-
Revenue Increased 8% to $262 Million
-
Redeemed $47 Million of Unsecured Senior Debt
-
Announcing the Acquisition of Krestmark Industries for $240 Million
-
2016 Adjusted EBITDA Guidance Reaffirmed
HEADWATERS INCORPORATED (NYSE: HW), a building products
company dedicated to improving lives through innovative advancements in
construction materials, today announced results for its third quarter of
fiscal 2016.
Third Quarter 2016 Highlights
-
Revenue increased 8% to $262 million, despite adverse weather impact
-
Income from continuing operations before income taxes increased from
$25 million to $27 million
-
Adjusted EBITDA increased 11% to $54 million and Adjusted EBITDA
margin expanded by 50 basis points
-
Building products Adjusted EBITDA margin expanded to 22.4%
-
Construction materials Adjusted EBITDA margin expanded to 26.2%
-
Repriced term loan debt, reducing the interest rate by 50 basis points
to Libor plus 300 bps
-
On July 1, redeemed $47 million of our unsecured senior debt, reducing
the outstanding principal amount to $99 million
-
On August 1, entered into a definitive agreement to acquire the assets
of Krestmark Industries, LP, a high-growth, high-margin manufacturer
of vinyl windows in South Central U.S.
CEO Commentary
“We are pleased with our growth and continued margin strength during the
third quarter, despite being impacted by adverse weather conditions in a
number of our markets, including heavy rain in the Texas and Gulf
regions,” said Kirk A. Benson, Chairman and Chief Executive Officer of
Headwaters. “Overall, Headwaters’ third quarter performance was
substantially in line with our expectations, allowing us to reaffirm our
2016 Adjusted EBITDA guidance of $185 million to $200 million.
“We are extremely pleased with the acquisition of Krestmark, and our
entry into the windows market with this best-in-class company. Krestmark
enjoys leading positions in several attractive markets, serving
primarily the new residential construction market in the South Central
region of the U.S. Krestmark has experienced a double digit compounded
revenue growth rate for the last eight years, while generating
attractive EBITDA margins. We anticipate that Krestmark’s Adjusted
EBITDA margins will be accretive to Headwaters 19.1% margins, making it
a niche window business that fits well with us.
“Revenue in our building products segment grew 10% in the quarter and
Adjusted EBITDA margins expanded over 30 bps. We enjoyed very strong
double digit top line growth in our trim product line during the
quarter. The growth in our trim product reflects the implementation of
our strategy to extend the geographic reach of our newly introduced or
acquired products to our existing two step distribution customers.
“Construction materials’ Adjusted EBITDA margin exceeded 26%, up almost
200 basis points over last year. Fly ash supplies began to normalize
very late in the quarter, so the increase in revenue and corresponding
margin improvement was primarily the result of increased fly ash pricing
and our bolt-on gypsum acquisition.”
Third Quarter Summary
Headwaters’ third quarter 2016 consolidated revenue increased by 8% to
$262.5 million from $243.3 million for the third quarter of 2015, and
gross profit increased by 9% to $83.5 million, compared to $76.8 million
in 2015. Operating income improved from $33.3 million in 2015 to $36.1
million in 2016, and Adjusted EBITDA increased by $5.2 million to $54.0
million, or 11% over 2015.
Income from continuing operations was $17.5 million, or $0.23 per
diluted share, for the third quarter of 2016, compared to $23.1 million,
or $0.30 per diluted share, for the third quarter of 2015, with the
decrease primarily due to increases in GAAP tax expense following the
release of deferred tax asset valuation allowances in the fourth quarter
of fiscal 2015. Third quarter adjusted income from continuing operations
was $22.7 million, or $0.30 per diluted share in 2016, compared to $19.1
million, or $0.25 per diluted share in 2015, representing increases of
approximately 20% year-over-year. Discontinued operations were
immaterial in both 2015 and 2016.
