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Headwaters Incorporated Announces Fourth Quarter and Fiscal 2013 Results

  Headwaters Incorporated Announces Fourth Quarter and Fiscal 2013 Results

                *FY 2013 Revenue Increased 11% to $703 Million
            *FY 2013 Operating Income Increased 58% to $54 Million
  *FY 2013 Adjusted EBITDA Increased 13% to $116 Million

Business Wire

SOUTH JORDAN, Utah -- November 5, 2013

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, 2013.

Fourth Quarter Highlights

  *Light building products revenue increased 21% and Adjusted EBITDA
    increased 19%
  *Heavy construction materials revenue increased 3% and Adjusted EBITDA
    increased 14%
  *Consolidated operating income and income from continuing operations for
    the quarter improved 65% and 334%, respectively
  *Repaid $7.9 million of convertible debt, reducing our February 2014 debt
    maturity to $7.7 million; maintained over $75 million of cash on hand

CEO Commentary

"We ended fiscal year 2013 with a strong fourth quarter, growing revenue by
13%, operating income by 65%, and Adjusted EBITDA by 15% over the fourth
quarter of 2012. As expected, our heavy construction materials segment showed
better sequential performance as the weather improved in the northern half of
the United States. Our architectural stone revenue continued to show improving
trends due to our 'good, better, and best' strategy and to exposure to new
residential construction. Our block group benefited from introducing new
products, geographic expansion to Louisiana, and a very positive economic
environment in Texas," said Kirk A. Benson, Chairman and Chief Executive
Officer. "Net income turned positive for the first time since early in the
housing down cycle, due to improved revenue, operating efficiencies, and lower
interest expense. We continued to manage our capital structure by prepaying a
portion of our debt due next February. Having successfully reduced our debt
ratios, we are now in the position to begin using cash flow and a balanced
debt strategy to accelerate growth.

"Fiscal year 2014 is starting on a strong note. We are introducing several new
light building products in 2014 and expect improved performance from our heavy
construction materials segment. Accordingly, we are initiating Adjusted EBITDA
guidance for fiscal year 2014 in the range of $125 million to $140 million."

Fourth Quarter Summary

Headwaters’ fourth quarter 2013 revenue increased by 13% to $215.0 million
from $190.1 million for the fourth quarter of 2012. Revenue from our acquired
trim board product line was approximately $10.4 million during the quarter.
Gross profit also increased by 13%, to $64.3 million, compared to $56.7
million in the fourth quarter of 2012. Operating income improved 65%, from
$15.9 million in 2012 to $26.3 million in 2013. Adjusted EBITDA increased by
$5.2 million, or 15% over 2012. Adjusted EBITDA margins for the quarter were
19.0%, an increase of 30 basis points over 2012. The improvement in Adjusted
EBITDA margins was tempered due to a change in product mix driven by strong
revenue growth in our block product line and the acquisition of our trim board
product. We anticipate that margins in both block and trim board will improve
in 2014.

Income from continuing operations was $13.2 million, or $0.18 per diluted
share, for the fourth quarter of 2013, compared to income of $3.0 million, or
$0.05 per diluted share, for the fourth quarter of 2012. Net income including
discontinued operations was $10.3 million, or $0.14 per diluted share, for the
fourth quarter of 2013, compared to a net loss of $(4.9) million, or $(0.08)
per diluted share, for the fourth quarter of 2012.

Fourth Quarter Business Segment Highlights

                  2013         2013         2013         2012
                                                     Adjusted        Adjusted
Business          Revenue      Adjusted     EBITDA       EBITDA
Segment                              EBITDA          Margin          Margin
Light Building    $114.8       $23.4        20.4%        20.8%
Products             million         million
Heavy                $95.7           $22.8
Construction      million      million      23.8%        21.7%
Materials
                                                                     
                                                                     
                                     2012            2013
                     2013            Operating       Operating       2012
                                                     Income          Operating
Business          Operating    Income       Margin       Income
Segment              Income                                          Margin
Light Building    $14.2        $10.7        12.4%        11.3%
Products             million         million
Heavy                $19.4           $16.9
Construction      million      million      20.3%        18.3%
Materials
                                                                     

