Headwaters Incorporated Announces Results For Second Quarter Of Fiscal Year 2012

Headwaters Incorporated (NYSE: HW), a building products company dedicated to improving lives through innovative advancements in construction materials, today announced results for its second quarter of fiscal 2012.

Second Quarter Fiscal 2012 Highlights

• Light building products revenue increased 19%, the highest year-over-year growth rate since March 2006
• Heavy construction materials revenue increased 14%, reflecting growth in both product sales and service revenues
• Results highlight positive impact of operating leverage – revenue increased 15% and Adjusted EBITDA increased nearly five-fold
• Repaid $12.0 million of subordinated debt in the quarter, reducing annual cash interest expense by $1.8 million

CEO Commentary

“The improving business trends we saw in the first quarter of the year continued in the second quarter, which we view as an indication that we are now in a more positive operating environment,” said Kirk A. Benson, Chairman and Chief Executive Officer of Headwaters. “We noted signs of strengthening end markets during the quarter, which favorably impacted our sales, as did warmer weather.

“Equally important, the operating leverage we built into our business model over the past few years is translating into strong improvements in free cash flow and Adjusted EBITDA. We remain focused on our mission of becoming a top tier construction materials company and we are poised to do that as the economy continues to improve."

Second Quarter Summary

Headwaters’ second quarter 2012 revenue increased by 15% to $129.6 million from $113.2 million for the second quarter of 2011. Adjusted EBITDA in the second quarter of 2012 was $12.5 million, a nearly five-fold increase from $2.6 million in the second quarter of 2011. Gross profit increased by 50% to $31.6 million in the second quarter of 2012, compared to $21.1 million in the second quarter of 2011, and operating loss for the second quarter of 2012 decreased to $(1.8) million from $(31.9) million in the second quarter of 2011. Improved operating results are directly related to increased sales combined with a strong contribution margin, as well as reduced fixed costs.

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