SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
FOR QUARTER ENDED April 30, 2000
COMMISSION FILE NO. 0-8190
WILLIAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0899518
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2849 MEADOW VIEW ROAD, FALLS CHURCH, VIRGINIA 22042
(Address of Principal Executive Offices) (Zip Code)
(703) 560-5196
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former names, former address and former fiscal year,
if changes since last report)
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 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 X No
3,590,106
Number of Shares of Common Stock Outstanding at April 30, 2000
</PAGE>
<PAGE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000 Omitted)
ASSETS
April 30 July 31
2000 1999
--------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 3,395 $ 1,145
Restricted cash 42 61
Certificates of deposit 822 738
Accounts receivable, net 13,134 11,481
Inventory 1,631 2,290
Costs and estimated earnings
in excess of billings
on uncompleted contracts 1,492 1,481
Prepaid and other expenses 1,092 641
--------- ---------
Total current assets 21,608 17,837
--------- ---------
PROPERTY AND EQUIPMENT, AT COST 17,352 16,215
Accumulated depreciation (9,243) (8,529)
--------- ---------
Property and equipment, net 8,109 7,686
--------- ---------
OTHER ASSETS
Investments
in unconsolidated affiliates 1,037 1,048
Deferred income taxes 3,688 3,944
Other 1,439 1,750
--------- ---------
Total other assets 6,164 6,742
--------- ---------
TOTAL ASSETS $ 35,881 $ 32,265
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable $ 2,362 $ 1,411
Accounts payable 5,131 4,868
Billings in excess of costs
and estimated earnings
on uncompleted contracts 3,217 2,222
Deferred income 258 348
Other liabilities 3,269 3,123
--------- ---------
Total current liabilities 14,237 11,972
---------
---------
LONG-TERM DEBT
Notes payable, less current portion 8,130 7,397
--------- ---------
Total Liabilities 22,367 19,369
--------- ---------
MINORITY INTERESTS 259 235
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - 3,590,106 and
3,587,877 issued and outstanding 359 359
Additional paid-in capital 16,432 16,424
Accumulated deficit (3,536) (4,122)
--------- ---------
Total stockholders' equity 13,255 12,661
---------
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 35,881 $ 32,265
========= =========
See Notes To Condensed Consolidated Financial Statements.
<PAGE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(000 0mitted) (Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
REVENUE --------- --------- --------- ---------
Construction $ 3,514 $ 2,270 $ 9,391 $ 7,564
Manufacturing 5,737 4,970 15,241 10,270
Sales and service 2,226 1,935 5,754 5,217
Other 188 162 592 574
--------- --------- --------- ---------
Total revenue 11,665 9,337 30,978 23,625
--------- --------- --------- ---------
DIRECT COSTS
Construction 2,582 1,459 6,716 4,968
Manufacturing 3,911 3,422 10,418 6,427
Sales and service 1,341 1,121 3,454 2,925
--------- --------- --------- ---------
Total direct costs 7,834 6,002 20,588 14,320
--------- --------- --------- ---------
GROSS PROFIT 3,831 3,335 10,390 9,305
--------- --------- --------- ---------
EXPENSES
Overhead 1,141 834 3,335 2,646
General and administrative 1,733 1,502 4,738 4,018
Depreciation 295 338 873 970
Interest 226 238 657 682
--------- --------- --------- ---------
Total expenses 3,395 2,912 9,603 8,316
--------- --------- --------- ---------
EARNINGS BEFORE INCOME TAXES,
EQUITY EARNINGS AND
MINORITY INTERESTS 436 423 787 989
INCOME TAX PROVISION 128 58 237 269
--------- --------- --------- ---------
EARNINGS BEFORE EQUITY EARNINGS
AND MINORITY INTERESTS 308 365 550 720
Equity earnings and
minority interest 20 28 36 62
--------- --------- --------- ---------
EARNINGS BEFORE EXTRAORDINARY ITEM 328 393 586 782
EXTRAORDINARY ITEM
Loss on extinguishment of debt - (193) - (193)
--------- --------- --------- ---------
NET EARNINGS $ 328 $ 200 $ 586 $ 589
========= ========= ========= =========
EARNINGS PER COMMON SHARE-BASIC
Earnings before extraordinary item $ 0.09 $ 0.11 $ 0.16 $ 0.22
Extraordinary Item - (0.05) - (0.05)
--------- --------- --------- ---------
EARNINGS PER COMMON SHARE-BASIC $ 0.09 $ 0.06 $ 0.16 $ 0.17
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING: BASIC 3,589,516 3,577,069 3,588,510 3,578,592
--------- --------- --------- ---------
<PAGE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000 Omitted) Nine Months Ended
April 30,
2000 1999
========= =========
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 1,927 $ (308)
NET CASH USED IN INVESTING ACTIVITIES (1,346) (659)
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,669 544
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,250 (423)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,145 1,384
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,395 $ 961
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes $ 52 $ 71
========= =========
Interest $ 644 $ 693
========= =========
See Notes To Condensed Consolidated Financial Statements.