Year Ended September 30, 2013

Our total revenue for the year ended September 30, 2013 was $702.6 million, up
11% from $632.8 million for 2012. Gross profit increased 10%, from $175.1
million in 2012 to $192.5 million in 2013. Operating income increased 58% from
$34.4 million in 2012 to $54.4 million in 2013, and the 2012 loss from
continuing operations of $(26.4) million, or a diluted loss per share of
$(0.43), turned positive in 2013 and resulted in income of $8.3 million, or
$0.12 per diluted share. The 2012 net loss including discontinued operations
of $(62.2) million, or a diluted loss per share of $(1.02), also turned
positive in 2013 with net income of $7.1 million, or $0.10 per diluted share.

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 2013 revenues in the light building products segment increased
$20.0 million, or 21%, to $114.8 million. The strongest growth in the quarter
was in our block product category, primarily because of new product
introductions and the strength of the Texas economy driving commercial and
institutional development. Our architectural stone product category also had
strong growth, benefiting from the ongoing rebound in new residential housing.
We continued to see soft repair and remodel end markets, which impacted both
our legacy siding products and our new trim board product line. Revenue from
our legacy products with repair and remodel end market exposure declined
during the quarter, but total repair and remodel income increased year over
year due to the acquisition of our trim board product line. We are introducing
several new products in our siding category, and with expanded trim board
distribution, we anticipate that 2014 revenue will positively rebound.
Exposure to repair and remodel provides an opportunity for growth, and will be
particularly beneficial to Headwaters as we sell some of our higher margin
products into the repair and remodel end market.

Fourth quarter 2013 gross profit increased by 16% from $29.7 million to $34.4
million, and operating income increased by 33% to $14.2 million from $10.7
million in 2012. Gross margin decreased 130 basis points to 30% in the
quarter, due largely to product mix. Adjusted EBITDA for the fourth quarter of
2013 was $23.4 million compared to $19.7 million in 2012, an increase of 19%.
Gross margin and Adjusted EBITDA margin decreased slightly as the strong
margin improvement associated with our stone product growth was offset by a
shift in our revenue mix driven by strong organic growth in our block product
group and the addition of trim board. We anticipate margin improvement over
the next year in our block product group as we eliminate some of the
manufacturing inefficiencies that resulted from the introduction of new
products and rapid growth. Margins in stone and trim board should improve
through growth and our focus on continuous improvement.

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 2013 revenues in the heavy construction materials segment
increased by 3% to $95.7 million, compared to $92.6 million for 2012. Although
service revenue was lower year over year, total revenue increased due to
higher fly ash shipments and price increases. Site service revenue as a
percent of total segment revenue is normally lower in the June and September
quarters, primarily due to seasonality, and represented approximately 25% of
total revenue for the September 2013 quarter, compared to 28% for the fourth
quarter of fiscal 2012 and 33% for the first half of fiscal 2013.

Gross profit increased by 6% to $27.3 million in the fourth quarter of 2013,
compared to $25.8 million in 2012, and gross margin increased by 80 basis
points to 29%. While revenue increased $3.1 million, operating income
increased $2.5 million or 81% of revenue, from $16.9 million in 2012 to $19.4
million in 2013. Similarly, Adjusted EBITDA increased $2.7 million from $20.1
million in 2012 to $22.8 million in 2013, or 13%. The increases in gross
profit, operating income, and Adjusted EBITDA in 2013 were due to increases in
fly ash revenue, and the impact of continuous improvement initiatives. Service
margins declined slightly due to start up inefficiencies associated with new
service contracts, but are expected to improve in 2014.

EPA Update

We believe that it is likely that the EPA will attempt to issue new
regulations surrounding the disposal of fly ash no earlier than December 2014.
Alignment of new water standards with proposed CCP disposal rules "could
provide strong support for a conclusion that regulation of [coal combustion
products] under RCRA Subtitle D would be adequate." Based on the EPA's
statements, we believe that the new regulations will be structured with coal
combustion products being regulated under RCRA Subtitle D. The D.C. Federal
District Court recently ordered the EPA to submit within 60 days its timeline
for the review and if necessary, modification of fly ash disposal regulations.
We will have greater certainty as to the timing of any new regulations after
the Court makes its final determination.

