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Headwaters Incorporated Announces Results For Third 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 third quarter of fiscal 2012.

Third Quarter Fiscal 2012 Highlights
  • Light building products revenue increased 6% and Adjusted EBITDA increased 25%
  • Heavy construction materials revenue increased 20% and Adjusted EBITDA increased 33%
  • Sold one coal cleaning facility for total potential consideration of $10.4 million, including assumption of reclamation liabilities
  • Extended maturity of $49.8 million of subordinated debt by two years to 2016 to match projected generation of free cash flow
  • Repaid $15.2 million of subordinated debt in the quarter and $34.7 million year-to-date

CEO Commentary

“We capitalized on increasing demand for construction materials in the third quarter," said Kirk A. Benson, Chairman and Chief Executive Officer of Headwaters. “Our heavy construction materials segment and light building products segment had Adjusted EBITDA margins of 20.1% and 21.2%, respectively. Consolidated Adjusted EBITDA margins for the nine months ended June 30 expanded by 300 basis points compared to last year, as we benefited from greater efficiency and operating leverage in what appears to be an improving market.

“We sold one of our coal cleaning facilities during the quarter, and expect our cash receipts to be approximately $10.4 million as a result of the sale, partially coming from future production royalties and the return of our reclamation bonds. We continue to make progress on the sale of the remaining facilities and we expect to complete further sale transactions this calendar year."

Third Quarter Summary

Headwaters’ third quarter 2012 revenue increased by 9% to $175.6 million from $160.7 million for the third quarter of 2011. Gross profit increased by 19% to $52.4 million in the third quarter of 2012, compared to $44.0 million in the third quarter of 2011. Operating income improved from $13.6 million in 2011 to $15.9 million in 2012, and Adjusted EBITDA improved by $0.2 million to $28.7 million. Headwaters records the majority of its incentive compensation in its third and fourth quarters of the fiscal year due to the seasonality of its business. In the current quarter, Headwaters recorded incentive compensation greater than its original plan due to substantially improved operating performance compared to 2011, and increases in the Company's stock price. The additional incentive compensation recorded in the quarter was $5.5 million.

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