Virco(US:VIRC)2020-09-14 18:50Financial Performance - For the three months ended July 31, 2020, the company reported a pre-tax profit of $6,679,000 on sales of $59,285,000, a decrease from a pre-tax profit of $9,084,000 on sales of $70,359,000 in the prior year, reflecting a decline in sales of 15.7%[98][99] - Net sales for the six months ended July 31, 2020 decreased by approximately $20.4 million compared to the same period last year, resulting in a pre-tax loss of $1,294,000, compared to a pre-tax profit of $4,599,000 in the prior year[103] - Order rates for the second quarter were approximately 27.9% lower than in the second quarter of the prior year, with July showing a partial recovery to a 12% reduction compared to the prior year[99] Cost and Expenses - Gross margin for the second quarter was 39.1%, down from 40.8% in the prior year, affected by unfavorable manufacturing overhead variances due to decreased production rates[100][104] - Selling, general and administrative expenses for the three months ended July 31, 2020 decreased by more than $3.0 million, representing 26.1% of sales, down from 26.4% in the prior year[101] - Capital spending for the six months ended July 31, 2020 was $1,359,000, down from $2,309,000 for the same period last year[111] Accounts and Financial Management - Accounts receivable increased by $20,926,000 from January 31, 2020 to July 31, 2020, compared to an increase of $27,852,000 during the same period last year[107] - The company successfully negotiated a waiver and amendment to its credit agreement, reducing the required fixed-charge coverage ratio from 1.10:1.00 to 1.00:1.00 as of July 31, 2020[112] Future Outlook - The company expects the impact of COVID-19 to continue to challenge its operations and believes the demand for its products will be adversely affected for an indeterminate period[113] - The company plans to moderate certain selling, general and administrative expenses and capital expenditures to preserve cash and maintain compliance with financial covenants[113]