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 January 31, 2001
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
3,598,796
Number of Shares of Common Stock Outstanding at January 31,
2001
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000 Omitted)
ASSETS
January 31 July 31
2001 2000
-------- --------
CURRENT ASSETS
Cash and cash equivalents $ 2,723 $ 2,568
Restricted cash 54 68
Certificates of deposit 846 681
Accounts receivable, net 13,178 13,289
Inventory 3,519 1,500
Costs and estimated earnings in excess
of billings on uncompleted contracts 1,145 1,545
Prepaid and other expenses 965 1,120
-------- --------
Total current assets 22,430 20,771
-------- --------
PROPERTY AND EQUIPMENT, AT COST 20,232 18,485
Accumulated depreciation (10,957) (9,475)
-------- --------
Property and equipment, net 9,275 9,010
-------- --------
OTHER ASSETS
Investments in unconsolidated affiliates - 1,043
Deferred income taxes 3,083 3,423
Other 535 759
-------- --------
Total other assets 3,618 5,225
-------- --------
TOTAL ASSETS $35,323 $35,006
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable $ 2,857 $ 1,515
Accounts payable 3,114 4,899
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,242 2,409
Deferred income 147 221
Other liabilities 4,131 4,286
-------- --------
Total current liabilities 12,491 13,330
-------- --------
LONG-TERM DEBT
Notes payable, less current portion 7,394 7,724
-------- --------
Total liabilities 19,885 21,054
-------- --------
MINORITY INTERESTS 1,091 279
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - 3,598,796 and 3,587,877
shares issued and outstanding 360 359
Additional paid-in capital 16,455 16,436
Accumulated deficit (2,468) (3,122)
-------- --------
Total stockholders' equity 14,347 13,673
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $35,323 $35,006
======== ========
See Notes To Condensed Consolidated Financial Statements.
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000 Omitted) Six Months Ended
January 31,
2001 2000
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 889 $ (779)
NET CASH USED IN INVESTING ACTIVITIES (1,285) (104)
NET CASH PROVIDED BY FINANCING ACTIVITIES 551 1,233
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 155 350
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,568 1,145
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,723 $ 1,495
======== ========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes $ 143 $ 53
======== ========
Interest $ 251 $ 423
======== ========
See Notes To Condensed Consolidated Financial Statements.
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
($000 Omitted)
Three Months Ended Six Months Ended
January 31 January 31
2001 2000 2001 2000
-------- -------- -------- --------
REVENUE
Construction $ 2,715 $ 3,786 $ 5,859 $ 5,877
Manufacturing 5,997 4,705 12,893 9,504
Sales and service 2,084 1,785 4,820 3,528
Other 307 220 622 404
-------- -------- -------- --------
Total revenue 11,103 10,496 24,194 19,313
-------- -------- -------- --------
DIRECT COSTS
Construction 1,694 2,843 3,874 4,134
Manufacturing 3,966 3,187 8,463 6,507
Sales and service 1,329 1,044 2,873 2,113
-------- -------- -------- --------
Total direct costs 6,989 7,074 15,210 12,754
-------- -------- -------- --------
GROSS PROFIT 4,114 3,422 8,984 6,559
-------- -------- -------- --------
EXPENSES
Overhead 1,340 1,158 2,506 2,194
General and administrative 1,951 1,643 3,971 3,005
Depreciation 405 287 786 578
Interest 275 218 512 431
-------- -------- -------- --------
Total expenses 3,971 3,306 7,775 6,208
-------- -------- -------- --------
EARNINGS BEFORE INCOME
TAXES, EQUITY EARNINGS AND
MINORITY INTERESTS 143 116 1,209 351
INCOME TAX PROVISION 37 35 461 109
-------- -------- -------- --------
EARNINGS BEFORE EQUITY
EARNINGS
AND MINORITY INTERESTS 106 81 748 242
Equity earnings and
minority interest (32) (11) (94) 16
-------- -------- -------- --------
NET EARNINGS $ 74 $ 70 $ 654 $ 258
======== ======== ======== ========
EARNINGS
PER COMMON SHARE- BASIC $ 0.02 $ 0.02 $ 0.18 $ 0.07
======== ======== ======== ========
EARNINGS
PER COMMON SHARE- DILUTED $ 0.02 $ 0.02 $ 0.18 $ 0.07
======== ======== ======== ========
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING: BASIC 3,592,286 3,588,158 3,592,254 3,588,018
--------- --------- --------- ---------
See Notes To Condensed Consolidated Financial
Statements
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2001
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 January 31, 2001 and July 31, 2000, as well as
the results of its operations for the three and six months ended January
31, 2001 and 2000, and cash flows for the six months then ended.
