Headwaters CEO Discusses F4Q2010 Results – Earnings Call Transcript
Headwaters, Inc. (
)
F4Q2010 (Qtr End 09/30/10) Earnings Conference Call
November 2, 2010 11:00 AM ET
Executives
Tricia Ross – IR, Financial Profiles
Sharon Madden – VP, IR
Kirk Benson – Chairman and CEO
Steve Stewart – CFO
Jack Lawless – President, Construction Materials
Bill Gehrmann – President, Resources
Analysts
John Quealy – Canaccord Genuity
Zach Larkin – Stephens Inc
Al Kaschalk – Wedbush Morgan Securities
Ed McCabe – Clean Value Partners
Dan Mannes – Avondale Partners
Esie [ph] – Principal Global Investors
Presentation
Operator
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Headwaters Inc. F4Q09 (Qtr End 09/30/2009) Earnings Call Transcript
Good morning. My name is Sarah and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Headwaters Incorporated fourth quarter and fiscal year 2010 conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Ms. Tricia Ross. You may now begin.
Tricia Ross
Hello and good morning. Thank you for joining us for the Headwaters Incorporated fourth quarter and fiscal year-end 2010 conference call. You should have all received a copy of today’s press release that was released before market opened this morning. If you have not yet received it, please call my office at 310-478-2700 or email tross
@
finprofiles.com and we will get a copy right away.
Without delay, I would now like to introduce Headwaters Vice President of Investor Relations, Sharon Madden.
Sharon Madden
Thank you Tricia. Good morning everyone and thank you for joining us today for fourth quarter and fiscal 2010 results.
The call today will be conducted by Kirk Benson, Headwaters Chairman and Chief Executive Officer, and Steve Stewart, Headwaters Chief Financial Officer. Also joining us are Bill Gehrmann, President of Headwaters Resources, and Jack Lawless, President of Headwaters Construction Materials.
As always before we get started, please keep in mind that certain statements made during this call, including statements related to our expected future business and financial performance maybe considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 both as amended.
Forward-looking statements by their very nature address matters that are to different degrees uncertain. These uncertainties which are described in more detail in the annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements, whether as a result of new information, future events or otherwise, except as maybe required by law.
You may find Headwaters Annual Report on Form 10-K, our Quarterly Report on Form 10-Q and other SEC filings readily available from the SEC’s website, Headwaters website or directly from the company.
I will now like to turn the call over to Kirk Benson.
Kirk Benson
Thank you very much Sharon and thank you for everyone for your attendance Headwaters year-end conference call. I’d like to begin by making some overall comments on our year from slide two. Steve Stewart, will then comment on the financials followed by Bill and Jack to discuss their operations.
Our revenue declined for the year by 1.8%, the decline occurred in the first half of the year. Revenue for the first half of the year dropped $36 million compared to 2009. Our revenue in the second half increased $24.1 million compared to 2009 or 7%. We’ve entered into a phase of revenue stability for sure.
All of our operating metrics improved compared to 2009. Growth profit was up by $16.8 million, operating income before the impairment charge improved by $21.9 million, and adjusted EBITDA increased by $19.3 million. Adjusted EBITDA was $400,000 above our forecast of $95 million. During the year, we were able to improve our financial position and reduce risk. We accomplished four actions to reduce risk. We refinanced our senior debt, eliminated EBITDA maintenance covenants. We don’t have any material debt due until 2014. We repaid $29 million of our senior subordinated 16% notes reducing recurring interest expense by $4.6 million and increasing our adjusted EBITDA interest coverage to almost two times.
We nurtured our cash balance, reduced CapEx, maximized tax refunds, sold our interests in our hydrogen peroxide plant and even with repayment of $29 million in debt, we ended with the year with $91 million in cash. We are in a position to continue to reduce debt. The combination of reducing debt, increasing EBITDA and preserving cash resulted in a reduction of our net debt-to-EBITDA ratio from over five times to approximately four times.
So I’d now like to turn the time over to Steve Stewart to review our financial results.
Steve Stewart
Good morning everybody and thank you Kirk. Before I discuss the slide and some of my comments, I want to mention that we expect to file our Form 10-K around November the 19th.. The comments that I’m going to provide here were taken primarily from the slides which you can see. That were sent out this morning and to a lesser extent from the condensed consolidated balance sheet and statements of operations that were attached to the press release.
During 2010, we had indicated that both our light building products and heavy construction materials businesses had shown signs of stabilization, even in light of the continued weakness in new housing and residential remodeling markets and a noticeable slowdown in the commercial construction and infrastructure activities, that directly impacts our fly ash operations.
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