financial statements.

Virco Mfg. Corporation

Unaudited Condensed Consolidated Balance Sheets

7/31/2025

1/31/2025

7/31/2024

10/31/2025

1/31/2025

10/31/2024

(In thousands, except share and par value data)

Liabilities

Current liabilities

Accounts payable

175,~~069~~715

11,593

2615,~~085~~381

Accrued compensation and employee benefits

6,~~856~~069

11,064

1112,~~572~~439

Income tax payable

14—

—

31,~~648~~463

Current portion of long-term debt

~~263~~266

258

~~253~~256

Current portion of operating lease liability

46,~~790~~389

1,673

~~1,431~~863

Other accrued liabilities

85,~~747~~875

9,687

1211,~~517~~142

Total current liabilities

3724,~~739~~314

34,275

5541,~~506~~544

Non-current liabilities

Accrued self-insurance retention

~~1,281~~927

780

1,~~285~~033

Accrued pension expenses

6,~~322~~389

6,746

9,~~536~~345

Income tax payable, less current portion

~~257~~287

200

~~232~~261

Long-term debt, less current portion

3,~~745~~678

3,878

43,~~008~~943

Operating lease liability, less current portion

3331,~~096~~467

36,007

37,~~204~~380

Other long-term liabilities

~~825~~840

795

~~765~~780

Total non-current liabilities

4543,~~526~~588

48,406

5352,~~030~~742

Commitments and contingencies (Note 13)

Stockholders’ equity

Preferred stock:

Authorized 3,000,000 shares, $0.01 par value; none issued or outstanding

—

Common stock:

Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 15,761,141 shares at 7/31/2025, 16,087,082 shares at 1/31/2025, and 16,289,406 shares at 7/31/2024

157

161

163

Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 15,761,141 shares at 10/31/2025, 16,087,082 shares at 1/31/2025, and 16,289,406 shares at 10/31/2024

157

161

163

Additional paid-in capital

113,~~667~~714

117,549

119,~~734~~796

Retained earnings (accumulated deficit)

1,264

(8,867)

(10,728)

Accumulated deficit

(456)

(8,867)

(2,734)

Accumulated other comprehensive income (loss)

~~288~~220

422

(1,~~357~~366)

Total stockholders’ equity

~~115~~113,~~376~~635

109,265

~~107~~115,~~812~~859

Total liabilities and stockholders’ equity

~~198~~181,~~641~~537

191,946

~~216~~210,~~348~~145

See accompanying notes to unaudited condensed consolidated financial statements.

Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of ~~Income~~Operations

	Three Months Ended				~~Six~~Nine Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands, except per share data)
Net sales	$	9247,~~086~~636	$	~~108~~82,~~419~~620	$	~~125~~173,~~840~~476	$	~~155~~237,~~154~~774
Costs of goods sold	5129,~~212~~544		5845,~~201~~942		6898,~~946~~490		84130,~~589~~531
Gross profit	4018,~~874~~092		5036,~~218~~678		5674,~~894~~986		70107,~~565~~243
Selling, general and administrative expenses	2519,~~503~~785		2825,~~324~~565		4161,~~617~~402		4571,~~700~~265
Operating income	15,371		21,894		15,277		24,865
Operating (loss) income	(1,693)		11,113		13,584		35,978
Unrealized loss (gain) on investment in trust account	~~968~~49		(~~597~~246)		(~~207~~158)		(~~812~~1,058)
Pension expense	27		~~107~~106		5481		~~214~~320
Interest expense, net	205		322		265		530
Interest expense (income), net	40		(24)		305		506
Income before income taxes	14,171		22,062		15,165		24,933
(Loss) income before income taxes	(1,809)		11,277		13,356		36,210
Income tax expense	3,985		5,229		4,247		5,960
Income tax (benefit) expense	(484)		2,876		3,764		8,836
Net income	$	10,186	$	16,833	$	10,918	$	18,973
Net (loss) income	$	(1,325)	$	8,401	$	9,592	$	27,374
Cash dividends declared per common share:	$	0.025	$	0.~~020~~025	$	0.~~050~~075	$	0.~~040~~065
Net income per common share:
Net (loss) income per common share:
Basic	$	(0.6508)	$	10.0452	$	0.6961	$	1.1667
Diluted	$	(0.6508)	$	10.0452	$	0.6961	$	1.1667
Weighted average shares of common stock outstanding:
Basic	15,~~741~~761		16,~~214~~289		15,~~749~~761		16,~~305~~379
Diluted	15,~~743~~761		16,~~215~~296		15,~~750~~766		16,~~305~~382

See accompanying notes to unaudited condensed consolidated financial statements.

Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

	Three Months Ended				~~Six~~Nine Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands)
Net income	$	10,186	$	16,833	$	10,918	$	18,973
Net (loss) income	$	(1,325)	$	8,401	$	9,592	$	27,374
Other comprehensive loss:
Pension adjustments (net of tax adjustment of $23 and $21 for three months, and $46 and $28 for six months at July 31, 2025 and 2024, respectively)	(67)		(19)		(134)		(47)
Pension adjustments (net of tax adjustment of $(22) and $(29) for three months, and $(68) and $(57) for nine months at October 31, 2025 and 2024, respectively)	(68)		(9)		(202)		(56)
Net comprehensive income	$	10,119	$	16,814	$	10,784	$	18,926
Net comprehensive (loss) income	$	(1,393)	$	8,392	$	9,390	$	27,318

See accompanying notes to unaudited condensed consolidated financial statements.

Virco Mfg. Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

	Six Months Ended
	Nine Months Ended
	7/31/2025		7/31/2024
	10/31/2025		10/31/2024
	(In thousands)
Operating activities
Net income	$	109,~~918~~592	$	1827,~~973~~374
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	34,~~086~~630		24,~~716~~165
Non-cash lease expense (benefits)	2,780		(418)
Non-cash lease expense	4,114		302
Provision for credit losses	3045		3045
Amortization of debt issuance costs	68102		6481
Deferred income taxes	20(58)		~~(19)~~272
Stock-based compensation	~~114~~161		~~270~~333
Amortization of net actuarial gain for pension plans	(~~180~~270)		(75113)
Non-cash unrealized gain on investment	(~~207~~158)		(~~812~~1,058)
Surrender of life insurance policies	(~~300~~219)		(~~265~~719)
Loss on disposal of property and equipment	7		—
Changes in operating assets and liabilities:
Trade accounts receivable	(~~33,843~~840)		(325,~~934~~052)
Inventories	(42,~~219)~~559		~~(203)~~9,423
Income taxes	43,~~130~~739		31,~~607~~318
Prepaid expenses and other assets	3(396)		(1,~~454~~237)
Accounts payable and accrued liabilities	1(13,~~774~~026)		186,~~483~~286
Net cash (used in) provided by operating activities	(15,826)		7,963
Net cash provided by operating activities	9,982		41,420
Investing activities:
Investing activities
Purchases of property, plant and equipment	(35,~~816~~086)		(25,~~886~~365)
Proceeds from surrendering life insurance policies	300		145
Purchases of marketable securities in trust accounts	—		(1,285)
Net cash used in investing activities	(3,516)		(2,741)
Proceeds from sale of fixed assets	—		4
Financing activities:
Proceeds from sale of marketable securities in trust accounts	—		1,285
Proceeds from surrendering life insurance policies	119		719
Net cash used in investing activities	(4,967)		(4,642)
Financing activities
Borrowing from long-term debt	—		23,165
Repayment of long-term debt	(~~128~~192)		(23,~~288~~350)
Common stock repurchased	(4,000)		(1,499)
Tax withholding payments on share-based compensation	—		(412)
Payment of deferred financing costs	—		(50)
Cash dividends paid	(~~787~~1,181)		(~~653~~1,060)
Net cash used in financing activities	(45,~~915~~373)		(23,~~737~~206)
Net (decrease) increase in cash	(~~24,257~~358)		233,~~485~~572
Cash at beginning of period	~~26,867~~$	26,867	~~5,286~~$	5,286
Cash at end of period	$	226,~~610~~509	$	738,~~771~~858
Supplemental disclosures of cash flow information:
Property, plant and equipment acquired and not yet paid at end of period	$	~~716~~331	$	~~531~~350
Cash paid during the period for interest, net of interest income	$	~~265~~305	$	~~530~~506
Cash paid during the period for income taxes, net of refunds	$	104	$	27,~~405~~291
Noncash investment in right-of-use assets in exchange for a lease liability	$	—372	$	32,982

See accompanying notes to unaudited condensed consolidated financial statements.