2. RELATED-PARTY TRANSACTIONS
Mr. Frank E. Williams, Jr., who owns or controls approximately 36% of
the Company's stock, and is also a director of the Company, also owns
controlling or substantial interest in the outstanding stock of Williams
Enterprises of Georgia, Inc., Williams and Beasley Company, and
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 $154,000 and ($1,415,000) for the three
months ended January 31, 2001 and 2000, respectively. Net billings to and
(from) these entities were approximately $528,000 and ($1,046,000) for
the six months ended January 31, 2001 and 2000, respectively
Mr. Williams, Jr. was repaid $640,000 on a loan he made during the
quarter ended October 31, 2000 to Williams Bridge Company, one of the
Company's subsidiaries.
The Company is liable to the Williams Family Limited Partnership
under a lease/option agreement. The initial lease term is for five years,
beginning February 15, 2000, with an extension option. The Company
recognized lease expense for the three and six months ended January 31,
2001 of $14,000 and $46,000.
3. COMMITMENTS/CONTINGENCIES
None
4. SEGMENT INFORMATION
Information about the Company's operations in its operating
segments for the three and six months ended January 31, 2001 and 2000
is as follows (in thousands):
Three Months Ended Six Months Ended
January 31, January 31,
2001 2000 2001 2000
------- ------- ------- -------
Revenues:
Construction $ 3,184 $ 4,140 $ 6,968 $ 6,459
Manufacturing 6,009 4,725 12,912 9,590
Sales & Service 2,329 1,901 5,149 3,760
Other 437 356 897 666
------- ------- ------- -------
11,959 11,122 25,926 20,475
------- ------- ------- -------
Intersegment revenues:
Construction 469 354 1,109 582
Manufacturing 12 20 19 86
Sales & Service 245 116 329 232
Other 130 136 275 262
------- ------- ------- -------
856 626 1,732 1,162
------- ------- ------- -------
Consolidated revenues:
Construction 2,715 3,786 5,859 5,877
Manufacturing 5,997 4,705 12,893 9,504
Sales & Service 2,084 1,785 4,820 3,528
Other 307 220 622 404
------- ------- ------- -------
Total Consolidated
Revenues: $11,103 $10,496 $24,194 $19,313
======= ======= ======= =======
Earnings before income taxes
equity earnings and
minority interest:
Construction $ 241 $ 181 $ 506 $ 438
Manufacturing 416 200 1,270 551
Sales & Service (78) 31 334 120
Other (436) (296) (901) (758)
------- ------- ------- -------
Total $ 143 $ 116 $1,209 $ 351
======= ======= ======= =======
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 receivable. The Company now owns 70.31% of the stock of S.I.P.,
Inc. This acquisition has been accounted for as a purchase.
7. RECLASSIFICATIONS
Certain Balance Sheet and Statement of Earnings items for prior
periods have been reclassified to conform to 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 has experienced increasing
demand for its products and services.
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
The Company's net working capital decreased from $11,090,000 at
October 31, 2000 to $9,939,000 at January 31, 2001, due mainly to the
decrease in accounts receivable from $16,448,000 at October 31, 2000 to
$13,178,000 at January 31, 2001.
When compared to the prior quarter, inventory at January 31, 2001
of $3,519,000 showed a slight decrease from the $3,912,000 at October
31, 2000. However, when compared to the fiscal year ended July 31,
2000, inventory increased 135% from $1,500,000. The increase includes
approximately $1,400,000 of materials at S.I.P., Inc. of Delaware.
Stockholder's Equity increased. At January 31, 2001, Stockholder's
Equity was $14,347,000, compared to the $14,256,000 at October 31, 2000
and $13,673,000 at July 31, 2000.
Overall gross profit margins improved by about 4.4% from the quarter
ended January 31, 2000 to the quarter ended January 31, 2001. A portion
of this improvement is attributed to the August 1, 2000 addition of S.I.P.,
Inc. of Delaware. Overall direct costs, when viewed as a percentage of
total revenue, decreased. For the quarter ended January 31, 2000, overall
direct costs were 67.3% of total revenue. At January 31, 2001, this had
declined to 62.9%. As a percentage of segment revenue, costs decreased
in the Manufacturing and Construction segments while increasing in Sales
and Service.
The Company's current portion of Notes Payable increased primarily
due to financing for yearly insurance premiums. The Company
traditionally finances its general liability, automotive and heavy
equipment, and worker's compensation insurance premiums, with the
worker's compensation program portion of the debt being the most
significant. The increase in debt during the second quarter has
historically coincided with the insurance programs' renewal period.
The Company's Cash and Cash Equivalents continue to improve from
$1,495,000 for the six months ended January 31, 2000 to the $2,723,000
at January 31, 2001. The Company continues to generate sufficient cash
to sustain its operational activities, as well as service all outstanding
debt.