The Senate has not yet taken up the fly ash disposal bill passed by the House,
H.R. 2218, the "Coal Residuals Reuse and Management Act of 2013.” We believe
that the House bill adequately protects human health and the environment and
meets all reasonable standards necessary for the safe disposal of coal
combustion products.

Energy Technology Segment

For the fourth quarter of 2013, revenue from continuing operations in our
energy segment was $4.4 million compared to $2.7 million in 2012. Adjusted
EBITDA for the September 2013 quarter was $0.1 million compared to $(1.8)
million in 2012. For the year, revenue grew to $15.3 million and Adjusted
EBITDA was $0.3 million compared to 2012 revenue of $11.5 million and Adjusted
EBITDA of $(3.6) million.

HCAT is a proprietary technology that uses a liquid catalyst precursor to
facilitate hydrogen transfer within the most difficult to upgrade,
bottom-of-the-barrel feedstocks, enabling refiners to increase conversion or
throughput, and/or utilize less expensive opportunity crudes. HCAT is
recognized in the industry as a proven technology based on continued
operations for over three years at our initial customer location. This
customer treats approximately 42,000 barrels per day with HCAT.

During 2013, we executed two agreements with refineries that have the
potential of using HCAT in an additional 55,000 barrels per day of heavy oil.
Ultimate use is dependent upon installation of mixing equipment, test trials,
and proven benefits. The initial trial at one of the refineries has commenced
and should be completed in the December 2013 quarter.

Discontinued Operations

We recorded a loss from discontinued operations in 2013 of $(1.1) million,
which included an income tax benefit of $2.7 million and $(0.1) million of
loss associated with sales of the coal cleaning facilities. In 2012, we
recorded a loss from discontinued operations of $(35.8) million, which
included impairment losses of $(13.0) million. We currently expect that
additional adjustments to the estimated loss from sale of the facilities may
be recognized in 2014 as certain contingencies are resolved. We satisfied the
contingent liability of $7 million associated with identifying 1 million tons
of feedstock for the Utah facility, eliminating Headwaters exposure related to
feedstock identification.

For all sales transactions, a majority of the consideration is in the form of
potential production royalties and deferred purchase price, which amounts are
dependent upon future plant production levels over approximately eight years.
Such potential proceeds were not considered in the loss calculations and will
be accounted for in future periods when any such amounts are received.

Income Taxes

For fiscal year 2013, Headwaters recorded Federal and State income taxes that
included certain discrete adjustments, resulting in an effective rate of
approximately 32%. Current Federal taxes were minimal, while State taxes were
approximately $2 million. Headwaters is not currently recognizing income tax
benefits attributable to its pre-tax net operating loss (“NOL”) and tax credit
carry forwards, except to the extent of 2013 earnings, because realization is
dependent upon future income from operations. As future income from operations
becomes more certain, it is anticipated that the benefits associated with our
NOLs and tax credits will be recorded. Headwaters currently has a pre-tax NOL
in the amount of $189.0 million and unused tax credits of $25.6 million, both
of which can be carried forward for up to 20 years.

Outlook

“Our fiscal year income from continuing operations improved from a loss of $26
million in 2012 to a profit of $8 million in 2013. Our profit reflects
increased sales and improvements made to the business, as well as reduced
interest expense," said Don P. Newman, Headwaters’ Chief Financial Officer.
"Driving our return to profitability in 2013 was revenue growth of $69.8
million, improved operating margins of 230 basis points, and a $10.1 million
reduction in interest expense compared to 2012. Reflecting continued
improvement in new residential and repair and remodel end markets, along with
stable input costs and improved operating efficiencies, we expect ongoing
improvements in our financial performance.

“Earnings per share will become a more important valuation metric for
Headwaters as we continue to grow and increase profits. This quarter we have
added Adjusted Earnings Per Share as a financial metric of our business. The
adjustments to GAAP earnings per share are designed to inform our shareholders
of the impact on GAAP earnings per share resulting from the amortization of
acquired intangibles and other non-routine items. After adjustments,
Headwaters' earnings per share increased 32% for the full fiscal year, from
$0.41 per share in 2012 to $0.54 per share in 2013."