Virco Mfg. Corporation

Unaudited Consolidated Statements of Changes in Stockholders' Equity

	Three-Month Period Ended July 31, 2025
	Three-Month Period Ended October 31, 2025
	Common Stock
In thousands, except share data	Shares	Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income ~~(Loss)~~		Total Stockholders' Equity
Balance at April 30, 2025	15,738,138	$	157	$	113,616	$	(8,528)	$	355	$	105,600
Net income	—	—		—		10,186		—		10,186
Cash dividends	—	—		—		(394)		—		(394)
Pension adjustments	—	—		—		—		(67)		(67)
Shares vested and others	23,003	—		—		—		—		—
Stock compensation expense	—	—		51		—		—		51
Stock repurchase	—	—		—		—		—		—
Balance at July 31, 2025	15,761,141	$	157	$	113,667	$	1,264	$	288	$	115,376
Net loss	—	—		—		(1,325)		—		(1,325)
Cash dividends	—	—		—		(395)		—		(395)
Pension adjustments	—	—		—		—		(68)		(68)
Shares vested and others	—	—		—		—		—		—
Stock compensation expense	—	—		47		—		—		47
Stock repurchase	—	—		—		—		—		—
Balance at October 31, 2025	15,761,141	$	157	$	113,714	$	(456)	$	220	$	113,635

	Three-Month Period Ended July 31, 2024
	Three-Month Period Ended October 31, 2024
	Common Stock
In thousands, except share data	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at April 30, 2024	16,207,612	$	162	$	120,048	$	(27,235)	$	(1,338)	$	91,637
Net income	—	—		—		16,833		—		16,833
Cash dividends	—	—		—		(326)		—		(326)
Pension adjustments	—	—		—		—		(19)		(19)
Shares vested and others	81,794	1		(412)		—		—		(411)
Stock compensation expense	—	—		98		—		—		98
Stock repurchase	—	—		—		—		—		—
Balance at July 31, 2024	16,289,406	$	163	$	119,734	$	(10,728)	$	(1,357)	$	107,812
Net income	—	—		—		8,401		—		8,401
Cash dividends	—	—		—		(407)		—		(407)
Pension adjustments	—	—		—		—		(9)		(9)
Shares vested and others	—	—		(1)		—		—		(1)
Stock compensation expense	—	—		63		—		—		63
Stock repurchase	—	—		—		—		—		—
Balance at October 31, 2024	16,289,406	$	163	$	119,796	$	(2,734)	$	(1,366)	$	115,859

	Six-Month Period Ended July 31, 2025
	Nine-Month Period Ended October 31, 2025
	Common Stock
In thousands, except share data	Shares	Amount		Additional Paid-in Capital		~~Retained Earnings (~~Accumulated Deficit)		Accumulated Other Comprehensive Income ~~(Loss)~~		Total Stockholders' Equity
Balance at January 31, 2025	16,087,082	$	161	$	117,549	$	(8,867)	$	422	$	109,265
Net income	—	—		—		109,~~918~~592		—		109,~~918~~592
Cash dividends	—	—		—		(~~787~~1,181)		—		(~~787~~1,181)
Pension adjustments	—	—		—		—		(~~134~~202)		(~~134~~202)
Shares vested and others	23,003	—		—		—		—		—
Stock compensation expense	—	—		~~114~~161		—		—		~~114~~161
Stock repurchase	(348,944)	(4)		(3,996)		—		—		(4,000)
Balance at July 31, 2025	15,761,141	$	157	$	113,667	$	1,264	$	288	$	115,376
Balance at October 31, 2025	15,761,141	$	157	$	113,714	$	(456)	$	220	$	113,635

	Six-Month Period Ended July 31, 2024
	Nine-Month Period Ended October 31, 2024
	Common Stock
In thousands, except share data	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholder's Equity
Balance at January 31, 2024	16,347,314	$	164	$	121,373	$	(29,048)	$	(1,310)	$	91,179
Net income	—	—		—		1827,~~973~~374		—		1827,~~973~~374
Cash dividends	—	—		—		(~~653~~1,060)		—		(~~653~~1,060)
Pension adjustments	—	—		—		—		(4756)		(4756)
Shares vested and others	81,794	1		(~~412~~413)		—		—		(~~411~~412)
Stock compensation expense	—	—		~~270~~333		—		—		~~270~~333
Stock repurchase	(139,702)	(2)		(1,497)		—		—		(1,499)
Balance at July 31, 2024	16,289,406	$	163	$	119,734	$	(10,728)	$	(1,357)	$	107,812
Balance at October 31, 2024	16,289,406	$	163	$	119,796	$	(2,734)	$	(1,366)	$	115,859

See accompanying notes to unaudited condensed consolidated financial statements.

VIRCO MFG. CORPORATION

Notes to ~~unaudited~~Unaudited Condensed Consolidated Financial Statements

~~July~~October 31, 2025

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements and are presented in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025 (“Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~July~~October 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2026. The balance sheet at January 31, 2025 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. All references to the “Company”, “we” and “our” refer to Virco Mfg. Corporation and its subsidiaries.

Note 2. Seasonality and Management Use of Estimates

The market for educational furniture is marked by extreme seasonality, with approximately 50% of the Company’s total sales typically occurring from June to August each year, the Company’s peak season. Hence, the Company typically builds and carries significant amounts of inventory during and in anticipation of this peak summer season to facilitate the rapid delivery requirements of customers in the educational market. This requires a large up-front investment in inventory, labor, storage and related costs as inventory is built in anticipation of peak sales during the summer months. If the capital required for this build-up exceeds cash available from operations, the Company has generally relied on third-party bank financing to meet cash flow requirements during the build-up period immediately preceding the peak season. In addition, the Company typically is faced with an overall higher accounts receivable balance during the peak season. This occurs for two primary reasons. First, accounts receivable balances typically increase during the peak season as shipments of products increase. Second, many customers during this period are educational institutions and government entities, which tend to pay accounts receivable slower than commercial customers.

The Company’s working capital requirements during and in anticipation of the peak summer season require management to make estimates and judgments that affect assets, liabilities, revenues and expenses, and related contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to market demand, labor costs and stocking inventory. Significant estimates made by management include, but are not limited to, valuation of inventory; deferred tax assets and liabilities; useful lives of property, plant and equipment; liabilities under pension, warranty and self-insurance; and the accounts receivable allowance for credit losses.

Note 3. Recently Issued Accounting Standards

New Accounting Pronouncements Recently Adopted

Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued this ASU to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 during the year ended January 31, 2025. Refer to Note 16 for required disclosures.

Recently Issued Accounting Pronouncements

ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued this ASU which provides a practical expedient to assume that the conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. This guidance is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. We do not expect that this guidance will have a material impact on our consolidated financial statements and disclosures.

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In November 2024, the FASB issued this ASU which requires a public entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. A public entity should apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact that this guidance will have on our consolidated financial statements and disclosures.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Tax Disclosures. In December 2023, the FASB issued this ASU which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. We do not expect that this guidance will have a material impact on our consolidated financial statements and disclosures.

The Company evaluates all ASUs issued by the Financial Accounting Standards Board ("FASB") for consideration of their applicability to our condensed consolidated financial statements. We have assessed all ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact.

Note 4. Revenue Recognition

The Company manufactures, markets and distributes a wide variety of school and office furniture to wholesalers, distributors, educational institutions and governmental entities. Revenue is recorded for promised goods or services when control is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.

The Company's sales generally involve a single performance obligation to deliver goods pursuant to customer purchase orders. Prices for our products are based on published price lists and customer agreements. The Company has determined that the performance obligations are satisfied at a point in time when the Company completes delivery per the customer contract. The majority of sales are free on board ("FOB") destination where the destination is specified per the customer contract and may include delivering the furniture into the classroom, school site or warehouse. Sales of furniture that are sold FOB factory are typically made to resellers of our product who in turn provide logistics to the ultimate customer. Once a product has been delivered per the shipping terms, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from the asset. The Company considers control to have transferred upon shipment or delivery in accordance with shipping terms because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset.

Sales are recorded net of discounts, sales incentives and rebates, sales taxes and estimated returns and allowances. The Company offers sales incentives and discounts through various regional and national programs to our customers. These programs include product rebates, product returns allowances and trade promotions. Variable consideration for these programs is estimated in the transaction price at contract inception based on current sales levels and historical experience using the expected value method, subject to constraint.

The Company generates revenue primarily by manufacturing and distributing products through resellers and direct-to-customers. Control transfers to both resellers and direct customers at a point in time when the delivery process is complete as determined by the corresponding shipping terms. Therefore, we do not consider them to be meaningfully different revenue streams given similarities in the nature of the products, performance obligation and distribution processes. Sales are predominately in the United States and to a similar class of customer. We do not manage or evaluate the business based on product line or any other discernable category.

Note 5. Inventories

Inventory is valued at the lower of cost or net realizable value (determined on a first-in, first-out basis (“FIFO”) and includes material, labor, and factory overhead. The Company records valuation adjustments for the excess cost of the inventory over its estimated net realizable value. Valuation adjustments for slow-moving and obsolete inventory involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company's financial condition or results of operations. Valuation adjustments for slow-moving and obsolete inventory are calculated using an estimated percentage applied to inventories based on a physical inspection of the product in connection with a physical inventory, a review of slow-moving products and component stage, inventory category, historical and forecasted consumption of sales, and consideration of active marketing programs. The market for educational furniture is traditionally driven by value, not style, and the Company has not typically incurred material obsolescence expenses. If market conditions are less favorable than those anticipated by management, additional valuation adjustments may be required. The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

Note 5. Inventories

Inventories are valued at the lower of cost or net realizable value (determined on a first-in, first-out basis (“FIFO”) and include material, labor, and factory overhead. The Company records valuation adjustments for the excess cost of the inventory over its estimated net realizable value. Valuation adjustments for slow-moving and obsolete inventory involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company's financial condition or results of operations. Valuation adjustments for slow-moving and obsolete inventory are calculated using an estimated percentage applied to inventories based on a physical inspection of the product in connection with a physical inventory, a review of slow-moving products and component stage, inventory category, historical and forecasted consumption of sales, and consideration of active marketing programs. The market for educational furniture is traditionally driven by value, not style, and the Company has not typically incurred material obsolescence expenses. If market conditions are less favorable than those anticipated by management, additional valuation adjustments may be required. The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

The following table presents a breakdown of the Company’s inventories:

7/31/2025

1/31/2025

7/31/2024

10/31/2025

1/31/2025

10/31/2024

(In thousands)

Finished goods

2321,~~317~~721

19,599

2317,~~498~~793

Work in process

2318,~~133~~517

21,357

2018,~~938~~137

Raw materials

1312,~~416~~849

14,691

1413,~~138~~018

Total inventories

5953,~~866~~087

55,647

5848,~~574~~948

Note 6. Leases

The Company has operating leases on real property, equipment, and automobiles, expiring at various dates through the fiscal year 2031. The Company determines if an arrangement is a lease at inception and assesses classification of the lease at commencement. The Company's lease terms include options to extend or terminate the lease only when it is reasonably certain that we exercise that option. All of the Company’s leases are classified as operating leases. The Company uses the implicit rate when readily determinable, or the incremental borrowing rate. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments using Company specific credit spreads. The Company’s lease terms include options to extend or terminate the lease only when it is reasonably certain that we will exercise that option. Lease expense for our operating leases is recognized on a straight-line basis over the lease term.

