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 October 31, 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
3,592,996
Number of Shares of Common Stock Outstanding at October 31,
2000
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months
Ended
($000 omitted except earnings per share) October
31,
2000 1999
REVENUE: ----------- -----------
Construction $ 3,144 $ 2,091
Manufacturing 6,896 4,799
Sales and service 2,736 1,743
Other revenue 315 184
-------- --------
Total revenue 13,091 8,817
-------- --------
DIRECT COSTS:
Construction 2,180 1,291
Manufacturing 4,497 3,320
Sales and service 1,544 1,069
-------- --------
Total direct costs 8,221 5,680
-------- --------
GROSS PROFIT 4,870 3,137
EXPENSES:
Overhead 1,166 1,036
General and administrative 2.020 1,362
Depreciation and amortization 381 291
Interest 237 213
-------- --------
Total expenses 3,804 2,902
-------- --------
EARNINGS BEFORE INCOME TAXES, EQUITY
EARNINGS AND MINORITY INTERESTS 1,066 235
INCOME TAX PROVISION 424 74
-------- --------
EARNINGS BEFORE EQUITY EARNINGS AND
MINORITY INTERESTS 642 161
Equity earnings (loss)
and minority interest (62) 27
-------- --------
NET EARNINGS $ 580 $ 188
======== ========
EARNINGS PER COMMON SHARE:
BASIC: $ 0.16 $ 0.05
======== ========
DILUTED: $ 0.16 $ 0.05
======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING: BASIC 3,591,512 3,587,877
--------- ---------
See Notes To Condensed Consolidated Financial Statements.
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000s omitted)
ASSETS
October 31, 2000 July 31, 2000
CURRENT ASSETS ---------- ----------
Cash and cash equivalents $ 2,659 $ 2,568
Restricted cash 107 68
Certificates of deposit 843 681
Accounts receivable, net 16,448 13,289
Inventory 3,912 1,500
Costs and estimated earnings in
excess of billings
on uncompleted contracts 1,908 1,545
Prepaid and other expenses 1,323 1,120
Total current assets 27,200 20,771
-------- --------
PROPERTY AND EQUIPMENT, AT COST 19,984 18,485
Accumulated depreciation (10,573) (9,475)
-------- --------
Property and equipment, net 9,411 9,010
-------- --------
OTHER ASSETS
Investments
in unconsolidated affiliates - 1,043
Deferred income taxes 3,051 3,423
Other 651 759
-------- --------
Total other assets 3,702 5,225
--------
- --------
TOTAL ASSETS $40,313 $35,006
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
October 31, 2000 July 31, 2000
---------- ----------
CURRENT LIABILITIES
Current portion of notes payable 1,363 $ 1,515
Accounts payable 5,305 4,899
Billings in excess of costs and
estimated earnings on
uncompleted contracts 3,999 2,409
Deferred income 184 221
Other liabilities 5,259 4,286
-------- --------
Total current liabilities 16,110 13,330
LONG-TERM DEBT
Notes payable, less current portion 8,872 7,724
-------- --------
Total Liabilities 24,982 21,054
MINORITY INTERESTS 1,075 279
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - $0.10 par value,
10,000,000 shares authorized;
3,587,877 issued and outstanding 359 359
Additional paid-in capital 16,439 16,436
Accumulated deficit (2,542) (3,122)
-------- --------
Total stockholders' equity 14,256 13,673
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $40,313 $35,006
======== ========
See Notes To Condensed Consolidated Financial Statements.
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000s omitted)
Three Months Ended October 31, 2000 1999
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 173 $(838)
------ ------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (616) 241
------ ------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 534 338
------ ------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 91 (259)
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD 2,568 1,145
------ ------
CASH AND CASH
EQUIVALENTS, END OF PERIOD $2,659 $ 886
======= =======
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes $ 52 $ 53
======= =======
Interest $ 251 $ 209
======= =======
See Notes To Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 31, 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 October 31, 2000 and
July 31, 2000, as well as the results of its operations for
the three months ended October 31, 2000 and 1999, and cash
flows for the three months then ended.
2. RELATED-PARTY TRANSACTIONS
Certain shareholders owning or controlling
approximately 36% 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. Net billings to and from these entities
were approximately $373,000 and $252,000 for the three
months ended October 31, 2000 and 1999, respectively.
Mr. Frank E. Williams, Jr., who owns or controls
approximately 36% of the Company's stock and is also a
director of the Company, loaned $640,000 during the quarter
ended October 31, 2000 to Williams Bridge Company, one of
the Company's subsidiaries. The loan is secured by a note,
which has monthly payments of interest only at prime plus
1%. The note is payable on August 1, 2002.
See Item 3 below for additional related party transactions.
