Headwaters Incorporated Announces Results for Fourth Quarter and Fiscal Year 2012

  Headwaters Incorporated Announces Results for Fourth Quarter and Fiscal Year
  2012

                  *2012 Revenue increased 8% to $633 million
                  *2012 Adjusted EBITDA exceeded $90 million
               *Repaid $38 million of subordinated debt in 2012
  *Expected 2013 Adjusted EBITDA of $100 million to $115 million

Business Wire

SOUTH JORDAN, Utah -- November 06, 2012

HEADWATERS INCORPORATED (NYSE: HW), a building products company dedicated to
improving lives through innovative advancements in construction materials,
today announced results for its fourth quarter and fiscal year ended September
30, 2012.

Fourth Quarter Highlights

  *Fourth quarter revenue of $190.1 million, an increase of 7% over prior
    year
  *Gross profit margin improved by 230 basis points to 29.8%
  *Operating income increased 120% to $15.9 million
  *Repaid $3.5 million of subordinated debt in the quarter

CEO Commentary

“We continued to see revenue growth in the fourth quarter, driven primarily by
improvements in new residential construction and market share gains," said
Kirk A. Benson, Chairman and Chief Executive Officer of Headwaters. "We
maintained exceptional operating leverage with contribution margins in excess
of 47%, greatly expanding operating income in an up market. For the quarter,
operating income grew by 120% to $15.9 million.

"Our successful restructuring in our light building products segment resulted
in gross margin improvement of 470 basis points to 28.8%, and operating income
improvement from $(14.7) million to $25.5 million for the year. The momentum
continued in the fourth quarter as our heavy construction materials and light
building products segments had quarterly Adjusted EBITDA margins of 21.7% and
20.8%, respectively.

“For 2013, we look forward to our first positive consolidated income from
continuing operations since 2007, fulfilling our commitment to provide
innovative building materials to our customers and to carefully manage our
business and capital structure.”

Fourth Quarter Summary

Headwaters’ fourth quarter 2012 revenue increased by 7% to $190.1 million from
$178.3 million for the fourth quarter of 2011. Gross profit increased by 16%
to $56.7 million in the fourth quarter of 2012, compared to $49.0 million in
the fourth quarter of 2011. Operating income improved from $7.2 million in
2011 to $15.9 million in 2012, and Adjusted EBITDA declined by $4.1 million to
$28.8 million from $32.9 million.

Headwaters records the majority of its incentive-based performance
compensation in the third and fourth quarters of the fiscal year due to the
seasonality of its business. In the current quarter, Headwaters recorded
performance based compensation greater than its original target due to
increases in the Company's stock price and substantially improved operating
performance. The above-target performance compensation recorded in the quarter
was approximately $10.0 million, of which, $6.8 million was related to the
increase in our stock price. After adjustment for above-target performance
compensation, Adjusted EBITDA would have increased in the quarter by 18% to
$38.8 million.

Income from continuing operations was $3.0 million, or $0.05 per diluted
share, for the fourth quarter of 2012, compared to a loss of $(3.3) million,
or $(0.05) per diluted share, for the fourth quarter of 2011. Excluding
above-target performance compensation expense of $10.0 million, income from
continuing operations would have been $13.0 million in 2012. Net loss
including discontinued operations was $(4.9) million, or $(0.08) per diluted
share, for the fourth quarter of 2012, compared to a net loss of $(46.7)
million, or $(0.77) per diluted share, for the fourth quarter of 2011.

Fourth Quarter Fiscal 2012 Business Segment Highlights

                         2012           2012           2012           2011
Business Segment                              Adjusted    Adjusted
                         Revenue        Adjusted       EBITDA         EBITDA
                                        EBITDA         Margin         Margin
Light Building        $94.8       $19.7       20.8%       16.0%
Products                 million        million
Heavy Construction    $92.6       $20.1       21.7%       23.2%
Materials                million        million
                                                         