The Company has an operating lease for its corporate office and manufacturing and distribution facility located in Torrance, California, currently with a remaining lease term through September 2030. The Company leases equipment under a 5-year operating lease arrangement. The Company has the option of buying the assets at the end of the lease period at a price that does not result in the Company being reasonably certain of exercising the option. In addition, the Company leases trucks and automobiles under operating leases that include certain fleet management and maintenance services. Certain of the leases contain renewal or purchase options and require payment for property taxes and insurance. The Company records lease expense on a straight-line basis based on the contractual lease payments. The Company recognizes the present value of the future lease commitments as an operating lease liability, and a corresponding right-of-use asset (“ROU asset”), net of tenant allowances. Tenant improvements and related tenant allowances are recorded as a reduction to the ROU asset. The Company elected to account for leases with an original term of 12 months or less that do not contain a purchase option as short-term leases. Additionally, certain of the leases provide for variable payment for property taxes, insurance, and common area maintenance payments, among others. The Company recognizes variable lease expenses for these leases in the period incurred. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The quantitative information regarding our leases is as follows:

	Three Months Ended				Six Months Ended
	7/31/2025		7/31/2024		7/31/2025			7/31/2024
	(In thousands, except lease term and discount rate)
Operating lease cost	$	2,359	$	1,423	$	4,717		$	2,842
Short-term lease cost	112		130		230			234
Sublease income	(10)		(10)		(20)			(20)
Variable lease cost	109		690		382			618
Total lease cost	$	2,570	$	2,233	$	5,309		$	3,674
Other operating leases information:
Cash paid for amounts included in the measurement of lease liabilities					$	1,936		$	3,260
Right-of-use assets obtained in exchange for new lease liabilities					$	331		$	34,012
Weighted-average remaining lease term (years)					5.0			6.0
Weighted-average discount rate					9.83		%	9.78		%

	Operating Lease
For the year ending January 31,	(In thousands)
Remaining of 2026	$	3,450
2027	9,710
2028	9,447
2029	9,610
2030	9,945
Thereafter	6,832
Remaining balance of lease payments	48,994
Short-term lease liabilities	4,790
Long-term lease liabilities (a)	33,096
Total lease liabilities	37,886
Difference between undiscounted cash flows and discounted cash flows	$	11,108

The quantitative information regarding our leases is as follows:


	Three Months Ended				Nine Months Ended
	10/31/2025		10/31/2024		10/31/2025			10/31/2024
	(In thousands, except lease term and discount rate)
Operating lease cost	$	2,340	$	2,341	$	7,057		$	5,183
Short-term lease cost	135		172		365			406
Sublease income	(10)		(10)		(30)			(30)
Variable lease cost	705		4		1,087			622
Total lease cost	$	3,170	$	2,507	$	8,479		$	6,181

Other operating leases information:
Cash paid for amounts included in the measurement of lease liabilities					$	2,943		$	4,881
Right-of-use assets obtained in exchange for new lease liabilities					$	372		$	34,309
Weighted-average remaining lease term (years)					4.8			5.7
Weighted-average discount rate					9.84		%	9.80		%

Minimum future lease payments for operating leases in effect as of October 31, 2025, are as follows:


	Operating Leases
For the year ending January 31,	(In thousands)
Remaining of 2026	$	2,448
2027	9,728
2028	9,464
2029	9,616
2030	9,945
Thereafter	6,832
Remaining balance of lease payments	48,033

Short-term lease liabilities	6,389
Long-term lease liabilities (a)	31,467
Total lease liabilities	37,856

Difference between undiscounted cash flows and discounted cash flows	$	10,177

(a) On July 23, 2024, the Company entered into a new lease agreement (the “Lease”) with Starboard Distribution Center, LLC which extends the Company’s tenancy at its 560,000 sq. ft. office, manufacturing and warehouse facility in Torrance, California. The Lease extends the tenancy for 65 months, covering the period from May 1, 2025 through September 30, 2030. Under the Lease, the monthly base rent will be abated for the initial 5-month period from May 1, 2025 to September 30, 2025, then is set at $726,700 for October 1, 2025 through April 30, 2026, with subsequent increases of 3.5% every 12 months thereafter. The Lease also provides for a tenant improvement allowance of up to $1.7 million to be used by December 31, 2026. The Landlord has the right to terminate the Lease upon customary events of default. In connection with this lease agreement, in the second quarter ended July 31, 2024, the Company recorded approximately $33.0 million (the present value of the future lease commitments) as an operating lease liability, and a corresponding ROU asset.

Note 7. Debt

Outstanding balances for the Company’s long-term debt are as follows:

7/31/2025

1/31/2025

7/31/2024

10/31/2025

1/31/2025

10/31/2024

(In thousands)

Revolving credit line

—

Other

43,~~008~~944

4,136

4,~~261~~199

Total debt

43,~~008~~944

4,136

4,~~261~~199

Less current portion

~~263~~266

258

~~253~~256

Non-current portion

3,~~745~~678

3,878

43,~~008~~943

The Company and Virco Inc., its wholly-owned subsidiary (collectively, the “Borrowers”) have a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”). The Credit Agreement was amended numerous times since its origination in December 2011, most recently on ~~April~~December 95, 2025.

The Credit Agreement as currently in effect permits the Company to issue cash dividends or make payments with respect to the Company’s capital stock in an aggregate amount up to $8.0 million during any fiscal year, provided that no default shall have occurred or is continuing or would result from any such payment, and the Company must demonstrate pro forma compliance with a 12-month trailing ~~fixed~~Fixed ~~charge~~Charge ~~coverage~~Coverage ~~ratio~~Ratio ("FCCR") of not less than 1.20:1.00 as of the fiscal quarter immediately preceding the date of any such dividend or payment. The Credit Agreement also requires the Company to maintain a minimum ~~fixed charge coverage ratio~~FCCR, and contains numerous other covenants that limit under certain circumstances the ability of the Borrowers and their subsidiaries to, among other things, merge with or acquire other entities, incur new liens, incur additional indebtedness, sell assets outside of the ordinary course of business, enter into transactions with affiliates, or substantially change the general nature of the business of the Borrowers.

sell assets outside of the ordinary course of business, enter into transactions with affiliates, or substantially change the general nature of the business of the Borrowers.

In addition to the financial covenants, the Credit Agreement provides for customary events of default, subject to certain cure periods and other limitations. Substantially all of the Borrowers' accounts receivable are automatically and promptly swept to repay amounts outstanding under the Credit Agreement upon receipt by the Borrowers. Due to this automatic liquidating nature of the Credit Agreement, if the Borrowers breach any covenant, violate any representation or warranty, or suffer a deterioration in their ability to borrow pursuant to the borrowing base calculation, the Borrowers may not have access to cash liquidity unless provided by PNC at its discretion.

The other material terms of the Credit Agreement as currently in effect include the following: (i) a revolving line of credit with a stated Maximum Revolving Advance Amount that is subject to a borrowing base limitation and generally provides for advances of $up to 85% of eligible accounts receivable, plus a percentage equal to the lesser of 60% of the value of eligible inventory or 85% of the liquidation value of eligible inventory, plus $10.0 million from January through June of each year, minus undrawn amounts of letters of credit and reserves; (~~increasing~~ii) inventory tosublimit of $7035.0 million and assemble-to-ship ("ATS") inventory sublimit of $15.0 million during the months of ~~June~~May through August; and (iii) an equipment loan of $2.0 million. The Credit Agreement is secured by substantially all of the Borrowers’ personal property and certain of the Borrowers’ real property. The Credit Agreement is subject to certain prepayment penalties upon early termination. Prior to the maturity date, principal amounts outstanding under the Credit Agreement may be repaid and reborrowed at the option of the Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions, including reduced borrowings under the revolving line to less than or equal to $10.0 million for a period of 30 consecutive days during the fourth quarter of each fiscal year. The Credit Agreement also contains certain financial covenants, including covenants requiring a minimum FCCR and limits on capital expenditures.