3. COMMITMENTS/CONTINGENCIES
As reported in the Company's quarterly filing for
October 31, 1999, the company had entered into an agreement
to purchase approximately 17 acres of unimproved real
estate adjoining its Prince William County, Virginia
properties from an unaffiliated third party for $567,500.
Given the Company's desire to limit borrowing at this
time, the Board of Directors accepted an offer from
Director Frank E. Williams, Jr., acting on behalf of the
Williams Family Limited Partnership, to acquire the
property and lease it to the Company with an option to
purchase the majority of the property back for the original
pro-rata cost. Given the interest of Mr. Williams, Jr.
and Company CEO Frank E. Williams, III, in the Williams
Family Limited Partnership, this transaction was discussed
and authorized by the board without the participation of
Mr. Williams, Jr. or Mr. Williams, III.
Management feels this transaction will enable the
Company to preserve its options to develop the property for
expansion of its manufacturing and other operations. The
Company intends to move ahead with the development of the
property.
Subsequent to January 31, 2000, the Williams Family
Limited Partnership acquired the property and executed the
lease/option agreement with the Company. 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.
4. SEGMENT INFORMATION
Information about the Company's operations in its
operating segments for the three and six months ended
October 31, 2000 and 1999 is as follows (in thousands):
Three Months Ended October 31,
2000 1999
---------- ----------
Revenues:
Construction $ 3,784 $2,319
Manufacturing 6,903 4,865
Sales and Services 2,820 1,859
Other 460 310
-------- --------
13,967 9,353
======== ========
Intersegment revenues:
Construction 640 228
Manufacturing 7 66
Sales and Services 84 116
Other 145 126
-------- --------
876 536
======== ========
Consolidated revenues:
Construction 3,144 2,091
Manufacturing 6,896 4,799
Sales and Services 2,736 1,743
Other 315 184
-------- --------
Total Consolidated Revenues: 13,091 8,817
======== ========
Earnings before income taxes,
equity earnings and
minority interest:
Construction 265 257
Manufacturing 854 351
Sales and Services 412 89
Other (465) (462)
-------- --------
Total $ 1,066 $ 235
======== ========
5. INVENTORIES
Inventory mainly consists of materials used in the
manufacturing segment.
6. PURCHASE OF ASSETS
Effective August 1, 2000, the Company purchased an
additional 28% of the stock of S.I.P., Inc. for
approximately $660,000 in cash and notes payable. The
Company now owns approximately 70% of the stock of S.I.P.,
Inc. This acquisition has been accounted for as a purchase
and the operating results of S.I.P., Inc. are now included
in the Condensed Consolidated Financial Statements of the
Company since the date of acquisition.
7. RECLASSIFICATIONS
Certain Balance Sheet and Statement of Earnings items
for prior periods have been reclassified to conform with
current period classifications.
.
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. Due primarily to
Increased governmental spending on infrastructure in recent years,
the Company, like its overall industry, has experienced increasing
demand for its products and services. Demand in the commercial
construction markets has also increased.
The Company, like others in the construction industry,
continues to experience difficulties in hiring and retaining
qualified personnel to meet this demand. The Company does not
believe it is at a competitive disadvantage as it relates to
labor.
The Company's subsidiaries, through the combination of
manufacturing, construction, and heavy hauling and lifting
capabilities, offer a turnkey approach for customers, thereby
increasing its competitiveness on some contracts. Each of
the subsidiaries maintains its own customer base, but works to
translate individual projects into broader opportunities for
the Company to obtain work.
Financial Condition
For the quarter ended October 31, 2000, the Company's net
working capital significantly increased, going from $7,441,000
at July 31, 2000 to $11,090,000 at October 31, 2000. The bulk
of this increase is due to the addition of approximately $2
million in net working capital from S.I.P., Inc. of Delaware.
The Company increased its ownership in S.I.P. from less than 50%
to more than 70% during the quarter ended October 31, 2000.
S.I.P.'s results are now consolidated with the other Williams
Industries' subsidiaries.
Williams Steel Erection Company and Williams Equipment
Corporation also have experienced significant increases in
their net working capital.
There was an increase of more than $3 million in Accounts
Receivable, due to the high volume of work produced during the
quarter, and $2,412,000 in inventory. The increase resulted
from the addition of S.I.P.'s inventory, as well as an increase
at Williams Bridge Company. The Company attempts to time
purchases of materials to take advantage of the most competitive
prices available in the marketplace.
Stockholder's Equity also increased. At October 31, 2000,
Stockholder's Equity was $14,256,000, an increase of $583,000
from July 31, 2000.
Overall gross profit margins improved by about 2% from the
quarter ended October 31, 1999 to the quarter ended October 31,
2000.