Third Quarter Business Segment Highlights
|
Business
Segment
|
|
|
|
2016
Revenue
|
|
|
|
2016
Adjusted
EBITDA
|
|
|
|
2016 Adjusted
EBITDA
Margin
|
|
|
|
2015 Adjusted
EBITDA
Margin
|
|
Building Products
|
|
|
|
$162.6 million
|
|
|
|
$36.5 million
|
|
|
|
22.4%
|
|
|
|
22.1%
|
|
Construction Materials
|
|
|
|
$97.7 million
|
|
|
|
$25.6 million
|
|
|
|
26.2%
|
|
|
|
24.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Segment
|
|
|
|
2016
Operating
Income
|
|
|
|
2015
Operating
Income
|
|
|
|
2016
Operating
Income
Margin
|
|
|
|
2015
Operating
Income
Margin
|
|
Building Products
|
|
|
|
$24.6 million
|
|
|
|
$22.8 million
|
|
|
|
15.1%
|
|
|
|
15.4%
|
|
Construction Materials
|
|
|
|
$20.9 million
|
|
|
|
$18.4 million
|
|
|
|
21.4%
|
|
|
|
20.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2016
Our total revenue for the nine months ended June 30, 2016 was $683.2
million, up 10% from $622.6 million for 2015. Gross profit increased
13%, from $179.6 million in 2015 to $202.7 million in 2016. Operating
income of $60.7 million in 2015 improved by 20%, to $73.1 million in
2016. Income from continuing operations in 2015 of $5.3 million, or
diluted income per share of $0.06, improved to $33.1 million, or $0.43
per diluted share, in 2016. The 2015 results include $24.8 million of
incremental interest expense related to early debt repayments. The 2016
results include additional non-cash tax expense resulting from the
release of deferred tax asset valuation allowances in the fourth quarter
of fiscal 2015. Discontinued operations were immaterial in both 2015 and
2016.
Adjusted EBITDA increased by $16.6 million, or 16%, from $106.7 million
to $123.3 million for the nine months ended June 30, 2016 as compared to
2015, and Adjusted EPS increased by 50%, from $0.40 in 2015 to $0.60 in
2016.
Building Products Segment
Headwaters’ building products segment is a national brand leader in
innovative building products through superior design, manufacturing and
channel distribution. The segment markets a wide variety of niche
building products, including siding accessories, manufactured
architectural stone, concrete block, and specialty roofing products.
Building products revenue increased 10%, from $147.8 million in the
third quarter of 2015 to $162.6 million in the third quarter of 2016. In
2016, gross profit increased 9% to $51.2 million from $47.0 million in
2015, and operating income increased 8% to $24.6 million from $22.8
million. Adjusted EBITDA in the third quarter of 2016 increased 12% from
$32.7 million in 2015 to $36.5 million.
All major product groups experienced sales growth despite adverse
weather conditions in the third quarter and the likely pull forward of
sales into the second quarter due to unseasonably mild winter
temperatures. Heavy rain in Texas negatively impacted revenue in our
block group. Siding products, which predominantly sells into the repair
and remodel market, experienced solid revenue growth, led by our trim
product where we have experienced double digit top line growth.
Adjusted EBITDA margins for the quarter were 22.4%, reflecting effective
cost controls and the continued benefit from lower raw material,
transportation, and energy costs. We should complete the consolidation
of our stone-coated metal roofing manufacturing plants in the September
quarter, resulting in anticipated margin improvement. Additional
integration activities will continue well into next year and should
result in 2017 margin expansion.
We recently entered into a definitive agreement, subject to certain
closing conditions, to acquire the assets of Krestmark Industries and
its affiliates for $240 million. Headquartered in Dallas, Texas,
Krestmark is one of the top-performing manufacturers of high quality
vinyl windows in the U.S. Krestmark has developed a best-in-class
business model offering an optimal line of branded window products to a
diverse customer base of homebuilders, lumber yards, and distributors.
The acquisition is a natural extension of Headwaters’ focus on supplying
our customers and homeowners with attractive products for the exterior
of the home.
We believe Krestmark fits well into Headwaters’ strategy of increasing
sales to core customers, having a strong focus on customer service, and
niche positioning that results in high margins relative to peers.
Krestmark has established a track record of robust growth through
existing and new customers. Its organic compounded annual growth rate
for revenue over the past eight years was greater than 15%. We
anticipate strong double digit revenue growth for Krestmark in 2017,
meeting or exceeding $125 million in revenue. It is anticipated that
Krestmark’s margins will be accretive to Headwaters’ 19.1% Adjusted
EBITDA margins.
We intend to finance the acquisition by borrowing under our term loan
credit facility. It is estimated that at closing our net debt to
Adjusted EBITDA ratio will be approximately 3.5 times on a pro forma
basis, but the ratio will be closer to 3.1 to 3.2 times on a pro forma
basis at the end of fiscal 2016. We anticipate that by the end of fiscal
2017, the net debt ratio will be in the range of 2.5x, or lower.