~~through~~The ~~August)~~Company's ~~that~~revolving isline ~~subject to a borrowing base limitation and generally provides for advances~~ of upcredit towith ~~85%~~PNC ofis ~~eligible~~structured ~~accounts receivable, plus a percentage equal~~ to ~~the~~provide ~~lesser~~seasonal ofcredit ~~60%~~availability ofduring the ~~value~~Company's ofpeak ~~eligible~~summer ~~inventory~~season. orApproximately ~~85% of the liquidation value of eligible inventory, plus~~ $1516.06 million ~~from~~was ~~January~~available ~~through~~for ~~July~~borrowing as of ~~each year~~October 31, ~~minus~~2025. ~~undrawn~~The ~~amounts~~interest ofrate ~~letters~~is ofdetermined ~~credit~~as ~~and~~a ~~reserves;~~sum ~~(ii) inventory sublimit~~ of ~~$35.0 million~~the ~~and~~applicable ~~assemble-to-ship~~margin ~~("ATS")~~rate, ~~inventory~~which ~~sublimit~~is ~~of $15~~3.~~0 million~~00% ~~during~~from ~~the~~January ~~months of May~~ through ~~August;~~July and ~~(iii) an equipment loan of $~~2.~~0 million.~~50% ~~The~~from ~~Credit~~August ~~Agreement~~through isDecember, ~~secured~~plus ~~by substantially all of~~ the ~~Borrowers’~~Secured ~~personal~~Overnight ~~property~~Financing ~~and~~Rate ~~certain of the Borrowers’ real property~~("SOFR"). The ~~Credit~~Company ~~Agreement~~incurred isa ~~subject~~fee toon ~~certain prepayment penalties upon early termination of~~ the ~~Credit~~unused ~~Agreement.~~portion ~~Prior to the maturity date, principal amounts outstanding under the Credit Agreement may be repaid and reborrowed at the option~~ of the ~~Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions, including reduced borrowings under the~~ revolving line toof ~~less~~credit ~~than~~at ora ~~equal~~rate toof ~~$10.~~0.25%. ~~million~~The ~~for~~Company adid ~~period~~not ofhave 30an ~~consecutive~~outstanding ~~days~~amount ~~during~~under the ~~fourth quarter of each fiscal year. The~~ Credit Agreement ~~also contains certain financial covenants, including covenants requiring a minimum fixed charge coverage ratio and limits on capital expenditures. The Company was in compliance with its debt covenants~~ as of ~~July~~October 31, 2025.

The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season. Approximately $68.0 million was available for borrowing as of July 31, 2025. The interest rate is determined as a sum of the applicable margin rate, which is 3.00% from January through July and 2.50% from August through December, plus the Secured Overnight Financing Rate (SOFR). The Company did not have an outstanding amount under the Credit Agreement as of July 31, 2025. The Company also incurred a fee on the unused portion of the revolving line of credit at a rate of 0.25%. 14

On December 5, 2025, the Company entered into Amendment No. 7 to the Credit Agreement with PNC. Amendment No. 7 amended the Credit Agreement and the secured revolving line of credit provided to the Company by PNC to reflect the following material changes:

i.Modify the stock repurchase window, originally from February 1, 2025 to January 31, 2026, changed to November 1, 2024 to October 31, 2025 for the $7.5 million of permitted share repurchases that are excluded from a) the FCCR testing, b) the Payment Conditions governing stock repurchases, and c) the trailing twelve months ("TTM") $8 million aggregate limit on stock repurchases and dividends.

ii.Commencing with respect to the fiscal quarter ending October 31, 2025, modify the definition of Earnings Before Interest, Taxes, Depreciation, and Amortization as it relates to the FCCR testing to add back non-cash lease expense or subtract non-cash lease income for each TTM reporting period.

iii.Reduce the Revolving Line of Credit limit by $10 million, except for the months of October, December, and January. The maximum Revolving Line of Credit limit during June through August was reduced from $70 million to $60 million.

iv.Reduce the $15 million seasonal over-advance to $10 million and limit to the months of January through June (removing access in the month of July).

In connection with this amendment, the Company incurred fees totaling $20,000 which will be capitalized as deferred financing costs when paid.

On April 9, 2025, the Company entered into Amendment No. 6 to the Credit Agreement with PNC, which established a new category of permitted share repurchases in an amount up to $7.5 million, which was a new category in addition to the share repurchases otherwise permitted under the Credit Agreement. The share repurchases under the new category were required to occur during the fiscal year ending 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 Agreement. The permitted share repurchases under this new category were also not counted as “Restricted Payments” when calculating the Company’s compliance with the FCCR covenants in the Credit Agreement.

On November 22, 2024, the Company entered into Amendment No. 5 to Amended and Restated Revolving Credit and Security Agreement (“Amendment No. 5”) with PNC, with an effective date of October 1, 2024. Amendment No. 5 amended the Credit Agreement and the secured revolving line of credit provided to the Company by PNC to reflect the following material changes:

i.Reduced the facility fee on the unused portion of the revolving line of credit to 0.250% from 0.375% per annum, commencing October 1, 2024;

ii.Increased limits on permitted acquisitions (as defined in the Credit Agreement) from $5 million to $8 million during the term of the Credit Agreement;

iii.Increased limits on cash dividends and common stock repurchase payments from $5 million to $8 million in the aggregate during any fiscal year.

OnThe ~~April 9, 2025, the~~ Company ~~entered~~also ~~into~~carries ~~Amendment~~a ~~No.~~mortgage 6on toa ~~the~~manufacturing ~~Credit~~building ~~Agreement~~in ~~with PNC Bank~~Conway, ~~which~~Arkansas. ~~established~~The aoriginal ~~new~~note ~~category~~was ofdated ~~permitted~~August ~~share~~2017 ~~repurchases~~with ina anprincipal ~~amount~~balance upof to $7.5 .8 million, ~~which~~at isa infixed ~~addition~~rate toof ~~the dollar limits on permitted share repurchases under the Credit Agreement discussed above~~4.0% ~~The~~per ~~share repurchases under the new category must occur during the fiscal~~ year ~~ending January 31, 2026, may not occur while any Default or Event of Default exists or would result from such repurchases,~~ and ~~must~~20-year ~~be made solely from cash on hand and not from the proceeds of advances under the Credit Facility~~term. The ~~permitted~~outstanding ~~share~~amount ~~repurchases~~ under this ~~new~~note ~~category~~was ~~are~~approximately ~~also~~$3.9 ~~not~~million ~~counted~~ as ~~“Restricted~~of ~~Payments”~~October 31, ~~when calculating the Company’s compliance with the Fixed Charge Coverage Ratio covenants in the Credit Agreement~~2025.

~~The~~Management ~~Company~~believes ~~also~~that ~~carries~~the acarrying ~~mortgage~~value onof ~~its~~debt ~~manufacturing~~approximated ~~building~~fair invalue ~~Conway~~at October 31, ~~Arkansas.~~2025, ~~The~~as ~~original~~all ~~note~~of ~~was~~the ~~dated~~long-term ~~August~~debt ~~2017~~bears ~~with~~interest ~~a principal balance of $5.8 million,~~ at avariable ~~fixed~~rates ~~rate~~based ofon ~~4.0%~~prevailing ~~per~~market ~~year~~conditions, ~~and~~except ~~20-year~~the ~~term.~~mortgage ~~The~~for ~~outstanding~~the ~~amount~~manufacturing ~~under~~building ~~this~~in ~~note was approximately $4.0 million as of July 31~~Conway, ~~2025~~Arkansas.

Management believes that the carrying value of debt approximated fair value at July 31, 2025, as all of the long-term debt bears interest at variable rates based on prevailing market conditions, except the mortgage for the manufacturing building in Conway, Arkansas.

Note 8. Income Taxes

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. 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 carrybacks, tax-planning strategies, and results of recent operations, to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets. Valuation allowances of $~~216~~217,000, $236,000 and $218,000 as of ~~July~~October 31, 2025, January 31, 2025 and ~~July~~October 31, 2024, respectively, 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. There was noan ~~change~~increase in the valuation allowance of $1,000 for the three months ended ~~July~~October 31, 2025 and a decrease of $2019,000 for the ~~six~~nine months ended ~~July~~October 31, 2025. ~~The~~There ~~net~~was no change in the valuation allowance ~~for~~during the three months ~~and six months~~ ended ~~July~~October 31, 2024. ~~was~~The anvaluation ~~increase~~allowance ofdecreased $133,000 ~~and~~during ~~decrease~~the ofnine ~~$33~~months ended October 31,~~000,~~ ~~respectively~~2024.

For the three months ended July 31, 2025 and 2024, the effective income tax rates were 28.1% and 23.7%, respectively. For the six months ended July 31, 2025 and 2024, the effective income tax rates were 28.0% and 23.9%, respectively. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

The January 31, 2022 and subsequent fiscal years remain open for examination by the IRS and some state jurisdictions. The January 31, 2021 and subsequent fiscal years remain open for the remaining state jurisdictions. The Company is not currently under federal or state examination.

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States. FASB Topic 740, Income Taxes, requires the effects of tax law changes to be recognized in the period of enactment. As the legislation was signed into law before the close of the second quarter, the impacts are contemplated in our operating results for the six months ended July 31, 2025. Among other provisions, the OBBB repealed the capitalization of domestic research and development expenditures, extended bonus depreciation on fixed assets, and includes a reduced deduction rate on foreign-derived deduction eligible income and income from non-U.S. subsidiaries. We're still evaluating these provisions, but we do not expect them to have a material impact on our effective tax rate and deferred tax assets in the fiscal year ending January 31, 2026, or in future periods.

