- The Washington Times - Monday, March 15, 2004

Shares of Williams Industries Inc. lost nearly a quarter of their value yesterday after the company reported a larger net loss from shrinking profit margins and said it might turn down a lucrative manufacturing contract.

The Manassas holding company, which has several subsidiaries involved in construction and manufacturing, said the rising cost of steel and other raw materials was cutting into profits, and that business was hurt by labor shortages and equipment failures.

Williams reported a net loss of $667,000, or 18 cents per share for the second fiscal quarter, compared with $618,000, or 17 cents per share, during the comparable quarter a year ago. Revenue rose from $11.8 million to $12.03 million. Williams’ fiscal year runs from August to July 31.

Williams announced the earnings Friday after the market closed. Shares of the company fell $1.24 to close at 3.93 on the Nasdaq Stock Market yesterday.

Williams said in January that its largest subsidiary, Williams Bridge Co., received a $22 million contract to make 14,650 tons of steel to be used in nine bridges as part of the Springfield Interchange Project in Virginia. But the company said last week that the contract was never formalized, and that it may back out now that one of its suppliers has refused to honor a commitment to pay for raw materials needed for the project.

“The fact remains that regardless of the validity of the increases, our suppliers have informed us they are not able to honor existing contracts,” Frank E. Williams III, the company’s president and chief executive officer, said in a statement. “Obviously, this creates substantial uncertainty.”

The price of steel, which has risen more than 65 percent since June, is the main cause of Williams’ shrinking margins. While some analysts had hoped President Bush’s repeal of tariffs on imported steel would lower the cost of steel, the value of the euro has risen, offsetting any price advantage. The price of steel has jumped so fast that companies such as Williams are struggling to adjust.

“Steel and scrap prices are up around the world,” said Morgan Stanley analyst Wayne Atwell at a hearing before the House Small Business Committee last week. “Cost pressures are too great for the steel industry to absorb, and the industry has passed its higher costs on to customers.”

Analysts said there is uncertainty around Williams financial future because many states where the company does business have budget shortfalls. Because of deficits, few states have set aside money to fund large bridge and road projects.

Williams, which is under contract to erect a span of the Woodrow Wilson Bridge replacement, wants Congress to renew the Transportation Equity Act for the 21st Century, a program providing federal funding for highways set to expire April 29. If the program is not renewed, Williams said, state funding for infrastructure will also be depressed. Most of Williams’ manufacturing business, especially bridge girders and equipment used in highway construction, relies on this spending by governments.

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