For the six months ended January 31, 2001, the Company used net cash
of $1,285,000 for investing activities. Of this total, $660,000 was used
to purchase an additional 28% of the stock of S.I.P. Inc. The Company
now owns approximately 70% of the stock of S.I.P., Inc. During the six
months, the Company also used net cash for site preparation work for its
new headquarters to be located on its Manassas, Virginia property.
Williams Industries (parent company) and several of its subsidiaries will
be moving to temporary facilities on the Company-owned property during
April 2001. Capital expenditures of approximately $2 million are
anticipated over the course of Fiscal 2001 and 2002 in conjunction
with the relocation and construction of the corporate facility.
The Company currently has about $3 million in variable rate notes.
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 January 31, 2001
Compared to Three Months Ended January 31, 2000
The Company reported a slight increase in net income for the quarter
ended January 31, 2001. Net income was $74,000 or $0.02 per share on total
revenue of $11,103,000. These results compare to net income of $70,000 or
$0.02 per share on total revenue of $10,496,000 for the quarter ended
January 31, 2000.
Due to the influence of weather-related issues, the second quarter of
the fiscal year is traditionally the Company's weakest.
When the three months ended January 31, 2001 are compared to the
three months ended January 31, 2000, the Construction segment experienced
a decline of about $1 million in revenue. This was due to a combination
of weather-related issues and the timing of start-ups on new projects.
The Manufacturing segment had an increase of approximately $1,292,000
when the three months ended January 31, 2001 are compared to the three
months ended January 31, 2000. The bulk of this increase came from the
consolidation of S.I.P., Inc. of Delaware. Piedmont Metal Products, Inc.,
however, also experienced a 63% increase in revenues, due in large part to
a unique contract for the emergency renovation of a plant involved in a
major industrial accident.
The Sales and Services segment also had an increase in revenues when
the three months ended January 31, 2001 are compared with the three months
ended January 31, 2000. Some of this increase is attributed to the
Company's recent consolidation of segment management, allowing higher
utilization for both long and short-term projects. More coordinated
scheduling also permits the Company to seize emergency, time-sensitive
opportunities, such as the removal of debris resulting from a major fire
at the Algerian Embassy in Washington, D.C., that generally produce higher
profit margins.
Direct costs, when viewed as a percentage of total revenue, declined,
while expenses, as viewed as a percentage of revenue, increased. The
relative decline in direct costs is a result of higher margin jobs during
the quarter. The increase in expenses is primarily due to increased costs
in insurance, both in terms of health care coverage for employees and other
coverages, such as general liability and worker's compensation, for
personnel, equipment and projects.
Six Months Ended January 31, 2001
Compared to Six Months Ended January 31, 2000
For the six months ended January 31, 2001, the Company had net
earnings of $654,000 or $0.18 per share on revenue of $24,194,000
compared to net earnings of $258,000 or $0.07 per share on revenue
of $19,313,000 for the six months ended January 31, 2000.
For the six months ended January 31, 2000, the Company had Equity
Earnings of $39,200 and Minority Interest Expense of $23,432. For the
six months ended January 31, 2001, the Company had Minority Interest
Expense of $94,000. These changes are due to the change in S.I.P.'s
ownership by the Company.
Gross profit margins increased from 33.9% for the six months ended
January 31, 2000 to 37.1% for the six months ended January 31, 2001.
Each of the Company's subsidiaries experienced revenue growth when
the six months are compared, with the largest growth coming in the
Manufacturing segment. New projects, as well as the addition of S.I.P.,
Inc. of Delaware to the Company's consolidated results, accounted for
most of the Company's increased revenues. However, the first three months
of Fiscal 2001 were much more conducive to construction activities than
the first three months of Fiscal 2000 when two major tropical storms
impacted construction throughout the region.
The Company's Manufacturing segment benefited from consistent order
flow for bridge girders and decking, both components of the TEA 21 program.
Manufacturing revenues increased from $9,504,000 for the six months ended
January 31, 2000 to $12,893,000 for the six months ended January 31, 2001.
The trend of manufacturing becoming a larger percentage 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 for at least five years.
BACKLOG
At January 31, 2001, the Company's backlog was approximately $43
million, which is an increase of $5 million from October 31, 2000. At
January 31, 2000, the Company's consolidated backlog was $31 million, but
this number did not include S.I.P. Inc. of Delaware, which represents about
$7 million of the January 2001 total. This backlog includes a good mix of
work for the Construction and Manufacturing segments. Sales and Service's
work is normally performed as needed. As a result, only a small percentage
of the backlog is derived from this segment.
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 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
None
(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
March 9, 2001 /s/ Frank E. Williams, III
Frank E. Williams, III
President, Chairman of the
Board
Chief Financial Officer