Note 9. Net Income per Share

Net income per share is calculated by dividing net income by the basic weighted-average number of common shares outstanding. The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended				Six Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	(In thousands, except per share data)
Net income	$	10,186	$	16,833	$	10,918	$	18,973
Weighted average shares of common stock outstanding - basic	15,741		16,214		15,749		16,305
Dilutive effect of common stock equivalents from equity incentive plans	2		1		1		—
Weighted average shares of common stock outstanding - diluted	15,743		16,215		15,750		16,305
Net income per share - basic	$	0.65	$	1.04	$	0.69	$	1.16
Net income per share - diluted	$	0.65	$	1.04	$	0.69	$	1.16

There were no anti-dilutive shares excluded from the computation of diluted earnings per share for the periods disclosed above.

For the three months ended October 31, 2025 and 2024, the effective income tax rates were 26.8% and 25.5%, respectively. For the nine months ended October 31, 2025 and 2024, the effective income tax rates were 28.2% and 24.4%, respectively. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States. FASB Topic 740, Income Taxes, requires the effects of tax law changes to be recognized in the period of enactment. As the legislation was signed into law before the close of the second quarter, the impacts are contemplated in our operating results for the nine months ended October 31, 2025. Among other provisions, the OBBB repealed the capitalization of domestic research and development expenditures, extended bonus depreciation on fixed assets, and reduced the deduction rate on foreign-derived deduction eligible income and income from non-U.S. subsidiaries. The Company is still evaluating these provisions, but we do not expect them to have a material impact on our effective tax rate and deferred tax assets in the fiscal year ending January 31, 2026, or in future periods.

Note 9. Net (Loss) Income per Share

Net (loss) income per share is calculated by dividing net income by the basic weighted-average number of common shares outstanding. The following table sets forth the computation of basic and diluted net (loss) income per share:


	Three Months Ended				Nine Months Ended
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands, except per share data)
Net (loss) income	$	(1,325)	$	8,401	$	9,592	$	27,374

Weighted average shares of common stock outstanding - basic	15,761		16,289		15,761		16,379
Dilutive effect of common stock equivalents from equity incentive plans	—		7		5		3
Weighted average shares of common stock outstanding - diluted	15,761		16,296		15,766		16,382

Net (loss) income per share - basic	$	(0.08)	$	0.52	$	0.61	$	1.67
Net (loss) income per share - diluted	$	(0.08)	$	0.52	$	0.61	$	1.67

There were 14,000 anti-dilutive shares excluded from the computation of diluted earnings per share for the three months ended October 31, 2025.

Note 10. Stock-Based Compensation

Stock Incentive Plan

Under the Company's 2019 Omnibus Equity Incentive Plan (the “2019 Plan”), the Company may grant an aggregate of up to 1,000,000 shares to its employees and non-employee directors in the form of restricted stock units, restricted stock awards and stock options. Restricted stock units and awards granted under the 2019 Plan are expensed ratably over the vesting period of the units and awards. The Company determines the fair value of its restricted stock units or awards and related compensation expense as the difference between the market value of the units or awards on the date of grant less the exercise price of the units or awards granted. During the ~~three~~nine months ~~and six months~~ ended ~~July~~October 31, 2025, the Company granted 23,003 awards, vested 16,066 shares according to their terms and forfeited 0zero shares under the 2019 Plan. As of ~~July~~October 31, 2025, there were approximately 498,856 shares available for future issuance under the 2019 Plan.

The following table summarizes the stock-based compensation expense related to restricted stock units and awards recognized in the Company's statements of income:

	Three Months Ended				~~Six~~Nine Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands)
Cost of goods sold	$	—	$	10—	$	—	$	38
Selling, general and administrative expenses	5147		8863		~~114~~161		~~232~~295
Total stock-based compensation expense	$	5147	$	9863	$	~~114~~161	$	~~270~~333

As of ~~July~~October 31, 2025, there was $~~156~~109,000 of unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized inover ~~one~~seven ~~month~~months.

Note 11. Retirement Plans

The Company and its subsidiaries cover certain employees under a noncontributory defined benefit retirement plan, entitled the Virco Employees’ Retirement Plan (the “Pension Plan”). As more fully described in the Annual Report on Form 10-K for the year ended January 31, 2025, benefit accruals under the ~~Employees~~Pension ~~Retirement~~ Plan were frozen effective December 31, 2003. There is no service cost incurred under the Pension Plan.

The Company also provides a supplementary retirement plan for certain key employees, the VIP Retirement Plan (the “VIP Plan”). As more fully described in the Annual Report on Form 10-K for the year ended January 31, 2025, benefit accruals under the VIP Plan were frozen since December 31, 2003. There is no service cost incurred under the VIP Plan.

In September 2025, the Company’s Board of Directors approved the termination of the VIP Plan. The termination became effective on November 1, 2025. The VIP Plan’s benefit obligation is expected to be settled by offering lump sum distributions to participants funded by the liquidation of assets held in a rabbi trust. Pension settlement charges related to the VIP Plan termination, which include the recognition of VIP Plan gains or losses recorded within accumulated other comprehensive income on the Company’s unaudited condensed consolidated balance sheets, are currently expected to be recognized during the fourth quarter of fiscal year 2027. The Company anticipates that the termination will not materially impact the Company's consolidated financial statements.

The following table summarizes the net periodic pension cost for the Pension Plan and the VIP Plan:

	Three Months Ended				~~Six~~Nine Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands)
Service cost	$	—	$	—	$	—	$	—
Interest cost	325		311		~~650~~975		~~622~~933
Expected return on plan assets	(208)		(~~169~~167)		(~~416~~624)		(~~338~~500)
Plan settlement	—		—		—		—
Amortization of prior service cost	—		—		—		—
Recognized net actuarial gain	(90)		(4038)		(~~180~~270)		(75113)
Benefit cost	$	27	$	~~102~~106	$	5481	$	~~209~~320

401(k) Retirement Plan

The Company’s 401(k) retirement plan, which covers all U.S. employees, allows participants to defer from 1% to 75% of their eligible compensation through a 401(k) retirement program. The plan includes Virco stock as one of the investment options. At ~~July~~October 31, 2025 and 2024, the plan held 1,~~097~~067,~~691~~754 shares and 1,~~154~~105,~~305~~376 shares of Virco stock, respectively. For the three months ended ~~July~~October 31, 2025 and 2024, the compensation costs incurred for employer match, which are paid in the form of Company stock, were $456,000 and $387,000 respectively. For the nine months ended October 31, 2025 and 2024, the compensation costs incurred for employer match, which are paid in the form of Company stock, were $1,470,000 and $1,165,000 respectively.

1617

were $469,000 and $337,000 respectively. For the six months ended July 31, 2025 and 2024, the compensation costs incurred for employer match, which are paid in the form of Company stock, were $1,014,000 and $778,000 respectively.

Note 12. Warranty Accrual

Effective February 1, 2014, the Company modified its warranty to a limited lifetime warranty. The modification is not anticipated to have a significant effect on warranty expense. Effective January 1, 2017, the Company modified the standard warranty offered on products sold after January 1, 2017 to provide specific warranty periods by product component, with no warranty period longer than ten years. The Company’s warranty is not a guarantee of service life, which depends upon events outside the Company’s control and may be different from the warranty period. The Company accrues an estimate of its exposure to warranty claims based upon both product sales data and an analysis of actual warranty claims incurred.

The following is a summary of the Company’s warranty-claim activity:

	Three Months Ended				~~Six~~Nine Months Ended
	7/31/2025		7/31/2024		7/31/2025		7/31/2024
	10/31/2025		10/31/2024		10/31/2025		10/31/2024
	(In thousands)
Beginning balance	$	500	$	500	$	500	$	500
Provision	3384		2160		76160		51111
Costs incurred	(3384)		(2160)		(76160)		(51111)
Ending balance	$	500	$	500	$	500	$	500

Note 13. Contingencies

The Company has a self-insured retention for product liability losses up to $250,000 per occurrence, workers’ compensation liability losses up to $250,000 per occurrence, general liability losses up to $50,000 per occurrence and automobile liability losses up to $50,000 per occurrence. The Company has purchased insurance to cover losses in excess of the self-insurance retention or deductible up to a limit of $30.0 million. The Company has obtained an actuarial estimate of its total expected future losses for liability claims and recorded a liability equal to the net present value.

The Company and its subsidiaries are defendants in various legal proceedings resulting from operations in the normal course of business. It is the opinion of management, in consultation with legal counsel, that the ultimate outcome of all such matters will not materially affect the Company’s financial position, results of operations or cash flows.

Note 14. Delivery Costs

For the three months ended ~~July~~October 31, 2025 and 2024, shipping and classroom delivery costs of approximately $105.04 million and $108.18 million, respectively, were included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of ~~income~~operations.

For the ~~six~~nine months ended ~~July~~October 31, 2025 and 2024, shipping and classroom delivery costs of approximately $1318.47 million and $1423.31 million, respectively, were included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of ~~income~~operations.