Non-GAAP Financial Measures

Headwaters currently uses two non-GAAP financial measures: Adjusted EBITDA and
Adjusted EPS. Headwaters defines Adjusted EBITDA as net income 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 detailed in the table that follows. 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, again as detailed below.

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 generally accepted
accounting principles (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. 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.

Headwaters’ calculations of Adjusted EBITDA, trailing twelve months (TTM)
Adjusted EBITDA and Adjusted EPS are reflected in the following tables. All
amounts which follow are presented on a continuing operations basis and do not
include the results from the discontinued coal cleaning business for any
period. Additionally, due to the sale of our interest in the Blue Flint
Ethanol facility in 2012, Adjusted EBITDA and Adjusted EPS do not include
results for Blue Flint for any period.


Reconciliation of Income (Loss) from Continuing Operations to Adjusted EBITDA
                                                           
(in millions)          Quarter Ended                        Year Ended
                       9/30/2012      9/30/2013      9/30/2012      9/30/2013 
Income (loss) from
continuing             $ 3.0           $ 13.2          $ (26.5     )    $ 8.3       
operations (GAAP)
Blue Flint              0.0            0.0            6.3            0.0       
Net interest            10.7           9.8            52.7           42.5      
expense
Income taxes            (1.1      )     3.4            0.7            4.0       
Depreciation,
amortization, and       13.1           13.3           53.2           54.0      
equity-based
compensation
Restructuring costs     0.0            0.0            2.2            0.0       
Thames bankruptcy       0.0            0.0            1.0            0.0       
Gain on early debt      (0.1      )     0.0            (2.4      )     0.0       
repayments
Write-off of R&D        3.2            0.0            3.2            0.0       
joint venture
Kleer
acquisition-related     0.0            0.0            0.0            1.8       
costs and
adjustments
Cash-based
compensation tied       6.8            1.1            12.3           5.6       
to stock price
Adjusted EBITDA        $ 35.6          $ 40.8          $ 102.7         $ 116.2     
                                                                               

Segment Adjusted EBITDA

Light building         $ 19.7          $ 23.4          $ 63.3          $ 72.9      
products
Heavy construction      20.1           22.8           54.8           56.6      
materials
Energy technology       (1.8      )     0.1            (3.6      )     0.3       
Corporate               (9.2      )     (6.6      )     (24.1     )     (19.2     )
Cash-based
compensation tied       6.8            1.1            12.3           5.6       
to stock price
Adjusted EBITDA        $ 35.6          $ 40.8          $ 102.7         $ 116.2     
                                                                                                  


TTM Adjusted EBITDA

(in millions)          Twelve Months Ended
                       9/30/2011      9/30/2012      9/30/2013 
Income (loss) from
continuing             $ (133.9    )    $ (26.5     )    $ 8.3       
operations (GAAP)
Blue Flint              (4.7      )     6.3            0.0       
Net interest            126.2          52.7           42.5      
expense
Income taxes            (0.2      )     0.7            4.0       
Depreciation,
amortization, and       57.3           53.2           54.0      
equity-based
compensation
Litigation accrual      15.0           0.0            0.0       
Restructuring costs     18.0           2.2            0.0       
Thames bankruptcy       0.0            1.0            0.0       
Gain on early debt      0.0            (2.4      )     0.0       
repayments
Write-off of R&D        0.0            3.2            0.0       
joint venture
Kleer
acquisition-related     0.0            0.0            1.8       
costs and
adjustments
Cash-based
compensation tied       (1.1      )     12.3           5.6       
to stock price
TTM Adjusted EBITDA    $ 76.6          $ 102.7         $ 116.2     
                                                        
                                                                              
Segment TTM Adjusted EBITDA

Light building         $ 39.6          $ 63.3          $ 72.9      
products
Heavy construction      46.2           54.8           56.6      
materials
Energy technology       2.5            (3.6      )     0.3       
Corporate               (10.6     )     (24.1     )     (19.2     )
Cash-based
compensation tied       (1.1      )     12.3           5.6       
to stock price
TTM Adjusted EBITDA    $ 76.6          $ 102.7         $ 116.2     
                                                                              