Construction Materials Segment
Headwaters is the largest domestic manager and marketer of coal
combustion products (CCPs), including fly ash. Utilization of these
materials improves performance of concrete and concrete construction
products while creating significant environmental benefits.
Third quarter 2016 revenue increased by 6% to $97.7 million, compared to
$91.9 million in 2015. The increase in revenue is primarily attributable
to positive pricing for high-value CCPs and the previously announced
acquisition of SynMat. Net price increases for the June 2016 quarter
averaged approximately 6%, as compared to the June 2015 quarter. The
continued favorable pricing environment is the result of demand for high
value CCPs, as well as increases in demand for portland cement. Service
revenue represented approximately 23% of total segment revenue for the
third quarter of 2016 compared to 18% for the year ago period, with
SynMat contributing to the higher service revenue percentage
year-over-year. Service revenue was 21% for all of fiscal 2015.
We believe that our fly ash supply in 2016 compared to 2015 was lower
because of a temporary seasonal decline in fly ash production due
primarily to lower electricity demand and unusually low natural gas
prices, both impacted by unseasonably mild temperatures. Sales volumes
were also impacted by rain. Based on demand for high quality CCPs,
improvements to weather, and increasing natural gas prices, we expect
that sales volumes for CCPs to normalize in the fourth quarter.
As demand for high quality CCPs remains strong, we continue to develop
additional fly ash sources, some of which are not dependent upon current
electricity generation. We have been actively involved in creative
strategies to secure additional supplies for some time, and believe that
several of these strategies will be operational in 2017. For example, we
believe that we can reclaim high quality fly ash previously disposed by
utilities, and are currently working on this initiative at multiple
sites. The American Coal Ash Association estimates that there are
hundreds of millions of tons of potentially available CCPs, much of
which we believe could be reclaimed for use as fly ash. In addition, we
are expanding our storage and blending capabilities. As we develop
additional sources of supply, we forecast 2017 volumes in the range of
6.1 to 6.5 million tons, a 9% to 20% increase over 2016 projected
volumes.
Gross profit increased by 11% to $31.2 million in 2016, compared to
$28.1 million in 2015, and gross margin increased by 140 basis points to
31.9%. Operating income increased $2.5 million, or 14%, from $18.4
million in 2015 to $20.9 million in 2016, with a 140 basis point
increase in operating margin. Adjusted EBITDA increased $3.3 million
from $22.3 million in 2015 to $25.6 million in 2016, or 15%. Adjusted
EBITDA margin of 26.2% set a new record for the June quarter and
represents an increase of nearly 200 basis points as compared to last
year.
Outlook
“We are pleased with the overall performance of the business and remain
very optimistic that our key end markets will continue to grow in 2017.
Efforts to increase our available fly ash supply should also add revenue
and cash flow in the coming months, as well as in 2017 and beyond,” said
Don P. Newman, Headwaters’ Chief Financial Officer. “In addition, the
acquisition of Krestmark creates a new platform for growth in a niche
windows market, and adds another high-margin exterior products business
to our portfolio.
“While financing the acquisition with debt will increase leverage in the
short term, the increase is modest and we expect to de-lever quickly. We
anticipate closing fiscal 2016 with a net debt to Adjusted EBITDA ratio
of between 3.1 and 3.2 times on a pro forma basis. At the end of fiscal
2017 we expect our net debt ratio to be in the range of 2.5x or lower.
“We have repaid approximately $113 million of debt since the beginning
of fiscal 2014 and plan to continue reducing debt levels in 2017, in
addition to investing in growth capex and bolt-on acquisitions.”
Financial Supplement Attached
Headwaters’ condensed consolidated statements of income for the three-
and nine-month periods ended June 30, 2015 and 2016, and balance sheets
as of September 30, 2015 and June 30, 2016, all presented in accordance
with generally accepted accounting principles (GAAP), are attached to
this press release in the financial supplement. In addition, Headwaters
currently uses two non-GAAP financial measures: Adjusted EBITDA and
Adjusted EPS. Headwaters’ calculations of Adjusted EBITDA, trailing
twelve months (TTM) Adjusted EBITDA, and Adjusted EPS are also included
in the financial supplement, following the GAAP financial statements.