17Note 15. Property, Plant and Equipment, Net

~~Note 15.~~ Property, ~~Plant,~~plant and ~~Equipment,~~equipment ~~Net~~consists of the following:

Property, plant, and equipment consists of the following:



	10/31/2025		1/31/2025		10/31/2024
	(In thousands)
Land	$	3,731	$	3,731	$	3,731
Land improvements	706		706		697
Buildings and building improvements	52,050		52,030		51,950
Machinery and equipment	123,422		119,972		118,324
Leasehold improvements	649		657		523
Property, plant and equipment, gross	180,558		177,096		175,225
Less accumulated depreciation and amortization	(145,105)		(140,668)		(139,604)
Property, plant and equipment, net	$	35,453	$	36,428	$	35,621

	7/31/2025		1/31/2025		7/31/2024
	(In thousands)
Land	$	3,731	$	3,731	$	3,731
Land improvements	706		706		697
Buildings and building improvements	52,050		52,030		51,899
Machinery and equipment	122,538		119,972		116,284
Leasehold improvements	657		657		523
Property, plant and equipment, gross	179,682		177,096		173,134
Less accumulated depreciation and amortization	(143,562)		(140,668)		(138,154)
Property, plant and equipment, net	$	36,120	$	36,428	$	34,980

Depreciation and amortization expenses related to property, plant, and equipment recorded within cost of goods sold were $1.12 million and $1.1 million for the three months ended ~~July~~October 31, 2025 and 2024, respectively. Depreciation and amortization expenses related to property, plant, and equipment recorded within selling, general, and administrative expenses were $0.54 million and $0.3 million for the three months ended ~~July~~October 31, 2025 and 2024, respectively.

Depreciation and amortization expenses related to property, plant, and equipment recorded within cost of goods sold were $2.3.5 million and $23.12 million for the ~~six~~nine months ended ~~July~~October 31, 2025 and 2024, respectively. Depreciation and amortization expenses related to property, plant, and equipment recorded within selling, general, and administrative expenses were $01.81 million and $01.60 million for the ~~six~~nine months ended ~~July~~October 31, 2025 and 2024, respectively.

Note 16. Segment Information

The Company operates in one segment and has one reportable segment. The Company determines operating segments based on how its Chief Operating Decision Maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. The Company’s CODM is a group of individuals comprised of our senior executives, who regularly review the Company’s operating results on a consolidated basis.

The Company’s CODM regularly reviews financial information presented on a consolidated basis. The CODM uses consolidated revenue, gross profit and net income to allocate operating and capital resources and assess performance by comparing actual results to historical results and previously forecasted financial information. The Company’s measure of segment assets is reported on the consolidated balance sheets as total assets.

Note 17. Subsequent Events

OnIn September 2, 2025, the Company’s Board of Directors ~~declared~~approved athe ~~cash~~termination ~~dividend~~of ~~for~~the VIP Plan. The termination became effective on November 1, 2025. Pension settlement charges related to the ~~Company’s~~VIP ~~second~~Plan ~~fiscal~~termination are currently expected to be recognized during the fourth quarter of fiscal year 2027. See Note 11.

~~$0.025~~On onDecember ~~each outstanding share of common stock. The dividend is payable on October 10~~4, 2025 ~~to stockholders of record of the common stock as of the close of business on September 19~~, ~~2025. While~~ the Company’s ~~currently intends to pay future dividends on a quarterly basis, following review and approval by the~~ Board of Directors, ~~the~~declared ~~declaration~~a ~~and~~cash ~~payment~~dividend offor ~~future dividends, as well as~~ the ~~amounts thereof, are subject to the discretion of the Board as well as restrictive covenants in the~~ Company’s ~~lending~~fourth ~~agreements.~~fiscal ~~There~~quarter ~~can~~of ~~be no assurance that the Company will declare and pay dividends in future periods.~~

18$0.025 on each outstanding share of common stock. The dividend is payable on January 9, 2026 to stockholders of record of the common stock as of the close of business on December 19, 2025. While the Company currently intends to pay future dividends on a quarterly basis, following review and approval by the Board of Directors, the declaration and payment of future dividends, as well as the amounts thereof, are subject to the discretion of the Board as well as restrictive covenants in the Company’s lending agreements. There can be no assurance that the Company will declare and pay dividends in future periods.

On December 5, 2025, the Company executed Amendment No. 7 to the Restated Credit Agreement. See Note 7.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Overview

The Company’s core market for education furniture, fixtures, and equipment ("FF&E") is marked by extreme seasonality. Typically, the Company recognizes approximately 50% of its total annual revenue in the months of June, July, and August. Incoming orders follow a similar cycle, with the bulk of orders arriving approximately 4-6 weeks preceding the summer delivery season.

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States. FASB Topic 740, Income Taxes, requires the effects of tax law changes to be recognized in the period of enactment. As the legislation was signed into law before the close of the second quarter, the impacts are contemplated in ~~our~~the Company's operating results for the ~~six~~nine months ended ~~July~~October 31, 2025. Among other provisions, the OBBB repealed the capitalization of domestic research and development expenditures, extended bonus depreciation on fixed assets, and ~~includes a~~ reduced the deduction rate on foreign-derived deduction eligible income and income from non-U.S. subsidiaries. These provisions are not expected to have a material impact to ~~our~~the Company's effective tax rate and deferred tax assets in fiscal year ending January 31, 2026 and future periods.

During the three months and ~~six~~nine months ended ~~July~~October 31, 2025, the Company experienced a decrease in net ~~revenue~~sales of approximately 1542.13% and 1827.90%, respectively, compared to ~~last~~the same periods in the prior fiscal year. In the same periods last year, the Company benefited from a large series of one-time, disaster recovery counter-seasonal shipments that resulted in approximately $46 million of additional shipments for the three months ended ~~July~~October 31, 2024 and approximately $1319 million for the ~~six~~nine months ended ~~July~~October 31, 2024. These deliveries positively affected the Company’s traditional cycle in the prior year, with positive impacts on production, overhead absorption, accounts receivable, collections, and reductions in inventory, as well as lower borrowings to support that inventory. Excluding this one-time event, net sales for the three months and nine months ended October 31, 2025 decreased approximately 38.3% and 22.1%, respectively. Management believes that the traditional seasonal cycle for school furniture and the Company's ability to service that seasonal cycle have returned to its pre-pandemic normal.

The current dynamic macroeconomic environment and uncertainty surrounding the government’s budget and spending levels have adversely affected the demand for ~~our~~the ~~products~~Company's school furniture. Reflecting the absence of ~~these~~last year's unusual disaster recovery counter-seasonal orders as of ~~July~~October 31, 2025, the Company’s shipments plus backlog was approximately 25.8% lower than as of the same date last year. Management has moderated production levels and will continue to monitor incoming order rates in pursuit of an appropriate balance between on-time summer deliveries and inventory investment. Order backlog at October 31, 2025 declined slightly to approximately $26 million compared to $27 million in the prior year. The Company believes that the majority of the current backlog will be delivered and recognized as revenue during the ~~third~~fourth quarter of the current fiscal year.

As discussed in the Risk Factors section of the Company’s Form 10-K for the fiscal year ended January 31, 2025, the Company’s recent revenue growth in fiscal 2025 and 2024 was partly a result of the delayed recovery from COVID-related school closures and subsequent supply-chain disruptions. Management cautions that future growth rates are unlikely to match those of the past several years. As with the unpredictable outcomes of school closures, supply chain disruptions, and school funding decisions, 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. Management intends to position the Company to respond to these uncertainties by continuing to reinvest in operating systems, employee training, and customer development and retention. Management estimates that more than 85% of public school funding and virtually all bond-funded new-school construction derives from state and local sources.

In recent months there have been significant changes and proposed changes to U.S. trade policies, including significant tariffs on imports from China, Canada, and other countries. These actions, and potential retaliatory responses, could result in revenue reduction, cost increases, and disruptions to supply chains and Company logistics. The Company is responding to these uncertainties in a similar way as it did with COVID-related school closures and supply chain disruptions. The Company is reinforcing its domestic capabilities and relationships in the belief that strong domestic suppliers to robustly funded, essential domestic institutions like schools, will ultimately benefit as these macro-level forces move toward a new equilibrium. This was the pattern of the post-COVID recovery, which lagged the triggering events by about two years. Management is not predicting this result but noting that global uncertainties can offer opportunities as well as challenges for domestically-focused suppliers like Virco.

The short- and mid-term impacts of trade uncertainties could adversely affect the Company’s operating results and financial condition. For more information on risks to the Company’s business caused by the recent changes in macro-economic ~~conditions, please see Part 1, Item 1A. “Risk Factors—Industry and Economic Risks” included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.~~

Three Months Ended July 31, 2025

For the three months ended July 31, 2025, the Company earned a net income of $10.2 million on sales of $92.1 million, compared to net income of $16.8 million on sales of $108.4 million in the same period of the prior year. Sales for the three months ended July 31, 2025 decreased by approximately $16.3 million or 15.1%, compared to the prior year. Second quarter revenue in the prior year was boosted by the previously-noted disaster recovery order, which contributed approximately $4 million in shipments in the prior year. The remaining decrease was driven by the current dynamic macroeconomic environment and uncertainty surrounding the government’s budget and spending levels, which adversely affected the demand for our products.

Cost of sales was 55.6% for the quarter ended July 31, 2025, compared to 53.7% for the same quarter ended last year. Gross margin for the second quarter was 44.4% compared to 46.3% in the prior year. The decrease in gross margin was attributable to a slight decline in the proportion of orders delivered with full service. These orders carry higher margins than orders with simple delivery.

Selling, general and administrative expenses ("SG&A") as a percentage of sales for the three months ended July 31, 2025 was 27.7% compared to 26.1% the same period last year. The increase in SG&A was primarily due to higher delivery costs.

The Company holds equity securities in a Rabbi Trust to fund benefits under its VIP Pension Plan. The Company recorded approximately $1.0 million of unrealized loss and $0.6 million of unrealized gain during the three months ended July 31, 2025 and 2024, respectively.