Reconciliation of Diluted EPS from Continuing Operations to Adjusted EPS


                      Quarter Ended                      Year Ended
(in millions,
except per-share        9/30/2012      9/30/2013     9/30/2012      9/30/2013
amounts)
Numerator:                                                           
Reported numerator
for diluted                                                            
earnings per
share from
continuing
operations in
accordance with
GAAP – income
(loss) from
continuing             $ 3.0           $ 13.2         $ (26.5     )    $ 8.3
operations
Adjustments to                                                       
numerator:
Amortization
expense related to
intangible
assets                  4.9            4.7           20.7           20.2
Blue Flint              0.0            0.0           6.3            0.0
Restructuring costs     0.0            0.0           2.2            0.0
Thames bankruptcy       0.0            0.0           1.0            0.0
Gain on early debt      (0.1      )     0.0           (2.4      )     0.0
repayments
Write-off of R&D        3.2            0.0           3.2            0.0
joint venture
Kleer
acquisition-related     0.0            0.0           0.0            1.8
costs and
adjustments
Premiums and
accelerated
interest expense
related to early        0.3            0.3           8.7            2.4
debt repayments
Cash-based
compensation tied       6.8            1.1           12.3           5.6
to stock price
Income tax effect
of above                (2.8      )     2.0           (0.3      )     0.4
adjustments
Total adjustments
to income (loss)
from
continuing
operations, net of
income tax
effect                  12.3           8.1           51.7           30.4
Numerator for
adjusted diluted
earnings per
share from
continuing             $ 15.3          $ 21.3         $ 25.2          $ 38.7
operations
                                                                                    
Denominator:                                                         
Reported
denominator for
diluted earnings
per
share in accordance     62.0           74.0          60.9           71.3
with GAAP
Effect on
calculation of
dilutive securities
of above                0.0            0.0           0.4            0.0
adjustments
Denominator for
adjusted diluted
earnings per
share, after effect
of adjustments on
calculation of          62.0           74.0          61.3           71.3
dilutive securities
                                                                                    
                                                                    
Reported diluted
income (loss) per
share from
continuing             $ 0.05          $ 0.18         $ (0.43     )    $ 0.12
operations
Effect of
adjustments on
diluted income
(loss)
per share               0.20           0.11          0.84           0.42
calculation
Adjusted diluted
income (loss) per
share from
continuing
operations             $ 0.25          $ 0.29         $ 0.41          $ 0.54
(Adjusted EPS)
                                                                                      

Liquidity and Long-term Debt

The components of our long-term debt (net of discounts) as of September 30,
2013, are shown in the following table:

                                                        
                               Amount            Interest
(dollars in millions)       Outstanding    Rate          Maturity
                                                                  Date
Senior secured notes        $400.0         7.625%        April 2019
Asset based loan                                 LIBOR plus
facility ($70.0 million     0.0            2.75%         October 2014
limit)
Convertible senior             7.6               2.50%            February
subordinated notes,                                               2014
net of discounts            49.4           8.75%         February
                                                                  2016
Total                       $457.0                      
                                                                  

During the September 2013 quarter, we repaid $7.9 million of the 2.50%
convertible notes, leaving only $7.7 million maturing in February 2014. We had
$75.3 million of cash on hand at September 30, 2013 and total liquidity of
$122.6 million, which includes the impact of providing $22.7 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 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 November 12,
2013 by dialing 1-800-406-7325 or 303-590-3030 and entering the pass code
4646500.

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 materials and products, the licensing of residue
hydrocracking technology and catalyst sales to oil refineries, results from
the sale of coal cleaning assets, the development, commercialization, and
financing of new products and 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, anticipated benefits from the sale
of coal cleaning assets, and the marketability of the coal combustion
products, building products and catalysts, 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. In some cases, 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 to identify such forward-looking statements. In addition, 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, 2012, 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,
                     2012           2013              2012            2013
Revenue:                                                             
Light building       $ 94,823          $ 114,823         $ 339,632          $ 394,324
products
Heavy
construction           92,567            95,714            281,672            293,000
materials
Energy                2,717        4,448           11,483        15,252   
technology
Total revenue          190,107           214,985           632,787            702,576
                                                                            