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2000
1. INTERIM FINANCIAL STATEMENTS
This document includes unaudited interim financial statements that
should be read in conjunction with the Company's latest audited annual
financial statements. However, in the opinion of management, these
financial statements contain all adjustments consisting only of normal
recurring items necessary for a fair presentation of the Company's
financial position as of April 30, 2000 and July 31, 1999, as well as
the results of its operations and its cash flows for the three and nine
months ended April 30, 2000 and 1999.
2. RELATED-PARTY TRANSACTIONS
Certain shareholders owning or controlling approximately 35% of the
outstanding stock of the Company own controlling interests in the
outstanding stock of Williams Enterprises of Georgia, Inc., 100% of
Williams and Beasley Company, and 100 % of Structural Concrete Products,
LLC. Each of these entities did business with the company during the
quarter.
Billings to Williams Enterprises of Georgia, Inc. and its affiliates
were approximately $16,000 and $374,000 for the three and nine months ended
April 30, 2000 and $138,000 and $893,000 for the three and nine months
ended April 30, 1999.
Net billings from Williams and Beasley Company during the three and nine
months ended April 30, 2000 were approximately $130,000 and $229,000
respectively. Billings from Williams and Beasley Company during the three
and nine months ended April 30, 1999 were approximately $166,000 and
$293,000.
Billings to Structural Concrete Products, LLC were approximately $2,000
and $121,000 for the three and nine months ended April 30, 2000.
Billings to this entity were insignificant during the three and nine
months ended April 30, 1999. Billings from Structural Concrete Products,
LLC to the Company were approximately $165,000 and $1,606,000 for the
three and nine months ended April 30, 2000. Billings from this entity
were insignificant during the three and nine months ended April 30, 1999.
During the quarter ended April 30, 2000, the Company entered into an
agreement with the Williams Family Limited Partnership to lease/purchase
approximately 17 acres of unimproved real estate adjoining its Prince
William County, Virginia properties. The initial lease term is for five
years, with an extension option. The base annual rent calculation will
be based on the capitalized cost of the property times the Williams Family
Limited Partnership's costs of funds (margin rate) plus one percent,
adjusted quarterly. Payments will be made on a monthly basis.
3. SEGMENT INFORMATION
Information about the Company's operations in its operating segments for
the three and nine months ended April 30, 2000 and 1999 is as follows (in
thousands):
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
-------- -------- -------- --------
Revenues:
Construction $ 3,930 $ 2,600 $10,389 $ 8,480
Manufacturing 5,774 4,843 15,364 10,406
Sales and Services 2,341 2,019 6,102 5,608
Other 307 308 972 986
-------- -------- -------- --------
12,352 9,770 32,827 25,480
-------- -------- -------- --------
Intersegment revenues:
Construction 416 330 998 916
Manufacturing 37 (127) 123 136
Sales and Services 115 84 348 391
Other 119 146 380 412
-------- -------- -------- --------
687 433 1,849 1,855
-------- -------- -------- --------
Consolidated revenues:
Construction 3,514 2,270 9,391 7,564
Manufacturing 5,737 4,970 15,241 10,270
Sales and Services 2,226 1,935 5,754 5,217
Other 188 162 592 574
-------- -------- -------- --------
Total Consolidated Revenues: 11,665 9,337 30,978 23,625
-------- -------- -------- --------
Earnings before income taxes,
equity earnings and
minority interest:
Construction 263 324 701 816
Manufacturing 535 421 1,086 962
Sales and Services 148 118 268 180
Other (510) (440) (1,268) (970)
-------- -------- -------- --------
Total $ 436 $ 423 $ 787 $ 988
-------- -------- -------- --------
4. INVENTORIES
Inventory consisted of the following (in thousands):
April 30 July 31
2000 1999
--------- ---------
Expendable tools
and equipment $ 795 $ 806
Supplies 271 277
Materials 1,623 2,383
--------- ---------
Total Inventory $ 2,689 $ 3,466
Less: Amount classified
as long term (Included
in Other Assets - Other) 1,058 1,176
--------- ---------
$ 1,631 $ 2,290
--------- ---------
Item 2. Management's Discussion and Analysis
Financial Condition and Results of Operations
General
The Company's operations serve the industrial, commercial and
institutional construction markets, primarily in the Mid-Atlantic
region of the United States. Since about April 1999, due primarily to
increased governmental spending on infrastructure, the Company, like
its overall industry, has experienced increasing demand for its
products and services.