Net interest expense was $0.2 million for the three months ended July 31, 2025, compared to $0.3 million for the same period last year. The decrease was attributable to less demand for seasonal working capital and related lower borrowings under the Company’s credit facility with PNC Bank.

For the three months ended July 31, 2025 and 2024, the effective income tax rates were 28.1% and 23.7%, respectively. The change in effective tax rates was due to a change in the forecasted mix of income before actual federal and state income taxes and estimated permanent differences. The OBBB did not have a material impact on our effective income tax rate for the three months ended July 31, 2025.

Six Months Ended July 31, 2025

For the six months ended July 31, 2025, the Company earned a net income of $10.9 million on sales of $125.8 million, compared to net income of $19.0 million on sales of $155.2 million in the same period of the prior year. Sales for the fiscal year decreased by approximately $29.3 million or 18.9%, compared to the prior year. Fiscal year to date revenue in the prior year was boosted by the previously-noted disaster recovery order, which contributed approximately $13 million in shipments in the prior year. The remaining decrease was driven by the current dynamic macroeconomic environment and uncertainty surrounding the government’s budget and spending levels, which adversely affected the demand for our products.

Cost of sales was 54.8% for the six months ended July 31, 2025, compared to 54.5% for the same period ended last year. Gross margin for the six months ended July 31, 2025 was 45.2% compared to 45.5% in the prior year. The decrease in gross margin was attributable to a slight decline in the proportion of orders delivered with full service. These orders carry higher margins than orders with simple delivery.

SG&A for the six months ended July 31, 2025 was 33.1% compared to 29.5% the same period last year. The increase in SG&A was primarily due to higher delivery costs.

The Company holds equity securities in a Rabbi Trust to fund benefits under its VIP Pension Plan. The Company recorded approximately $0.2 million and $0.8 million of unrealized gain during the six months ended July 31, 2025 and 2024, respectively.

Net interest expense was $0.3 million for the six months ended July 31, 2025, compared to $0.5 million for the same period last year. The decrease was attributable to less demand for seasonal working capital and related lower borrowings under the Company’s credit facility with PNC Bank.

For the six months ended July 31, 2025 and 2024, the effective income tax rates were 28.0% and 23.9%, respectively. The change in effective tax rates was due to a change in the forecasted mix of income before actual federal and state income taxes and estimated permanent differences. The OBBB did not have a material impact on our effective income tax rate for the six months ended July 31, 2025.

conditions, please see Part 1, Item 1A. “Risk Factors—Industry and Economic Risks” included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Three Months Ended October 31, 2025

For the three months ended October 31, 2025, the Company incurred a net loss of $1.3 million on sales of $47.6 million, compared to net income of $8.4 million on sales of $82.6 million in the same period of the prior year. Sales for the three months ended October 31, 2025 decreased by approximately $35.0 million or 42.3%, compared to the prior year. Third quarter sales in the prior year was boosted by the previously-noted disaster recovery order, which contributed approximately $6 million in shipments. The remaining decrease was driven by the current dynamic macroeconomic environment and uncertainty surrounding the government’s budget and spending levels, which adversely affected the demand for the Company's products.

Cost of goods sold was 62.0% of net sales for the quarter ended October 31, 2025, compared to 55.6% for the same quarter ended last year. Gross margin for the third quarter was 38.0% compared to 44.4% in the prior year. Gross margin declined in the current period primarily due to lower sales volume combined with a decline in production levels, partially offset by a slight reduction in manufacturing spending. The Company reduced production levels in order to maintain control over inventory levels.

Selling, general and administrative expenses ("SG&A") for the three months ended October 31, 2025 decreased by $5.8 million. The decrease in SG&A expenses was primarily due to lower variable selling expenses related to the overall decline in sales volume. SG&A expenses as a percentage of sales for the three months ended October 31, 2025 were 41.5% compared to 30.9% in the same period last year. This was primarily due to lower sales volume in relation to fixed SG&A costs. Since a significant portion of SG&A expense does not fluctuate with sales volume, SG&A increased as a percentage of sales.

The Company holds equity securities in a rabbi trust to fund benefits under its VIP Retirement Plan (the "VIP Plan"). The Company recorded approximately $49,000 of unrealized loss and $246,000 of unrealized gain during the three months ended October 31, 2025 and 2024, respectively.

For the three months ended October 31, 2025 and 2024, the effective income tax rates were 26.8% and 25.5%, respectively. The change in effective tax rates was due to a change in the forecasted mix of income before actual federal and state income taxes and estimated permanent differences. The OBBB did not have a material impact on the Company's effective income tax rate for the three months ended October 31, 2025.

Nine Months Ended October 31, 2025

For the nine months ended October 31, 2025, the Company earned a net income of $9.6 million on sales of $173.5 million, compared to net income of $27.4 million on sales of $237.8 million in the same period of the prior year. Sales for the fiscal year decreased by approximately $64.3 million or 27.0% compared to the prior year. Fiscal year to date sales in the prior year was boosted by the previously-noted disaster recovery order, which contributed approximately $19 million in shipments. The remaining decrease was driven by the current dynamic macroeconomic environment and uncertainty surrounding the government’s budget and spending levels, which adversely affected the demand for the Company's products.

Cost of goods sold was 56.8% for the nine months ended October 31, 2025, compared to 54.9% for the same period ended last year. Gross margin for the nine months ended October 31, 2025 was 43.2% compared to 45.1% in the prior year. Gross margin declined in the current period primarily due to lower sales volume combined with a decline in production levels, partially offset by a slight reduction in manufacturing spending. The Company reduced production levels in order to maintain control over inventory levels.

SG&A for the nine months ended October 31, 2025 decreased by $9.9 million. The decrease in SG&A expenses was primarily due to lower variable selling expenses related to the overall decline in sales volume. SG&A expenses as a percentage of sales for the nine months ended October 31, 2025 were 35.4% compared to 30.0% in the same period last year. This was primarily due to lower sales volume in relation to fixed SG&A costs. Since a significant portion of SG&A expense does not fluctuate with sales volume, SG&A increased as a percentage of sales.

The Company holds equity securities in a rabbi trust to fund benefits under its VIP Plan. The Company recorded approximately $0.2 million and $1.1 million of unrealized gain during the nine months ended October 31, 2025 and 2024, respectively.

For the nine months ended October 31, 2025 and 2024, the effective income tax rates were 28.2% and 24.4%, respectively. The change in effective tax rates was due to a change in the forecasted mix of income before actual federal and state income taxes and estimated permanent differences. The OBBB did not have a material impact on the Company's effective income tax rate for the nine months ended October 31, 2025.

Liquidity and Capital Resources

The market for education furniture is extremely seasonal and approximately 50% of the Company's annual sales volume is shipped in the months of June through August of each year. The Company traditionally manufactures large quantities of inventory during the first and second quarters of each fiscal year in anticipation of seasonally high summer shipments. In addition, the Company finances a large balance of accounts receivable during the peak season.

Accounts Receivable decreased by $914.24 million at ~~July~~October 31, 2025 compared to last year. The change is primarily due to a decrease in shipments (as discussed above under “Overview”) ~~and offset slightly by improved collections~~.

Inventory increased by $14.31 million at ~~July~~October 31, 2025 compared to last year. The ~~slight~~ increase is primarily driven by ~~higher~~increased ~~material~~ costs, ~~and~~ offset slightly by decreased production ~~hours~~levels during the year.

Accrual basis capital expenditures for the ~~six~~nine months ended ~~July~~October 31, 2025 were $23.87 million compared to $35.14 million for the same period last year. Capital expenditures are being financed through the Company's operating cash flow and restricted to not exceed $8.0 million per year by covenant.

OnAs ~~April~~a 9,result ~~2025~~of materially improved profitability in recent years, the Company ~~entered~~had ~~into~~approximately ~~Amendment No~~$26.5 6million toand ~~the~~$38.9 ~~Credit~~million ~~Agreement~~in ~~with~~cash ~~PNC~~at ~~Bank~~October 31, ~~which~~2025 ~~established~~and a2024, ~~new~~respectively. ~~category~~The ofCompany ~~permitted~~uses ~~share~~its ~~repurchases~~cash inflow angenerated ~~amount~~from upoperations to ~~$7.5~~fund ~~million~~capital expenditures, ~~which~~quarterly iscash individends ~~addition~~and tostock ~~the~~repurchases. ~~dollar~~For ~~limits~~the onnine ~~permitted~~months ~~share~~ended ~~repurchases~~October ~~under~~31,2025, the ~~Credit~~Company ~~Agreement~~spent ~~discussed above~~$5.1 ~~The~~million ~~share~~in ~~repurchases~~capital ~~under~~expenditures, ~~the~~issued ~~new~~$1.2 ~~category~~million ~~must~~of ~~occur~~cash ~~during~~dividends ~~the~~and ~~fiscal~~spent ~~year~~$4.0 ~~ending~~million ~~January~~to ~~31,~~repurchase ~~2026~~348,944 ~~may~~shares ~~not~~of ~~occur~~its ~~while~~common ~~any~~stock. ~~Default~~As ~~or Event~~ of ~~Default~~October 31, ~~exists or would result from such repurchases~~2025, ~~and~~$7.2 ~~must~~million bewas ~~made~~authorized ~~solely~~by ~~from~~the ~~cash~~Board ~~on hand~~ and ~~not~~available ~~from~~for ~~the~~repurchase ~~proceeds~~ of ~~advances~~shares ~~under~~by the ~~Credit~~Company, ~~Facility.~~subject ~~The~~to ~~permitted~~the ~~share~~restrictions on repurchases under ~~this~~its ~~new~~Credit ~~category~~Agreement ~~are~~with ~~also~~PNC ~~not~~Bank, ~~counted~~National asAssociation ~~“Restricted~~("PNC"). ~~Payments”~~The ~~when calculating the~~ Company’s ~~compliance~~may ~~with~~elect ~~the~~to ~~Fixed~~opportunistically ~~Charge~~purchase ~~Coverage~~shares ~~Ratio~~based ~~covenants~~on inexcess ~~the~~cash ~~Credit~~generation ~~Agreement.~~and ~~See~~share ~~Note~~price 7considerations.