Fiscal Year 2012 Summary

Total revenue for the 2012 fiscal year was $632.8 million, up 8% from $588.0
million for 2011. Gross profit increased 20%, from $145.9 million in 2011 to
$175.1 million in 2012. Operating income improved by $46.6 million to a
positive operating income of $34.4 million, increasing from an operating loss
of $(12.2) million in 2011. Loss from continuing operations decreased from
$(134.1) million, or a diluted loss per share of $(2.21), in 2011, to a loss
of $(25.8) million, or $(0.43) per diluted share, in 2012. The net loss
including discontinued operations decreased from $(229.9) million, or a
diluted loss per share of $(3.80), in 2011, to a net loss of $(62.2) million,
or $(1.02) per diluted share, in 2012. After including above-target
performance compensation of approximately $15.5 million ($12.3 million of
which is related to Headwaters' stock performance, which increased equity
value more than $300 million), Adjusted EBITDA in 2012 improved by 16% to
$90.4 million, compared to Adjusted EBITDA of $77.7 million in 2011. Adding
above-target compensation back to our 2012 performance, Headwaters' Adjusted
EBITDA would have been $105.9 million, a 36% improvement over 2011.

Fiscal 2012 Business Highlights

                     2011            2012            2011            2012
Business                                             Operating       Operating
Segment           Operating    Operating    Income       Income
                     Income                          Margin          Margin
                                     Income
Light Building    $(14.7)      $25.5        (4.7)%       7.5%
Products             million         Million
Heavy                $31.3           $40.2
Construction      million      million      12.4%        14.3%
Materials
                                                        

Light Building Products Segment

Headwaters’ light building products segment is a national brand leader in
innovative building products through superior design, manufacturing and
channel distribution. The segment brands and brings to market a wide variety
of building products, including vinyl siding accessories and manufactured
architectural stone.

Fourth quarter 2012 revenues in the light building products segment increased
$4.8 million, or 5%, to $94.8 million, compared to $90.0 million for the
fourth quarter of 2011. Quarterly gross margin increased by 500 basis points
to 31.3% and operating income, after adjustment for 2011 restructuring
charges, improved by 78% to $10.7 million. Adjusted EBITDA improved to $19.7
million from $14.4 million in 2011.

We experienced growth in our siding and stone groups as our product offerings
gained market share. Both siding and stone product groups are benefiting from
improvements in the new residential construction end markets, driving revenue
growth from both price and volume increases. Revenue in our concrete block
product group declined, primarily due to slower school construction in the
Texas market, but we are starting to see improvement in sales from new
products, particularly products sold into retail channels, increasing our
participation in residential construction. We anticipate revenue in our
concrete block group to be flat to slightly up in 2013.

Our light building products segment is benefiting from positive operating
leverage inherent in our business model, as evidenced by the strong impact
that revenue growth had on gross profit and Adjusted EBITDA. Revenue for the
year grew by 8%, but after adjusting for restructuring charges, operating
income expanded by more than 10 times to $27.7 million, as our cost savings
initiatives added to our operating leverage. Adjusted EBITDA increased 60% to
$63.3 million in 2012 compared to $39.6 million in 2011.

Heavy Construction Materials Segment

Headwaters Resources 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.

Fourth quarter 2012 revenues in the heavy construction materials segment
increased by 12% to $92.6 million, compared to $82.6 million for 2011. We
experienced revenue growth in both CCP sales and in CCP services provided to
utilities, as incremental revenue from new projects more than offset the
effect of unplanned outages and lower electricity demand. Revenue increases
were particularly strong in the central region of the country. CCP service
revenue represented approximately 28% of total revenue for both the fourth
quarter of 2012 and for the year.

Gross profit increased by 14% to $25.8 million in the fourth quarter of 2012,
compared to $22.6 million in 2011. Gross margin improved by 40 basis points to
27.8%. Operating income was $16.9 million in 2012 compared to $15.5 million in
2011. The improvements in gross profit and operating income were primarily due
to improved product sales, product mix, and our continuous improvement efforts
to lower costs. Adjusted EBITDA increased by 5% to $20.1 million in 2012 from
$19.2 million in 2011.

For the year, heavy construction materials revenue increased $28.4 million or
11% compared to 2011. Operating income increased 28% from $31.3 million to
$40.2 million, and Adjusted EBITDA grew by 19% to $54.8 million. Passage of
the highway bill in the quarter, and increases in new residential
construction, should provide our heavy construction materials segment the
opportunity for continuing its solid performance into 2013.