Like others in the construction industry, the Company is experiencing
difficulties in hiring and retaining qualified personnel to meet this
demand. In order to meet this challenge, the Company has developed a
close working relationship with the Virginia Council of Churches,
which helps sponsor and train refugee workers in various trades. The
Company is also working with the Virginia Department of Labor to
transition workers from companies that are downsizing to appropriate
positions in the Company's geographically diverse subsidiaries.
Unlike many of its competitors, the Company continues to benefit from
the synergistic efforts of its subsidiaries. The combination of
manufacturing, construction, and heavy hauling and lifting capabilities
have allowed the Company to offer a turnkey approach for its customers,
thereby increasing its competitiveness on some contracts. While each
of the subsidiaries maintain their own customer base, the synergistic
capabilities have also allowed for cross pollination in marketing
efforts, which also improves the opportunities for the Company to
obtain work. Management intends to seek out and exploit these
synergistic opportunities, which can be beneficial in containing costs
as well as enhancing revenues.
Financial Condition
For the quarter ended April 30, 2000, the Company's net working
capital and stockholder's equity both increased. Net working capital
went from $7,237,000 at January 31, 2000 to $7,371,000 at April 30,
2000. At April 30, 2000, Stockholder's Equity was $13,255,000, an
increase of $331,000 from the quarter ended January 31, 2000.
There were varying increases in direct costs when viewed as a
percentage of segment revenue. Direct costs in the construction
segment increased by almost nine percent. The increase was due almost
totally to increased labor expense attributed to overtime necessary to
keep major projects on schedule. The Company does not believe this
segment is at a competitive disadvantage in this area because
increasing labor expenses are an industry-wide trend resulting from
increased demand. Direct costs in the Sales and Services segment,
again viewed as a percentage of revenue, increased slightly, primarily
due to increasing fuel costs, although there were some cost increases
due to labor. Direct costs in the Manufacturing segment appear to
have stabilized and did not increase during the quarter.
Although the Company's overall revenues continue to increase, accounts
receivable declined by more than $1 million due to the collection of
outstanding accounts and the timing of billings on new projects.
Increases in accounts payable are directly related to the Company's
increased activity. The increases in notes payable is due to the
purchase of a $775,000 crane during the quarter ended April 30, 2000.
In keeping with the significant amount of manufacturing in the quarter,
inventory has declined as work in process was completed.
Cash flow from operations was ($779,000) at January 31, 2000 and
$1,927,000 at April 30, 2000. This significant change was primarily
due to the collection of major receivables at Williams Bridge Company
and Williams Steel Erection Company.
The Company currently has about $5 million in variable rate notes;
therefore a 2% increase in interest rates, which seems likely in
today's market conditions, would increase interest expense by about
$100,000 per year.
Three Months Ended April 30, 2000 Compared to Three Months Ended April
30, 1999
The Company reported a 60% increase in net income for the quarter
ended April 30, 2000. Net income was $328,000 or $0.09 per share on
total revenue of $11,665,000. These results compare to net income of
$200,000 or $0.06 per share on total revenue of $9,337,000 for the
quarter ended April 30, 1999. It should be noted that the 1999
quarter contained an extraordinary loss of $193,000 or $0.05 per
share.
Each of the Company's subsidiaries experienced revenue growth when
the quarters are compared, but the largest increase came in the
Construction segment whose revenues went from $2,270,000 for the
quarter ended April 30, 1999 to $3,514,000 for the quarter ended April
30, 2000. The increase was due to a variety of new projects that
began during the quarter, including extensive work on infrastructure
projects funded by the federal TEA 21 program that is funneling
billions of dollars into highway construction.
The Company's manufacturing segment continues to benefit from
consistent order flow for bridge girders, also a component of the TEA
21 program. Manufacturing revenues went from $4,970,000 for the
quarter ended April 30, 1999 to $5,737,000 for the quarter ended April
30, 2000. The manufacturing segment continues to grow as a percentage
of the Company's revenue. The trend of manufacturing becoming a larger
part of the Company's business began with federal funding increases in
Fiscal 1999. The increasing proportion of revenues generated by
manufacturing is expected to continue for several years as funding for
infrastructure programs is scheduled to continue increasing for at
least five years.
Sales and Services revenues also increased, going from $1,935,000 at
April 30, 1999 to $2,226,000 at April 30, 2000. Much of the increase
in revenue was a result of increased demand for the subsidiaries'
rigging services.
While each of the Company's operating subsidiaries had an increase in
revenues when the quarters are compared, direct cost issues discussed
earlier kept pre-tax profits at several subsidiaries from increasing as
significantly as revenues.
However, expenses, when viewed as a percentage of total revenue,
declined due to further consolidation of corporate overhead.
Current inventory declined significantly from $3,536,171 at April 30,
1999 to $1,631,000 at April 30, 2000 as work was produced. In
addition, much of the inventory that had been stockpiled when steel
prices were cheaper is now being replaced on an "as needed" basis
rather than acquiring advance quantities at higher prices.