Headwaters defines Adjusted EBITDA as income from continuing operations
plus net interest expense, income taxes, depreciation and amortization,
equity-based compensation, cash-based compensation tied to stock price,
goodwill and other impairments, and other non-routine adjustments that
arise from time to time, all as presented in the table in the financial
supplement. Headwaters currently defines Adjusted EPS as diluted EPS
from continuing operations plus the effect of amortization expense
related to acquired intangible assets and other non-routine adjustments
that arise from time to time, as presented in the table in the financial
supplement.
Adjusted EBITDA and Adjusted EPS are used by management, investors, and
analysts to measure operating performance, as a supplement to our
consolidated financial statements presented in accordance with GAAP.
Adjusted EBITDA is also used by management, investors, and analysts as
one measure of a company’s ability to service its debt and meet its
other cash needs. Our presentations of Adjusted EBITDA and Adjusted EPS
have limitations as analytical tools, and should not be considered in
isolation or as substitutes for analysis of our results as reported
under GAAP. Accordingly, they are not presented as alternative measures
of liquidity. Because the definitions of Adjusted EBITDA and Adjusted
EPS vary among companies and industries, our definitions of these
non-GAAP financial measures may not be comparable to similarly titled
measures used by other companies.
Conference Call
Management will host a conference call with a simultaneous web cast
today at 11:00 a.m. Eastern Time, 9:00 a.m. Mountain Time, to discuss
the Company’s financial results and business outlook. The call will be
available live via the Internet by accessing Headwaters’ web site at www.headwaters.com
and clicking on the Investor Relations section. To listen to the live
broadcast, please go to the web site at least fifteen minutes early to
register, download, and install any necessary audio software. There will
also be corresponding slides with the webcast. For those who cannot
listen to the live broadcast, an online replay will be available for 90
days on www.headwaters.com,
or a phone replay will be available through August 9th, 2016,
by dialing 877-344-7529 or 412-317-0088 and entering the passcode
10090671.
About Headwaters Incorporated
Headwaters Incorporated is improving lives through innovative
advancements in construction materials through application, design, and
purpose. Headwaters is a diversified growth company providing products,
technologies, and services to the construction materials and building
products markets. Through its construction materials and building
products businesses, the Company has been able to improve sustainability
by transforming underutilized resources into valuable products. www.headwaters.com
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This press release contains forward-looking statements relating to
Headwaters’ operations that are based on management’s current
expectations, estimates, and projections about the industries in which
Headwaters operates. Words such as “may,” “should,” “anticipates,”
“expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,”
“believes,” “seeks,” “schedules,” “estimates,” “budgets,” “goals,”
“outlook,” and similar expressions are intended to help identify such
forward-looking statements. Forward-looking statements include
Headwaters’ expectations as to the managing and marketing of coal
combustion products, the production and marketing of building products,
the sales to oil refineries of residue hydrocracking catalysts, the
development, commercialization, and financing of new products and other
strategic business opportunities and acquisitions, and other information
about Headwaters which are not purely historical by nature, including
those statements regarding Headwaters’ future business plans, the