EPA Update

During the quarter, the U.S. Senate introduced a bipartisan legislative
solution to the disposal of fly ash, including a Federal standard that would
be administered by the States. The Senate bill has 12 Democrat and 14
Republican co-sponsors, indicating that we are likely to have 60 Senators
supporting the legislation when it comes up for a vote. Of course, the House
version of the Senate bill was passed with a strong bipartisan majority
earlier in the year. It is now important to identify a legislative vehicle to
which the fly ash disposal language can be attached, providing Congress an
opportunity to resolve the regulatory uncertainty caused by the EPA in a
bipartisan, environmentally sound manner.

As part of its response to deadline litigation initiated by environmental
organizations, the EPA formally stated that it requires more time to evaluate
proposed fly ash disposal regulations. In its recent court filing, the EPA
indicated that it does not expect to propose final regulations until 2014, at
the earliest. Based on the timetable set by the EPA, we do not anticipate any
significant developments in the near term, unless action is required by the
courts.

Finally, the EPA has not completed its risk evaluation methodology for
encapsulated beneficial use of fly ash. When the risk evaluation methodology
is complete, we believe that the EPA may apply it to fly ash concrete and
synthetic gypsum wallboard, two examples of encapsulated products, confirming
the historical consensus that there is no environmental exposure associated
with the use of coal combustion products in these applications.

Energy Technology Segment

For the fourth quarter of 2012, revenue from continuing operations in our
energy segment was $2.7 million compared to $5.7 million in 2011. Adjusted
EBITDA was $(1.8) million in 2012 compared to $0.9 million in 2011. HCAT sales
were lower in the fourth quarter of 2012 as compared to 2011 primarily due to
unplanned outages at one of our customer refineries. Currently, both customer
refineries are using HCAT to improve conversion of heavy oil to lighter
liquids through reduced fouling.

Discontinued Operations

The loss from discontinued operations for the fourth quarter of 2012 was
$(7.9) million, which included $6.0 million of accruals and other non-cash
charges. Exclusive of the non-cash charges, our quarterly loss from
discontinued operations was $(1.9) million in the fourth quarter of 2012,
compared to a total of over $(9.0) million for the first three quarters of the
year.

We continue to negotiate with prospective purchasers of the coal cleaning
facilities and currently expect to sell all, or substantially all, of our
discontinued coal cleaning business before the end of calendar 2012. In fiscal
2012, we sold one of our coal cleaning facilities, and on October 31, 2012, we
closed on the sale of two additional facilities. Since the facilities sold in
October will have to be relocated, proceeds from the sale are largely through
royalties related to future production. The remaining eight facilities are
under contract, but there are material conditions that must be met in order
for the transactions to close.

Income Taxes

For fiscal 2012, Headwaters did not recognize income tax benefits attributable
to its pre-tax net operating loss ("NOL") and tax credits because realization
is dependent upon future income or capital gains from operations. Headwaters
currently has a pre-tax NOL in the amount of $166.9 million and tax credits of
$23.8 million, both of which can be carried forward for up to 20 years.

Outlook

"We generated strong free cash flow from our continuing operations in 2012,
which enabled us to further strengthen our balance sheet by paying down debt,"
said Don P. Newman, Headwaters’ Chief Financial Officer. "Over the past five
quarters, we repaid $48.2 million of debt and improved our net debt to
adjusted EBITDA ratio from a high of 6.7 to 4.9. Importantly, we have
restructured the maturity dates of our subordinated debt to coincide with our
free cash flow generation, dramatically reducing our balance sheet risk.

“We are pleased with the underlying improvement in the business and, should
end markets maintain their current momentum, expect to generate net income
from continuing operations in 2013, our first annual profit since 2007. We
expect our Adjusted EBITDA from continuing operations for 2013 to be in the
range of $100 million to $115 million, depending on the level of new housing
starts, repair and remodeling spend, and the continued growth of our newer
products. Other risks include increased transportation costs and raw material
pricing.”