Overall direct costs, when viewed as a percentage of total
revenue, decreased. For the quarter ended October 31, 1999,
overall direct costs were 64.4% of total revenue. At October
31, 2000, this had declined to 62.8%. As a percentage of
segment revenue, costs decreased in the Manufacturing and Sales
and Services segment while increasing in Construction.
Direct costs in the construction segment increased by about
8% for the quarter ended October 31, 1999 to the quarter ended
October 31, 2000. Construction segment cost increases continue
to arise from labor expenses, particularly overtime, necessary
to keep major projects on schedule. Increased labor expenses
are an industry-wide trend resulting from increased demand.
Direct costs in the Sales and Services segment, as a
percentage of revenue, decreased by nearly 5% from the quarter
ended October 31, 1999 to the quarter ended October 31, 2000,
primarily due to reductions in both fuel and labor costs.
Direct costs, as a percentage of revenue, in the
Manufacturing segment decreased by about 4% from the quarter
ended October 31, 1999 to the quarter ended October 31, 2000.
Part of this decrease is attributed to more strategic material
purchases while the remainder is linked to the addition of S.I.P.
in the overall calculation.
Accounts receivable increased by more than $3 million due
to the combination of the inclusion of S.I.P.'s receivables and
the significant billings for work performed during the quarter.
Increases in accounts payable, which are slight in comparison,
are directly related to the Company's increased activity.
The Company's Cash and Cash Equivalents show a significant
improvement to $2,659,000 at October 31, 2000 compared to the
$886,000 at October 31, 1999.
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.
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.
Three Months Ended October 31, 2000 Compared to
Three Months Ended October 31, 1999
The Company reported a 300% increase in net income for the
quarter ended October 31, 2000. Net income was $580,000 or
$0.16 per share on total revenue of $13,091,000. These results
compare to net income of $188,000 or $0.05 per share on total
revenue of $8,817,000 for the quarter ended October 31, 1999.
In the quarter ended October 31, 1999, the Company had
Equity Earnings of $43,400 and Minority Interest Expense of
$16,113. For the quarter ended October 31, 2000, the Company
had Minority Interest Expense of $62,465. This change is due
to the Company's change in S.I.P. ownership.
Gross profit margins increased slightly from 35.6% for
the period ended October 31, 1999 to 37.2% for the period ended
October 31, 2000.
Each of the Company's subsidiaries experienced revenue
growth when the quarters are compared. While the Manufacturing
Segment had the greatest revenue in terms of actual dollars,
the Sales and Services Segment had the greatest percentage
increase in revenue from the quarter ended October 31, 1999 to
October 31, 2000. While new projects accounted for most of the
Company's increased revenues, it should be noted that the
quarter ending October 31, 2000 was much more conducive to
construction activities than the prior year's quarter when two
major tropical storms impacted construction throughout the
region.
Extensive work on the multi-million dollar Springfield
Interchange project in Virginia, as well as other infrastructure
projects funded by the federal TEA 21 program that is funneling
billions of dollars into highway construction, contributed to
the increased revenue both in the Construction and Sales and
Services Segments.
The Company's manufacturing segment benefited from
Consistent order flow for bridge girders and decking, both
components of the TEA 21 program. Manufacturing revenues went
from $4,799,000 for the quarter ended October 31, 1999 to
$6,896,000 for the quarter ended October 31, 2000. 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.
Expenses, when viewed as a percentage of total revenue,
declined.
BACKLOG
Backlog increased by nearly $3 million, going from $35
million at July 31, 2000 to nearly $38 million at October 31,
2000. When compared to the October 31, 1999 backlog of $34
million, the increase is nearly $4 million. This backlog
includes a good mix of work for the Construction and
Manufacturing segments. Sales and Services work is normally
performed as needed and only a small portion of this segment's
work is shown in the backlog numbers.
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 into Fiscal 2002.
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 or 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
On November 11, 2000, the shareholders of Williams
Industries, Inc. elected the Company's board of directors.
Elected were: Stephen N. Ashman, William C. Howlett, R.
Bentley Offutt, William Sim, Frank E. Williams, Jr., and
Frank E. Williams, III.
The results of the November 11, 2000 shareholder's
election of directors are as follows:
Nominee For Abstain
- ---------------------- --------- -------
Stephen N. Ashman 3,329,305 98,531
William C. Howlett 3,312,312 115,524
R. Bentley Offutt 3,263,793 164,043
William J. Sim 3,329,305 98,531
Frank E. Williams, Jr. 3,324,047 103,789
Frank E. Williams, III 3,320,747 107,089
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
The Company filed a report on Form 8-K on November 28,
2000 to further clarify information, relating to options
granted to directors, contained in its 2000 proxy.
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
December 6, 2000 /s/ Frank E. Williams, III
Frank E. Williams, III
President, Chairman of the
Board
Chief Financial Officer