operation of facilities, the availability of feedstocks, and the
marketability of the coal combustion products, building products, and
catalysts. These statements are not guarantees of future performance and
are subject to certain risks, uncertainties, and other factors, many of
which are beyond the Company’s control and are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such forward-looking statements. The
reader should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Unless legally required, Headwaters undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise. Among the important factors
that could cause actual results to differ materially from those in the
forward-looking statements are: changing feedstock and energy prices;
actions of competitors or regulators; technological developments;
potential disruption of the Company’s production facilities,
transportation networks, and information technology systems due to war,
terrorism, malicious attack, civil accidents, political events, civil
unrest, or severe weather; potential environmental liability or product
liability under existing or future laws and litigation; potential
liability resulting from other pending or future litigation; changed
accounting rules under generally accepted accounting principles
promulgated by rule-setting bodies; and the factors set forth under the
heading “Risk Factors” in the Company’s Annual Report on Form
10-K, quarterly reports on Form 10-Q, and other periodic reports. In
addition, such results could be affected by general domestic and
international economic and political conditions and other unpredictable
or unknown factors not discussed in this press release which could have
material adverse effects on forward-looking statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEADWATERS INCORPORATED
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
(in thousands, except per-share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building products
|
|
|
|
$
|
147,830
|
|
|
|
|
$
|
162,642
|
|
|
|
|
$
|
371,770
|
|
|
|
|
$
|
423,682
|
|
|
|
|
Construction materials
|
|
|
|
|
91,900
|
|
|
|
|
|
97,741
|
|
|
|
|
|
240,802
|
|
|
|
|
|
255,494
|
|
|
|
|
Energy technology
|
|
|
|
|
3,564
|
|
|
|
|
|
2,083
|
|
|
|
|
|
10,044
|
|
|
|
|
|
4,040
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
243,294
|
|
|
|
|
|
262,466
|
|
|
|
|
|
622,616
|
|
|
|
|
|
683,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building products
|
|
|
|
|
100,801
|
|
|
|
|
|
111,409
|
|
|
|
|
|
264,474
|
|
|
|
|
|
297,742
|
|
|
|
|
Construction materials
|
|
|
|
|
63,850
|
|
|
|
|
|
66,577
|
|
|
|
|
|
174,099
|
|
|
|
|
|
181,059
|
|
|
|
|
Energy technology
|
|
|
|
|
1,881
|
|
|
|
|
|
949
|
|
|
|
|
|
4,453
|
|
|
|
|
|
1,736
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
|
|
166,532
|
|
|
|
|
|
178,935
|
|
|
|
|
|
443,026
|
|
|
|
|
|
480,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
76,762
|
|
|
|
|
|
83,531
|
|
|
|
|
|
179,590
|
|
|
|
|
|
202,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
38,906
|
|
|
|
|
|
42,408
|
|
|
|
|
|
105,286
|
|
|
|
|
|
115,172
|
|
|
|
|
Amortization
|
|
|
|
|
4,557
|
|
|
|
|
|
5,029
|
|
|
|
|
|
13,603
|
|
|
|
|
|
14,410
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
43,463
|
|
|
|
|
|
47,437
|
|
|
|
|
|
118,889
|
|
|
|
|
|
129,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
33,299
|
|
|
|
|
|
36,094
|
|
|
|
|
|
60,701
|
|
|
|
|
|
73,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
|
|
(8,083
|
)
|
|
|
|
|
(9,270
|
)
|
|
|
|
|
(56,000
|
)
|
|
|
|
|
(25,543
|
)
|
|
Other income (expense), net
|
|
|
|
|
122
|
|
|
|
|
|
(207
|
)
|
|
|
|
|
(180
|
)
|
|
|
|
|
(288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
|
25,338
|
|
|
|
|
|
26,617
|
|
|
|
|
|
4,521
|
|
|
|
|
|
47,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (provision)
|
|
|
|
|
(2,220
|
)
|
|
|
|
|
(9,090
|
)
|
|
|
|
|
760
|
|
|
|
|
|
(14,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
23,118
|
|
|
|
|
|
17,527