"Effective January 1, 2013, we are pleased to invite Sylvia Summers to serve
on Headwaters Board of Directors," said Kirk A. Benson, Chairman and Chief
Executive Officer. "Sylvia was identified as an excellent candidate to serve
on Headwaters' Board by the National Association of Corporate Directors. She
has 18 years of general management experience including serving as CEO of
Trident Microsystems, the largest manufacturer of system microchips to the
digital TV and set top box markets. Sylvia has a masters degree in electrical
engineering and an MBA degree. We are very happy to have access to Sylvia's
broad business experience. She will stand for election for a three year term
at Headwaters' next stockholder meeting."

Discussion of EBITDA

Headwaters has historically defined EBITDA as net income plus net interest
expense, income taxes (excluding income tax credits generated), depreciation
and amortization, stock-based compensation, foreign currency translation gain
or loss (when applicable) and goodwill or other impairments. Any additional
adjustments to EBITDA are detailed in the table that follows. EBITDA and
Adjusted EBITDA are used by management to measure operating performance, as a
supplement to our consolidated financial statements presented in accordance
with generally accepted accounting principles (GAAP). EBITDA and Adjusted
EBITDA are also used by investors to measure a company’s ability to service
its debt and meet its other cash needs. The EBITDA and Adjusted EBITDA
calculations as reflected in the following tables are consistent with the
definitions Headwaters has used historically and with the definitions
management intends on using in future periods when measuring operating
performance.

Management believes EBITDA and Adjusted EBITDA are helpful in highlighting
trends, because EBITDA excludes certain results of decisions that are outside
the control of operating management and can differ significantly from company
to company depending on long-term strategic decisions regarding capital
structure, tax jurisdictions, and capital investments. Management compensates
for the limitations of using non-GAAP financial measures by using them to
supplement GAAP results to provide a more complete understanding of the
factors and trends affecting the business rather than by using GAAP results
alone.

EBITDA and Adjusted EBITDA are not measurements of our financial performance
under GAAP and should not be considered as alternatives to net income,
operating income or any other performance measure derived in accordance with
GAAP or as a measure of our liquidity. Additionally, EBITDA and Adjusted
EBITDA are not intended to be measures of free cash flow available for
management’s discretionary use, as they do not consider certain cash
requirements such as interest payments, tax payments and debt service
requirements. Our presentation of EBITDA and Adjusted EBITDA has limitations
as an analytical tool, and should not be considered in isolation, or as a
substitute for analysis of our results as reported under GAAP. Because the
definition of EBITDA varies among companies and industries, our definition of
EBITDA may not be comparable to other similarly-titled measures used by other
companies.

Headwaters’ calculations of Adjusted EBITDA and trailing twelve months (TTM)
Adjusted EBITDA are reflected in the following tables. All amounts which
follow are presented on a continuing operations basis and do not include the
results from coal cleaning for any period. Additionally, due to the sale of
our interest in the Blue Flint Ethanol facility, Adjusted EBITDA does not
include any results from Blue Flint for any period.

Adjusted EBITDA – Consolidated

(in millions)    Quarter Ended                     Year Ended
                 9/30/2011     9/30/2012     9/30/2011     9/30/2012 
Income (loss)
from             $ (3.3      )   $ 3.0          $ (133.9    )   $ (26.5     )
continuing
operations
Less Blue         0.0           0.0           (4.7      )    6.3       
Flint
Net interest      13.4          10.7          126.2         52.7      
expense
Income taxes      (3.1      )    (1.1      )    (0.2      )    0.7       
Depreciation,
amortization,
and               14.2          13.1          57.3          53.2      
stock-based
compensation
Restructuring     11.7          0.0           18.0          2.2       
costs
Litigation        0.0           0.0           15.0          0.0       
accrual
Thames            0.0           0.0           0.0           1.0       
bankruptcy
Gain on early
debt              0.0           (0.1      )    0.0           (2.4      )
repayments
Write-off of
R&D joint         0.0           3.2           0.0           3.2       
venture
Adjusted         $ 32.9         $ 28.8         $ 77.7         $ 90.4      
EBITDA
                                                                  
