Headwaters Incorporated Announces Results For Second Quarter Of Fiscal Year 2012

Our total revenue for the six months ended March 31, 2012 was $267.1 million, up 7% from $249.0 million for 2011. Gross profit increased 25%, from $52.9 million in 2011 to $66.0 million in 2012. The operating loss of $(32.9) million in 2011 improved to a positive operating income of $2.6 million in 2012, and the loss from continuing operations decreased from $(132.6) million, or a diluted loss per share of $(2.20) in 2011, to a loss of $(31.5) million, or $(0.52) per diluted share, in 2012. The net loss including discontinued operations decreased from $(176.8) million, or a diluted loss per share of $(2.93) in 2011, to a net loss of $(44.3) million, or $(0.73) per diluted share, in 2012.

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.

Second quarter revenues in the light building products segment increased $11.6 million, or 19%, to $74.3 million, compared to $62.7 million for the second quarter of 2011. We experienced significant growth in sales of our siding and architectural stone product groups, with a small decrease in sales in our concrete block product group. Revenue growth was driven by an expansion of our distribution system, resulting in new customers in some key markets. In addition, we benefited from warm winter weather, improved end markets, and strong growth in some of our new product offerings.

During the second half of fiscal 2011, we implemented a major restructuring initiative, which continues to positively impact gross margins and reduce SG&A costs. SG&A declined by $2.5 million in the second quarter of 2012 as compared to 2011, a reduction that was similar to the first quarter year-over-year decline. We also benefited from the positive operating leverage inherent in our business model, as evidenced by the strong impact that revenue growth had on gross margins and Adjusted EBITDA. Segment gross margin improved to 27% in the second quarter of 2012 from 17% in the second quarter of 2011. Second quarter 2012 Adjusted EBITDA increased more than five-fold to $11.7 million from $2.0 million in the second quarter of 2011.

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