|
|
|
|
|
|
5,281
|
|
|
|
|
|
33,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
|
|
(110
|
)
|
|
|
|
|
258
|
|
|
|
|
|
(387
|
)
|
|
|
|
|
(186
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
23,008
|
|
|
|
|
|
17,785
|
|
|
|
|
|
4,894
|
|
|
|
|
|
32,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
|
|
(191
|
)
|
|
|
|
|
(269
|
)
|
|
|
|
|
(695
|
)
|
|
|
|
|
(848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Headwaters Incorporated
|
|
|
|
$
|
22,817
|
|
|
|
|
$
|
17,516
|
|
|
|
|
$
|
4,199
|
|
|
|
|
$
|
32,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share attributable to Headwaters
Incorporated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
0.23
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.43
|
|
|
|
|
From discontinued operations
|
|
|
|
|
0.00
|
|
|
|
|
|
0.00
|
|
|
|
|
|
0.00
|
|
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
0.23
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding:
|
|
|
|
|
76,044
|
|
|
|
|
|
75,457
|
|
|
|
|
|
75,699
|
|
|
|
|
|
75,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building products
|
|
|
|
$
|
22,838
|
|
|
|
|
$
|
24,603
|
|
|
|
|
$
|
39,465
|
|
|
|
|
$
|
50,508
|
|
|
|
|
Construction materials
|
|
|
|
|
18,427
|
|
|
|
|
|
20,945
|
|
|
|
|
|
40,090
|
|
|
|
|
|
47,113
|
|
|
|
|
Energy technology
|
|
|
|
|
(993
|
)
|
|
|
|
|
(1,106
|
)
|
|
|
|
|
(1,131
|
)
|
|
|
|
|
(3,990
|
)
|
|
|
|
Corporate
|
|
|
|
|
(6,973
|
)
|
|
|
|
|
(8,348
|
)
|
|
|
|
|
(17,723
|
)
|
|
|
|
|
(20,534
|
)
|
|
|
|
Total
|
|
|
|
$
|
33,299
|
|
|
|
|
$
|
36,094
|
|
|
|
|
$
|
60,701
|
|
|
|
|
$
|
73,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEADWATERS INCORPORATED
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
June 30,
|
|
Assets:
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
2016
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
$
|
142,597
|
|
|
|
|
|
|
$
|
87,503
|
|
|
|
|
Trade receivables, net
|
|
|
|
|
|
|
|
|
|
134,384
|
|
|
|
|
|
|
|
136,137
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
55,074
|
|
|
|
|
|
|
|
65,684
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
12,156
|
|
|
|
|
|
|
|
13,784
|
|
|
Total current assets
|
|
|
|
|
|
|
|
|
|
344,211
|
|
|
|
|
|
|
|
303,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
|
|
|
185,718
|
|
|
|
|
|
|
|
190,089
|
|
|
Goodwill
|
|
|
|
|
|
|
|
|
|
178,199
|
|
|
|
|
|
|
|
218,722
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
|
143,718
|
|
|
|
|
|
|
|
182,633
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
92,852
|
|
|
|
|
|
|
|
74,824
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
34,321
|
|
|
|
|
|
|
|
43,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
$
|
979,019
|
|
|
|
|
|
|
$
|
1,012,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
|
|
$
|
25,306
|
|
|
|
|
|
|
$
|
23,760
|
|
|
|
|
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
104,325
|
|
|
|
|
|
|
|
107,990
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
|
|
|
4,250
|
|
|
|
|
|
|
|
4,250
|
|
|
Total current liabilities
|
|
|
|
|
|
|
|
|
|
133,881
|
|
|
|
|
|
|
|
136,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
|
|
|
|
|
|
|
558,080
|
|
|
|
|
|
|
|
552,798
|
|
|
|
|
Income taxes
|
|
|
|
|
|
|
|
|
|
6,590
|
|
|
|
|
|
|
|
3,015
|
|
|
|
|
Other long-term liabilities
|
|
|
|
|
|
|
|
|
|
30,186
|
|
|
|
|
|
|
|
35,910
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
728,737
|
|
|
|
|
|
|
|
727,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest in consolidated subsidiary
|
|
|
|
|
|
|
|
|
|
12,431
|
|
|
|
|
|
|
|
12,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock - par value
|
|
|
|
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
74
|
|
|
|
|
Capital in excess of par value
|
|
|
|
|
|
|
|
|
|
728,667
|
|
|
|
|
|
|
|
731,630
|
|
|
|
|
Retained earnings (accumulated deficit)
|
|
|
|
|
|
|
|
|
|
(489,889
|
)
|
|
|
|
|
|
|
(457,847
|
)
|
|
|
|
Treasury stock
|
|
|
|
|
|
|
|
|
|
(1,001
|
)
|
|
|
|
|
|
|
(1,308
|