Adjusted
EBITDA by                                                        
segment
Light
building         $ 14.4         $ 19.7         $ 39.6         $ 63.3      
products
Heavy
construction      19.2          20.1          46.2          54.8      
materials
Energy            0.9           (1.8      )    2.5           (3.6      )
technology
Corporate         (1.6      )    (9.2      )    (10.6     )    (24.1     )
Adjusted         $ 32.9         $ 28.8         $ 77.7         $ 90.4      
EBITDA
                                   

Adjusted EBITDA – Light Building Products Segment

(in millions)    Quarter Ended                    Year Ended
                 9/30/2011     9/30/2012     9/30/2011     9/30/2012 
Operating        $ (5.8      )   $ 10.7         $ (14.7     )   $ 25.5      
income (loss)
Other income      (0.1      )    0.0           (0.2      )    (0.4      )
(expense)
Depreciation,
amortization,
and               9.4           9.0           38.4          36.0      
stock-based
compensation
Restructuring     10.9          0.0           16.1          2.2       
costs
Adjusted         $ 14.4         $ 19.7         $ 39.6         $ 63.3      
EBITDA
                                                               

Adjusted EBITDA – Heavy Construction Materials Segment

(in millions)    Quarter Ended                    Year Ended
                 9/30/2011     9/30/2012     9/30/2011     9/30/2012
Operating        $ 15.5         $ 16.9         $ 31.3         $ 40.2
income
Other income      0.1           0.0           0.4           0.0
(expense)
Depreciation,
amortization,
and               3.6           3.2           14.5          13.6
stock-based
compensation
Thames            0.0           0.0           0.0           1.0
bankruptcy
Adjusted         $ 19.2         $ 20.1         $ 46.2         $ 54.8
EBITDA
                                                             

Adjusted EBITDA – Energy Technology Segment

(in millions)    Quarter Ended                      Year Ended
                 9/30/2011     9/30/2012      9/30/2011     9/30/2012 
Operating        $ 0.3          $ (2.2      )    $ (10.4     )   $ (6.0      )
income (loss)
Other income      0.0           (3.4      )     0.0           (9.5      )
(expense)
Tax credits       (0.8      )    0.0            0.0           0.0       
(reversal)
Less Blue         0.8           0.0            (4.7      )    6.3       
Flint
Depreciation,
amortization,
and               0.6           0.6            2.6           2.4       
stock-based
compensation
Litigation        0.0           0.0            15.0          0.0       
accrual
Write-off of
R&D joint         0.0           3.2            0.0           3.2       
venture
Adjusted         $ 0.9          $ (1.8      )    $ 2.5          $ (3.6      )
EBITDA
                                                                 

TTM Adjusted EBITDA – Consolidated

(in millions)             Twelve Months Ended
                          9/30/2010     9/30/2011     9/30/2012 
Loss from continuing      $ (21.1     )   $ (133.9    )   $ (26.5     )
operations
Less Blue Flint            (9.9      )    (4.7      )    6.3       
Net interest expense       71.1          126.2         52.7      
Income taxes               (11.7     )    (0.2      )    0.7       
Depreciation,
amortization, and          53.3          57.3          53.2      
stock-based
compensation
Foreign currency           (2.8      )    0.0           0.0       
translation gain
Non-recurring banking      3.3           0.0           0.0       
fees
Litigation settlement      1.6           15.0          0.0       
/ accrual
Gain on sale of South      (3.9      )    0.0           0.0       
Korean joint venture
Asset impairment           3.5           0.0           0.0       
Restructuring costs        0.0           18.0          2.2       
Thames bankruptcy          0.0           0.0           1.0       
Gain on early debt         0.0           0.0           (2.4      )
repayments
Write-off of R&D joint     0.0           0.0           3.2       
venture
TTM Adjusted EBITDA       $ 83.4         $ 77.7         $ 90.4      
                                                         
TTM Adjusted EBITDA by
Segment
Light building            $ 52.3         $ 39.6         $ 63.3      
products
Heavy construction         51.4          46.2          54.8      
materials
Energy technology          (5.4      )    2.5           (3.6      )
Corporate                  (14.9     )    (10.6     )    (24.1     )
TTM Adjusted EBITDA       $ 83.4         $ 77.7         $ 90.4      
                                                                             