Cost of
revenue:
Light building         65,168            80,405            241,669            283,128
products
Heavy
construction           66,817            68,374            210,158            219,996
materials
Energy                1,420        1,885           5,893         6,970    
technology
Total cost of         133,405      150,664         457,720       510,094  
revenue
                                                                            
Gross profit           56,702            64,321            175,067            192,482
                                                                            
Operating
expenses:
Amortization           4,936             4,687             20,675             20,230
Research and           2,256             2,121             8,006              7,330
development
Selling,
general and            33,652            31,203            109,838            110,511
administrative
Restructuring         0            0               2,145         0        
costs
Total
operating             40,844       38,011          140,664       138,071  
expenses
                                                                            
Operating              15,858            26,310            34,403             54,411
income
                                                                            
Net interest           (10,720 )         (9,844  )         (52,678  )         (42,566  )
expense
Other income          (3,240  )     102             (7,493   )     364      
(expense), net
                                                                            
Income (loss)
from
continuing             1,898             16,568            (25,768  )         12,209
operations
before income
taxes
                                                                            
Income tax
benefit               1,139        (3,374  )        (661     )     (3,924   )
(provision)
                                                                            
Income (loss)
from                   3,037             13,194            (26,429  )         8,285
continuing
operations
                                                                            
Loss from
discontinued
operations,           (7,943  )     (2,941  )        (35,819  )     (1,148   )
net of income
taxes
                                                                            
Net income           $ (4,906  )    $ 10,253         $ (62,248  )    $ 7,137    
(loss)
                                                                            
                                                                            
Basic and
diluted income
(loss) per
share:
From
continuing           $ 0.05            $ 0.18            $ (0.43    )       $ 0.12
operations
From
discontinued          (0.13   )     (0.04   )        (0.59    )     (0.02    )
operations
                     $ (0.08   )    $ 0.14           $ (1.02    )    $ 0.10     
Weighted
average shares
outstanding:
Basic                 60,963       72,926          60,894        70,128   
                                                                            
Diluted               61,953       74,034          60,894        71,252   
                                                                            
                                                                            
Operating
income (loss)
by segment:
Light building       $ 10,661          $ 14,223          $ 25,553           $ 34,194
products
Heavy
construction           16,864            19,423            40,254             43,519
materials
Energy                 (2,164  )         (477    )         (6,045   )         (1,939   )
technology
Corporate             (9,503  )     (6,859  )        (25,359  )     (21,363  )
Total                $ 15,858      $ 26,310         $ 34,403       $ 54,411   
                                                                            
                                                                            
                                                                            
                                                                            
HEADWATERS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
                                                                            
                                                         September 30,
Assets:                                                  2012               2013
Current
assets:
Cash and cash                                            $ 53,782           $ 75,316
equivalents
Trade
receivables,                                               102,006            109,868
net
Inventories                                                31,588             37,383
Other                                                     27,320        21,316   
Total current                                              214,696            243,883
assets
                                                                            
Property,
plant and                                                  159,706            159,619
equipment, net
Intangible                                                 143,911            139,797
assets, net
Goodwill                                                   116,671            137,198
Other assets                                              45,953        43,512   
                                                                            
Total assets                                             $ 680,937      $ 724,009  
                                                                            
Liabilities
and
Stockholders'
Equity:
Current
liabilities:
Accounts                                                 $ 17,477           $ 21,810
payable
Accrued                                                    123,691            119,211
liabilities
Current
portion of                                                0             7,553    
long-term debt
Total current                                              141,168            148,574
liabilities
Long-term debt                                             500,539            449,420
Income taxes                                               22,079             24,637
Other
long-term                                                 20,280        16,968   
liabilities
Total                                                     684,066       639,599  
liabilities
                                                                            
Stockholders'
equity:
Common stock -                                             61                 73
par value
Capital in
excess of par                                              640,047            720,828
value
Retained
earnings                                                   (643,109 )         (635,972 )
(accumulated
deficit)
Treasury stock                                            (128     )     (519     )
Total
stockholders'                                             (3,129   )     84,410   
equity
                                                                            
Total
liabilities
and                                                      $ 680,937      $ 724,009  
stockholders'
equity

Contact:

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