)
|
|
Total stockholders' equity
|
|
|
|
|
|
|
|
|
|
237,851
|
|
|
|
|
|
|
|
272,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
$
|
979,019
|
|
|
|
|
|
|
$
|
1,012,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEADWATERS INCORPORATED
|
|
Reconciliations of Non-GAAP Financial Measures (Unaudited)
|
|
(in millions, except per-share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Income from Continuing Operations to
Adjusted EBITDA
|
|
|
|
Quarter Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (GAAP)
|
|
|
|
$
|
23.1
|
|
|
|
|
$
|
17.5
|
|
|
|
|
$
|
5.2
|
|
|
|
|
$
|
33.0
|
|
|
Non-controlling interest of subsidiary
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
(0.9
|
)
|
|
Net interest expense
|
|
|
|
|
8.1
|
|
|
|
|
|
9.3
|
|
|
|
|
|
56.0
|
|
|
|
|
|
25.6
|
|
|
Income taxes
|
|
|
|
|
2.2
|
|
|
|
|
|
9.1
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
14.2
|
|
|
Depreciation, amortization, and equity-based compensation
|
|
|
|
|
14.5
|
|
|
|
|
|
15.8
|
|
|
|
|
|
41.4
|
|
|
|
|
|
45.0
|
|
|
Non-routine customer and business acquisition-related costs and
adjustments
|
|
|
|
|
0.3
|
|
|
|
|
|
2.6
|
|
|
|
|
|
1.2
|
|
|
|
|
|
6.4
|
|
|
Asset impairments, write-offs and other non-routine items
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
-
|
|
|
|
|
|
0.6
|
|
|
|
|
|
-
|
|
|
Cash-based compensation tied to stock price
|
|
|
|
|
1.1
|
|
|
|
|
|
-
|
|
|
|
|
|
3.8
|
|
|
|
|
|
-
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
48.8
|
|
|
|
|
$
|
54.0
|
|
|
|
|
$
|
106.7
|
|
|
|
|
$
|
123.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Products
|
|
|
|
$
|
32.7
|
|
|
|
|
$
|
36.5
|
|
|
|
|
$
|
66.8
|
|
|
|
|
$
|
82.8
|
|
|
Construction materials
|
|
|
|
|
22.3
|
|
|
|
|
|
25.6
|
|
|
|
|
|
51.6
|
|
|
|
|
|
59.7
|
|
|
Energy technology
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(2.9
|
)
|
|
Corporate
|
|
|
|
|
(6.7
|
)
|
|
|
|
|
(7.3
|
)
|
|
|
|
|
(15.5
|
)
|
|
|
|
|
(16.3
|
)
|
|
Cash-based compensation tied to stock price
|
|
|
|
|
1.1
|
|
|
|
|
|
-
|
|
|
|
|
|
3.8
|
|
|
|
|
|
-
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
48.8
|
|
|
|
|
$
|
54.0
|
|
|
|
|
$
|
106.7
|
|
|
|
|
$
|
123.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
TTM Adjusted EBITDA Reconciliation
|
|
|
|
|
|
|
|
9/30/2014
|
|
|
|
9/30/2015
|
|
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (GAAP)
|
|
|
|
|
|
|
|
$
|
16.5
|
|
|
|
|
$
|
132.1
|
|
|
|
|
$
|
159.9
|
|
|
Non-controlling interest of subsidiary
|
|
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
(0.9
|
)
|
|
|
|
|
(1.1
|
)
|
|
Net interest expense
|
|
|
|
|
|
|
|
|
46.3
|
|
|
|
|
|
64.2
|
|
|
|
|
|
33.8
|
|
|
Income taxes
|
|
|
|
|
|
|
|
|
3.6
|
|
|
|
|
|
(94.5
|
)
|
|
|
|
|
(79.5
|
)
|
|
Depreciation, amortization, and equity-based compensation
|
|
|
|
|
|
|
|
|
56.9
|
|
|
|
|
|
56.2
|
|
|
|
|
|
59.8
|
|
|
Non-routine customer and business acquisition-related costs and
adjustments
|
|
|
|
|
|
|
|
|
6.1
|
|
|
|
|
|
1.8
|
|
|
|
|
|
7.0
|
|
|
Asset impairments, write-offs and other non-routine items
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
0.6
|
|
|
|
|
|
-
|
|
|
Cash-based compensation tied to stock price
|
|
|
|
|
|
|
|
|
6.1
|
|
|
|
|
|
6.1
|
|
|
|
|
|
2.3
|
|
|
TTM Adjusted EBITDA
|
|
|
|
|
|
|
|
$
|
137.8
|
|
|
|
|
$
|
165.6
|
|
|
|
|
$
|
182.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment TTM Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Products
|
|
|
|
|
|
|
|
$
|
88.1
|
|
|
|
|
$
|
101.9
|
|
|
|
|
$
|
117.9
|
|
|
Construction materials
|
|
|
|
|
|
|
|
|
66.8
|
|
|
|
|
|
80.5
|
|
|
|
|
|
88.6
|
|
|
Energy technology
|
|
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
|
|
2.2
|
|
|
|
|
|
(0.7
|
)
|
|
Corporate
|
|
|
|
|
|
|
|
|
(21.2
|
)
|
|
|
|
|
(25.1
|
)
|
|
|
|
|
(25.9
|
)
|
|
Cash-based compensation tied to stock price
|
|
|
|
|
|
|
|
|
6.1
|
|
|
|
|
|
6.1
|
|
|
|
|
|
2.3
|
|
|
TTM Adjusted EBITDA
|
|
|
|
|
|
|
|
$
|
137.8
|
|
|
|
|
$
|
165.6
|
|