Liquidity and Long-term Debt

During the fourth quarter of 2012, we repurchased and canceled $3.5 million of
our 2.50% convertible senior subordinated notes. The components of our
long-term debt (net of discounts) as of September 30, 2012, are shown in the
following table:

(in millions)                Amount         Interest Rate   Maturity
                                Outstanding                        Date
Senior secured notes         $    400.0     7.625    %      April 2019
Asset based loan facility        0.0       LIBOR plus      October
($70.0 million limit)                            2.75%             2014
                                                                   February
Convertible senior                   51.3        2.50     %        2014
subordinated notes, net                                   
of discounts                         49.2        8.75     %        February
                                                                   2016
Total                        $    500.5                    
                                                           

We had approximately $53.8 million of cash on hand at September 30, 2012 and
total liquidity of $104.9 million, which includes the impact of Headwaters
providing $18.9 million for letters of credit for various purposes.

Conference Call

Management will host a conference call with a simultaneous web cast today at
11:00 a.m. Eastern, 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 November 13, 2012 by dialing 1-800-406-7325 or 303-590-3030
and entering the pass code 4569726.

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 heavy construction materials, light building products, and energy
technology industries. Through its coal combustion products, building
products, and energy businesses, the Company has been able to improve
sustainability by transforming underutilized resources into valuable products.
www.headwaters.com

Forward Looking Statements

Certain statements contained in this press release are forward-looking
statements within the meaning of federal securities laws and Headwaters
intends that such forward-looking statements be subject to the safe-harbor
created thereby. Forward-looking statements include Headwaters’ expectations
as to the managing and marketing of coal combustion products, the production
and marketing of building products, the sale of its discontinued cleaned coal
operations, the licensing of residue hydrocracking technology and catalyst
sales to oil refineries, the availability of refined coal tax credits, the
development, commercialization, and financing of new technologies and other
strategic business opportunities and acquisitions, and other information about
Headwaters. Such statements that 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, cleaned coal, catalysts,
and the availability of tax credits, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 regarding
future events and our future results that are based on current expectations,
estimates, forecasts, and projections about the industries in which we operate
and the beliefs and assumptions of our management. Actual results may vary
materially from such expectations. Words such as “may,” “should,” “intends,”
“plans,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “believes,”
“seeks,” “estimates,” “forecasts,” or variations of such words and similar
expressions, or the negative of such terms, may help identify such
forward-looking statements. Any statements that refer to projections of our
future financial performance, our anticipated growth and trends in our
businesses, and other characterizations of future events or circumstances, are
forward-looking. In addition to matters affecting the coal combustion
products, building products, and energy industries or the economy generally,
factors that could cause actual results to differ from expectations stated in
forward-looking statements include, among others, the factors described in the
caption entitled “Risk Factors” in Item 1A in Headwaters’ Annual Report on
Form 10-K for the fiscal year ended September 30, 2011, Quarterly Reports on
Form 10-Q, and other periodic filings and prospectuses.

Although Headwaters believes that its expectations are based on reasonable
assumptions within the bounds of its knowledge of its business and operations,
there can be no assurance that our results of operations will not be adversely
affected by such factors. Unless legally required, we undertake no obligation
to revise or update any forward-looking statements for any reason. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this press release. Our internet address is
www.headwaters.com. There we make available, free of charge, our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
any amendments to those reports, as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. Our reports
can be accessed through the investor relations section of our web site.

HEADWATERS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per-share amounts)
                                                             
                        Quarter Ended September 30,   Year Ended September 30,
                         2011        2012        2011         2012    
Revenue:
  Light building        $ 90,041        $ 94,823      $ 314,062        $ 339,632
  products
  Heavy
  construction            82,554          92,567        253,300          281,672
  materials
  Energy                 5,688       2,717       20,602       11,483  
  technology
        Total             178,283         190,107       587,964          632,787
        revenue
                                                                       
Cost of
revenue:
  Light building          66,416          65,168        238,377          241,669
  products
  Heavy
  construction            59,911          66,817        193,006          210,158
  materials
  Energy                 2,917       1,420       10,648       5,893   
  technology
        Total
        cost of           129,244         133,405       442,031          457,720
        revenue
                                                                
