Virco Manufacturing Corporation VIRC reported mixed second-quarter fiscal 2024 (ended July 31, 2024) results, wherein earnings surpassed the Zacks Consensus Estimate but sales missed the same. Following the results, the company's shares lost 9.3% on Sept. 09.
On a year-over-year basis, the top and the bottom lines increased. This was primarily driven by higher factory output and improved operating efficiencies. A large counter-seasonal disaster recovery order also contributed to the positive results. This order is now blending into the company’s usual seasonal delivery pattern, which peaks during the second and third quarters when schools are closed.
Although order rates declined slightly with the progress of summer, Shipments plus Backlog remained higher compared to last year. The company is confident in its ability to adapt to these changes. Its strong financial position supports the ongoing investments in new manufacturing equipment and service expansions. VIRC is well-positioned to seize unexpected opportunities as the market adjusts to a new post-pandemic phase.
Going forward, the company aims to seek potential acquisition opportunities to expand and strengthen its current business capabilities. Also, along with driving its prospects, Virco expects to add shareholder value through quarterly dividends and share repurchases.
Delving Deeper
The company reported adjusted earnings of $1.04 per share, which surpassed the Zacks Consensus Estimate of $1.00 by 4%. In the last reported quarter, it reported adjusted earnings of 95 cents per share.
Virco Manufacturing Corporation Price, Consensus and EPS Surprise
Virco Manufacturing Corporation price-consensus-eps-surprise-chart | Virco Manufacturing Corporation Quote
Net sales of $108.4 million missed the consensus mark of $115.9 million by 6.5% but grew 1% from the prior-year quarter’s level.
Operating Highlights
During the fiscal second quarter, Virco’s gross profit increased 3.4% year over year to $50.2 million. The gross margin expanded 100 basis points (bps) to 46.3% from 45.3% a year ago.
Selling, general and administrative expenses, as a percentage of sales, increased 60 bps to 26.1% from 25.5% reported a year ago. The uptick in operating expenses stemmed from a modest increase in full-service orders and the associated installation costs.
The company reported an operating profit of $21.9 million compared with $21.2 million in the prior-year quarter.
Financials
At the end of the fiscal second-quarter, Virco had cash of $0.8 million, down from $5.3 million at fiscal 2023-end. As of July 31, long-term debt (less current portion) was $4 million, slightly down from $4.1 million at fiscal 2023-end.
At the end of second-quarter fiscal 2024, the company’s inventory came in at $58.6 million, slightly up from $58.4 million in the year-ago period.
VIRC’s Zacks Rank
Virco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Consumer Discretionary Releases
PENN Entertainment, Inc. PENN reported a narrower-than-expected loss in second-quarter 2024. The company’s bottom and top lines surpassed the Zacks Consensus Estimate but declined on a year-over-year basis. PENN's quarterly results were hampered by disappointing performances of its South and Interactive segments.
However, top-of-funnel growth improvement, better risk management and enhanced promotional strategies led to stronger-than-expected revenues and adjusted EBITDA in the Interactive segment. PENN continues to focus on database growth and customer engagement through the use of latest technology, ongoing investments in gaming and non-gaming areas and partnerships in food and beverage.
Choice Hotels International, Inc. CHH delivered drab second-quarter 2024 results, with adjusted earnings and revenues missing the Zacks Consensus Estimate. Nevertheless, both metrics increased on a year-over-year basis.
The results were backed by strong demand trends across the company’s diversified portfolio of brands. This uptrend in demand aided in accelerating global hotel openings, expanding international market reach and increasing the size of its reward program. CHH’s versatile business model and accretive growth strategies ensure the support required to foster its growth trends.
Hilton Worldwide Holdings Inc. HLT reported mixed second-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. Both metrics increased year over year.
The company's performance was backed by notable improvements in revenue per available room, attributed to higher occupancy rates and average daily rates. As of June 30, 2024, Hilton's development pipeline comprised nearly 3,370 hotels, with almost 508,300 rooms across 136 countries and territories. For 2024, HLT expects net unit growth to be in the range of 7-7.5%.
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