|
|
|
$
|
182.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted EPS from Continuing Operations to
Adjusted EPS
|
|
|
|
Quarter Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported numerator for diluted earnings per share from
continuing operations in accordance with GAAP - income from
continuing operations attributable to Headwaters Incorporated
|
|
|
|
$
|
22.9
|
|
|
|
|
$
|
17.2
|
|
|
|
|
$
|
4.5
|
|
|
|
|
$
|
32.1
|
|
|
Adjustments to numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To reflect income taxes in the 2015 periods at a normalized rate
(see Note to table below)
|
|
|
|
|
(7.3
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
-
|
|
|
Amortization expense related to acquired intangible assets
|
|
|
|
|
4.5
|
|
|
|
|
|
5.0
|
|
|
|
|
|
13.4
|
|
|
|
|
|
14.2
|
|
|
Non-routine customer and business acquisition-related costs and
adjustments
|
|
|
|
|
0.3
|
|
|
|
|
|
2.6
|
|
|
|
|
|
1.2
|
|
|
|
|
|
6.4
|
|
|
Asset impairments, write-offs and other non-routine items
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
-
|
|
|
|
|
|
0.6
|
|
|
|
|
|
-
|
|
|
Interest expense related to early debt repayments and repricing
|
|
|
|
|
-
|
|
|
|
|
|
1.4
|
|
|
|
|
|
24.8
|
|
|
|
|
|
1.4
|
|
|
Cash-based compensation tied to stock price
|
|
|
|
|
1.1
|
|
|
|
|
|
-
|
|
|
|
|
|
3.8
|
|
|
|
|
|
-
|
|
|
Income tax effect of above pretax adjustments (see Note to table
below)
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
(3.5
|
)
|
|
|
|
|
(17.0
|
)
|
|
|
|
|
(8.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments to income from continuing operations, net of
income tax effect
|
|
|
|
|
(3.8
|
)
|
|
|
|
|
5.5
|
|
|
|
|
|
25.5
|
|
|
|
|
|
13.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for adjusted diluted earnings per share from
continuing operations
|
|
|
|
$
|
19.1
|
|
|
|
|
$
|
22.7
|
|
|
|
|
$
|
30.0
|
|
|
|
|
$
|
45.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported denominator for diluted earnings per share in accordance
with GAAP and for adjusted earnings per share
|
|
|
|
|
76.0
|
|
|
|
|
|
75.5
|
|
|
|
|
|
75.7
|
|
|
|
|
|
75.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported diluted income per share from continuing operations
(GAAP)
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
0.23
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.43
|
|
|
Effect of adjustments on diluted income per share calculation
|
|
|
|
|
(0.05
|
)
|
|
|
|
|
0.07
|
|
|
|
|
|
0.34
|
|
|
|
|
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted income per share from continuing operations
(Adjusted EPS) (see Note to table below)
|
|
|
|
$
|
0.25
|
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
0.40
|
|
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note to table: Until the September 2015 quarter, when we
reversed most of the valuation allowance on our deferred tax assets,
our estimated effective income tax rate was only approximately 10%,
while in 2016 our effective income tax rate is estimated at 39%.
Accordingly, in order for the 2015 Adjusted EPS to be comparable to
2016, we have included an adjustment to reflect income taxes at a
normalized rate of 39%, for both the 2015 period GAAP earnings and
the income tax effect of the adjustments shown in the table. This is
consistent with the calculation of income taxes for the 2016
periods. Using this same methodology for the quarters ended December
31, 2015 and March 31, 2016 for reporting the income tax effect of
the adjustments, would have resulted in the following numbers being
reported for those two periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
3/31/2016
|
|
Income tax effect of adjustments
|
|
|
|
|
|
|
|
|
$
|
(2.3
|
)
|
|
|
|
|
|
$
|
(2.8
|
)
|
|
Adjusted diluted income per share from continuing operations
(Adjusted EPS)
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
|
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160802005732/en/
Copyright Business Wire 2016
