After its latest earnings report, investors are getting comfortable with furniture maker Virco Manufacturing Corp.
Shares of the Torrance school furniture manufacturer soared 21 percent during the week ended June 18 to close at $2.50, making it one of the biggest gainers on the LABJ Stock Index. (See Page 38.)
Most people know Virco as the name on the back of the chair they kicked while bored in elementary school. The company, which manufactures furniture for classrooms and offices, suffered sales and employment cuts when school spending was slashed during the recession. Now, its boss thinks his company is finally recovering.
Virco reported a net loss of $3.9 million (26 cents a share) in the three months ended April 30, compared with a net loss of $4.5 million (31 cents) for the same quarter a year earlier. Revenue rose 18 percent to $23.5 million.
The first quarter “continued the upward trend that began last winter, reflecting better internal efficiencies and the possible stabilization of funding in our core market of publicly funded schools,” Robert Virtue, Virco’s chief executive, wrote in a letter to shareholders last week after earnings were released.
The company did not respond to a request for comment.
Al Kaschalk, an analyst who covers the company for downtown L.A. brokerage Wedbush Securities, said Virco is on the right track.
“They’ve done an excellent job on lowering their own cost structure and are therefore able to deliver a smaller operating loss,” he said.
The 62-year old company was devastated by the 2008 economic crisis, as cash-strapped school districts across the country had to cut spending. Replacing classroom furniture was one of the first budget items to go.
The company’s historical stock prices reflected its struggles. Virco went public in 1964 and its shares hit a high of $18.78 in February 1998. Between November 2007 and February 2009, when the worst of the economic crisis hit, Virco’s shares plummeted from $11.52 to $1.85. The stock hasn’t broken $4 a share since.
In 2012, still struggling to recover, the company offered buyouts to all its employees, shrinking its workforce from 1,050 to 830. Today, Virco employs about 700 people.
As the economy comes back and school districts get right side up again, Kaschalk said that he believes Virco will return to full health.
“The company’s well positioned to benefit,” he said.
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