~~For~~During the ~~six~~quarter ~~months~~ ended ~~July~~ October 31, 2025, the Company’s ~~spent~~Board ~~$4.0~~of ~~million~~Directors toapproved ~~repurchase~~the ~~348,944~~termination ~~shares~~ of ~~its~~the ~~common~~VIP ~~stock.~~Plan, Asa ofsupplemental ~~July 31,~~retirement ~~2025,~~plan $7for certain key employees.2 ~~million~~This decision was ~~authorized~~part byof the ~~Board~~Company's ongoing efforts to reduce benefit obligations and ~~available~~ongoing ~~for~~administrative ~~repurchase~~costs. ofThe ~~shares~~termination is expected to be settled through lump sum distributions to participants funded by the ~~Company~~liquidation of assets held in a rabbi trust, ~~subject~~which are expected to occur during the ~~restrictions~~fourth onquarter ~~repurchases~~of ~~under~~fiscal ~~its~~year ~~Credit~~2027. ~~Agreement~~Management ~~with~~anticipates ~~PNC~~these ~~Bank.~~distributions ~~The~~will not materially impact the Company's ~~may~~current ~~elect~~and tolong-term ~~opportunistically~~liquidity ~~purchase~~and ~~shares~~that ~~based~~the ontermination ~~excess~~will ~~cash~~not ~~generation~~materially ~~and~~impact ~~share~~the ~~price~~Company's ~~considerations.~~consolidated financial statements.

~~Based~~On onApril 9, 2025, the Company’s ~~current~~entered ~~projections~~into Amendment No. 6 to the Credit Agreement with PNC, ~~raw~~which ~~material~~established ~~costs~~a ~~and~~new ~~its~~category ~~ability~~of topermitted ~~introduce~~share ~~price~~repurchases ~~increases~~in an amount up to $7.5 million, ~~management~~which ~~believes~~was ita ~~will~~new ~~maintain~~category ~~compliance~~in ~~with~~addition ~~its~~to ~~financial~~the ~~covenants~~share repurchases under the Credit Agreement,. ~~although~~The ~~risks~~share ~~and~~repurchases ~~uncertainties~~under ~~remain~~the new category were required to occur during the fiscal year ending January 31, ~~such~~2026, asmay ~~changes~~not inoccur ~~economic~~while ~~conditions~~any Default or Event of Default exists or would result from such repurchases, ~~changing~~and ~~raw~~must ~~material~~be ~~costs~~made solely from cash on hand and ~~supply~~not ~~chain~~from ~~challenges~~the proceeds of advances under the Credit Agreement. The ~~Company~~permitted ~~was~~share inrepurchases under this new category were also not counted as “Restricted Payments” when calculating the Company’s compliance with ~~its~~the ~~debt~~Fixed Charge Coverage Ratio ("FCCR") covenants asin ofthe ~~July 31,~~Credit ~~2025~~Agreement.

~~The~~On ~~Company~~December ~~believes~~5, ~~that~~2025, ~~cash~~the ~~flows~~Company ~~from~~entered ~~operations,~~into ~~together~~Amendment ~~with~~No. ~~the~~7 ~~Company's~~to ~~unused~~the ~~borrowing~~Credit ~~capacity~~Agreement with PNC. ~~Bank~~Amendment ~~will~~No. be7 ~~sufficient~~amended tothe ~~fund~~Credit Agreement and the ~~Company's~~secured ~~debt~~revolving ~~service~~line ~~requirements,~~of ~~capital~~credit ~~expenditures~~provided ~~and~~to ~~working~~the ~~capital~~Company ~~needs~~by ~~for~~PNC to reflect the ~~next~~following ~~twelve~~material ~~months.~~changes:

i.Modify the repurchase window, originally from February 1, 2025 to January 31, 2026, changed to November 1, 2024 to October 31, 2025 for the $7.5 million of permitted share repurchases that are excluded from a) the FCCR testing, b) the Payment Conditions governing stock repurchases, and c) the trailing twelve months ("TTM") $8 million aggregate limit on stock repurchases and dividends.

iv.Reduce the $15 million seasonal over-advance to $10 million and limit to the months of January through June (removing access in the month of July).

In connection with this amendment, the Company incurred fees totaling $20,000 which will be capitalized as deferred financing costs when paid.

Based on the Company’s current projections, raw material costs and its ability to introduce price increases, management believes it will maintain compliance with its financial covenants under the Credit Agreement, although risks and uncertainties remain, such as changes in economic conditions, changing raw material costs and supply chain challenges. The Company did not have an outstanding amount under the Credit Agreement as of October 31, 2025.

The Company believes that cash flows from operations and cash on hand, together with the Company's unused borrowing capacity with PNC, will be sufficient to fund the Company's debt service requirements, capital expenditures and working capital needs for the next twelve months.

Off Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

The Company's critical accounting policies and estimates are outlined in its Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Forward-Looking Statements

From time to time, including in this Quarterly Report on Form 10-Q for the quarterly period ended ~~July~~October 31, 2025, the Company or its representatives have made and may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, without limitation, reports to stockholders, press releases, oral statements made with the approval of an authorized executive officer of the Company and filings with the Securities and Exchange Commission ("SEC"). The words or phrases “anticipates,” “expects,” “will continue,” “believes,” “estimates,” “projects,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The results contemplated by the Company's forward-looking statements are subject to certain risks and uncertainties that could cause actual results to vary materially from anticipated results, including without limitation, availability of funding for educational institutions, availability and cost of materials, availability and cost of labor, demand for the Company's products, competitive conditions affecting selling prices and margins, capital costs and general economic conditions. Such risks and uncertainties are discussed in more detail in the Company's Form 10-K for the fiscal year ended January 31, 2025, including under the caption "Risk Factors".

The Company's forward-looking statements represent its judgment only on the dates such statements were made. By making any forward-looking statements, the Company assumes no duty to update them to reflect new, changed or unanticipated events or circumstances.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is therefore not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its Principal Executive Officer along with its Principal Financial Officer, of the effectiveness of the design and operation of ~~our~~the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of ~~July~~October 31, 2025. Based upon the foregoing, the Company's Principal Executive Officer along with the Company's Principal Financial Officer concluded that the Company's disclosure controls and procedures as of such date were effective to ensure that the information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Company management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Company management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the fiscal quarter covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.24

PART II — Other Information

Virco Mfg. Corporation

Item 1. Legal Proceedings

The Company is a party to various legal actions arising in the ordinary course of business which, in the opinion of the Company, are not material in that management either expects that the Company will be successful on the merits of the pending cases or that any liabilities resulting from such cases will be substantially covered by insurance. While it is impossible to estimate with certainty the ultimate legal and financial liability with respect to these actions, management believes that the aggregate amount of such liabilities will not be material to the results of operations, financial position, or cash flows of the Company.

Item 1A. Risk Factors

You should carefully consider and evaluate the information in this Quarterly Report and the risk factors set forth under the caption “Item 1A. Risk Factors” in ~~our~~the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025 (the “Form 10-K”), which was filed with the SEC on April 14, 2025. The risk factors associated with ~~our~~the Company's business have not materially changed compared to the risk factors disclosed in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

~~Purchases of Equity Securities by the Issuer and Affiliated Purchasers~~None.

The following table provides the repurchases of our common stock during the fiscal quarter ended July 31, 2025:

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)
May 2025	—	$	—	—	$	7,190,210
June 2025	—	—		—	$	7,190,210
July 2025	—	—		—	$	7,190,210
Total	—			—
(a) The average price paid per share includes any broker commissions.
(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. 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. The actual dollar value of shares that may be repurchased in any fiscal year plus cash dividends during such fiscal year is also limited under our Credit Agreement with PNC Bank, as further discussed above under “Note 7. Debt” to our Condensed Consolidated Financial Statements.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the fiscal quarter ended ~~July~~October 31, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

ExhibitNumber			Document
10.1			Amendment No. 7 to Amended and Restated Revolving Credit and Security Agreement, effective as of December 5, 2025, by and among Virco Mfg. Corporation and Virco, Inc., as borrowers, and PNC Bank, National Association, as lender and administrative agent, and form of Revolving Credit Note dated December 5, 2025.
31.1			Certification of Robert A. Virtue, Chief Executive Officer, pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of Bassey Yau, Senior Vice President, Finance, pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS — XBRL Instance Document.

Exhibit 101.SCH — XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL — XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB — XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE — XBRL Taxonomy Extension Presentation Linkbase Document.

2425

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VIRCO MFG. CORPORATION
Date: September 5, 2025	By:	/s/ Bassey Yau
Date: December 8, 2025	By:	/s/ Bassey Yau
		Bassey Yau
		Senior Vice President — Finance
		(Principal Financial Officer)

2526

Filing Compare · VIRCO MFG CORPORATION