Gross profit              49,039          56,702        145,933          175,067
                                                                       
Operating
expenses:
  Amortization            5,533           4,936         22,359           20,675
  Research and            1,503           2,256         6,451            8,006
  development
  Selling,
  general and             23,053          33,652        111,358          109,838
  administrative
  Restructuring          11,738      0           17,930       2,145   
  costs
        Total
        operating         41,827          40,844        158,098          140,664
        expenses
                                                                
Operating income          7,212           15,858        (12,165  )       34,403
(loss)
                                                                       
Net interest              (13,425 )       (10,720 )     (126,252 )       (52,678 )
expense
Other income              (211    )       (3,240  )     4,314            (7,493  )
(expense), net
                                                                
Income (loss) from
continuing                (6,424  )       1,898         (134,103 )       (25,768 )
operations before
income taxes
                                                                       
Income tax
benefit                   3,091           1,139         171              (661    )
(provision)
                                                                
Income (loss) from
continuing                (3,333  )       3,037         (133,932 )       (26,429 )
operations
                                                                       
Loss from
discontinued              (43,399 )       (7,943  )     (95,989  )       (35,819 )
operations, net of
income taxes
                                                                
Net loss                $ (46,732 )   $ (4,906  )   $ (229,921 )   $ (62,248 )
                                                                       
                                                                       
Basic and diluted
earnings (loss)
per share:
  From
  continuing            $ (0.05   )     $ 0.05        $ (2.21    )     $ (0.43   )
  operations
  From
  discontinued           (0.72   )    (0.13   )    (1.59    )    (0.59   )
  operations
                        $ (0.77   )   $ (0.08   )   $ (3.80    )   $ (1.02   )
                                                                       
Weighted average
shares
outstanding:
  Basic                  60,537      60,963      60,440       60,894  
  Diluted                60,537      61,953      60,440       60,894  
                                                                       
                                                                       
Operating income
(loss) by
segment:
  Light building        $ (5,760  )     $ 10,661      $ (14,751  )     $ 25,553
  products
  Heavy
  construction            15,501          16,864        31,304           40,254
  materials
  Energy                  473             (2,164  )     (14,387  )       (6,045  )
  technology
  Corporate              (3,002  )    (9,503  )    (14,331  )    (25,359 )
  Total                 $ 7,212      $ 15,858     $ (12,165  )   $ 34,403  
                                                                                 

HEADWATERS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
                                                      
                                               September 30,
Assets:                                         2011          2012     
Current assets:
    Cash and cash equivalents                  $ 50,810           $ 53,782
    Trade receivables, net                       90,931             102,006
    Inventories                                  33,247             31,588
    Other                                       16,818        27,320   
Total current assets                             191,806            214,696
                                                                  
Property, plant and equipment,                   164,709            159,706
net
Intangible assets, net                           164,221            143,911
Goodwill                                         116,671            116,671
Assets held for sale                             24,446             7,807
Other assets                                     66,384             38,146
                                                              
Total assets                                   $ 728,237      $ 680,937  
                                                                  
Liabilities and Stockholders'
Equity:
Current liabilities:
    Accounts payable                           $ 18,979           $ 17,477
    Accrued liabilities                          94,223             123,691
    Current portion of long-term                9,014         0        
    debt
Total current liabilities                        122,216            141,168
                                                                  
    Long-term debt                               518,789            500,539
    Income taxes                                 15,909             22,079
    Other long-term liabilities                 14,587        20,280   
Total liabilities                               671,501       684,066  
                                                                  
Stockholders' equity:
    Common stock - par value                     61                 61
    Capital in excess of par                     637,547            640,047
    value
    Retained earnings                            (580,861 )         (643,109 )
    (accumulated deficit)
    Other                                       (11      )     (128     )
Total stockholders' equity                       56,736             (3,129   )
                                                              
Total liabilities and stockholders'            $ 728,237      $ 680,937  
equity

Contact:

Headwaters Incorporated
AT THE COMPANY:
Sharon Madden
Vice President of Investor Relations
(801) 984-9400
or
ANALYST CONTACT:
Financial Profiles
Tricia Ross
(916) 939-7285
 
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