Nine Months Ended April 30, 2000 Compared to Nine Months Ended April
30, 1999
For the nine months ended April 30, 2000, the Company had net earnings
of $586,000 or $0.16 per share on revenue of $30,978,000 compared to
net earnings of $589,000 or $0.17 per share on revenue of $23,625,000
for the nine months ended April 30, 1999.
Direct comparisons are difficult, however, because of special items
that occurred in Fiscal 1999. The nine months ended April 30, 1999
contained a one-time sales tax adjustment of approximately $237,000,
which reduced expenses in that period and increased pre-tax earnings.
When that item is removed, profits increased in Fiscal 2000 by
comparison. However, nine months ended April 30, 1999 also contained
an extraordinary loss on extinguishments of debt of $193,000, which
reduced Fiscal 1999 profits. When these items are removed, earnings
declined on the higher Fiscal 2000 revenues due to the higher direct
costs.
During the nine months ended April 30, 2000, direct costs as a
percentage of revenue increased by six percent when compared to the
nine months ended April 30, 1999 while expenses as a percentage of
revenue declined. A considerable portion of this change can be
attributed to about $1.5 million in work that was subcontracted during
the nine months ended April 30, 2000.
BACKLOG
Backlog increased by more than $5 million, going from $31 million at
January 31, 2000 to more than $36 million at April 30, 2000. Included
in this backlog is a major erection project at the National Institutes
of Health in Bethesda, Maryland for the new Clinical Research Center.
This project is not scheduled to begin until Fiscal 2001. Williams
Bridge Company also has added a significant number of manufacturing
jobs for highway projects, the majority of which are located in the
Mid-Atlantic region.
Both the manufacturing and construction operations have produced
substantial revenues while simultaneously maintaining high backlogs.
The maintenance of these levels of activity is viewed as significant.
With the exception noted above, most of the backlog will be completed
within the next 12 months if contract schedules are followed.
Management believes that the level of work is sufficient to allow the
Company to have adequate work well into Fiscal 2001.
Management
Management believes that operations will generate sufficient cash to
fund activities. However, as revenues increase, it may become necessary
to continue increasing the Company's credit facilities to handle
short-term cash requirements, particularly in terms of inventory
expansion for major fabrication projects. Management, therefore, is
focusing on the proper allocation of resources to ensure stable growth.
Safe Harbor for Forward-Looking Statements
The Company is including the following cautionary statements to make
applicable and take advantage of the safe harbor provisions within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 for any forward-looking statements
made by, or on behalf of, the Company in this document and any
materials incorporated herein by reference. Forward-looking statements
include statements concerning plans, objectives, goals, strategies,
future events or performance and underlying assumptions and other
statements, which are other than statements of historical facts. Such
forward-looking statements may be identified, without limitation, by
the use of the words "anticipates," "estimates," "expects," "intends,"
and similar expressions. From time to time, the Company or one of its
subsidiaries individually may publish or otherwise make available
forward-looking statements of this nature. All such forward-looking
statements, whether written or oral, and whether made by or on behalf
of the Company or its subsidiaries, are expressly qualified by these
cautionary statements and any other cautionary statements which may
accompany the forward-looking statements. In addition, the Company
disclaims any obligation to update any forward-looking statements to
reflect events or circumstances after the date hereof.
Forward-looking statements made by the Company are subject to risks
and uncertainties that could cause actual results or events to differ
materially from those expressed in, or implied by, the forward-looking
statements. These forward-looking statements may include, among
others, statements concerning the Company's revenue and cost trends,
cost reduction strategies and anticipated outcomes, planned capital
expenditures, financing needs and availability of such financing, and
the outlook for future activity in the Company's market areas.
Investors or other users of forward-looking statements are cautioned
that such statements are not a guarantee of future performance by the
Company and that such forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially
from those expressed in, or implied by, such statements. Some, but not
all of the risks and uncertainties, in addition to those specifically
set forth above, include general economic and weather conditions,
market prices, environmental and safety laws and policies, federal and
state regulatory and legislative actions, tax rates and policies, rates
of interest and changes in accounting principles or the application of
such principles to the Company.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
General
The Company is party to various claims arising in the ordinary course
of its business. Generally, claims exposure in the construction
services industry consists of workers compensation, personal injury,
products' liability and property damage. The Company believes that its
insurance and other expense accruals, coupled with its primary and
excess liability coverage, are adequate coverage for such claims or
contingencies.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule.
(b) Reports on Form 8-K
None.
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.
WILLIAMS INDUSTRIES, INCORPORATED
June 6, 2000 /s/ Frank E. Williams, III
Frank E. Williams, III
President, Chairman of the
Board
Chief Financial Officer
