With school spending high on the agenda in Los Angeles, Sacramento and Washington, D.C., few companies stand to benefit from the coming construction boom more than Virco Manufacturing Corp.
The Torrance-based firm, the largest manufacturer of movable classroom furniture in the nation, is aggressively angling to grab a bigger piece of the action as schools outfit those new classrooms and computer labs with tables, chairs and desk systems.
"What we're seeing from the funding end is, it's way up. We're seeing funding for new construction and renovations now. We fit into both those categories," said Larry Wonder, vice president of Virco's education sales group.
Virco, which celebrates its 50th anniversary this year, is somewhat obscure among Los Angeles-area public companies despite its size perhaps because about half the stock is owned by the founding family, the Virtues. Only one analyst follows the company closely.
Virco stock experienced an unusual jump two weeks ago, spurting from around $11.40 a share to nearly $15 before settling down to the $12.50 range as of late last week. Company officials were unable to explain the spike. Executive Vice President Douglas Virtue said the stock sometimes jumps up and down at the end of the quarter as mutual funds adjust their positions.
"This is not the first time this has happened to us," he said. "The fundamentals were unchanged before the run-up and are unchanged today. We cannot predict what mutual funds do."
About 65 percent of Virco's business is comprised of education-related sales, primarily to public K-12 schools. The remainder is made up of commercial sales, mainly to churches, convention centers and meeting facilities.
Schools market on the rise
The schools market looks particularly promising, considering that an estimated 75 percent of school buildings across the nation are more than 30 years old, having been built to serve baby boomers. A lot of the furniture in those classrooms may be nearly indestructible, but is equally long in the tooth and a far cry from the ergonomic designs of today.
"Furniture is one of the last items schools spend money on," said Virtue, the son of president and CEO Robert Virtue and grandson of company founder Julian Virtue. "If they've got furniture that's still usable but rough around the edges, they tend to postpone replacing it for as many years as they can."
California schools alone need an estimated $40 billion over the next 10 years to modernize crumbling facilities and build new ones, said Jim Murdoch, a lobbyist for the Sacramento-based Coalition for Adequate School Housing. California ranks among the top states where Virco does business, along with other highly populated or growing states.
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