HEADWATERS INC FROM:
RE: Headwaters Incorporated 10701 S. River Front Parkway, Suite 300 South Jordan, UT 84095
Phone: (801) 984-9400
NYSE: HW
FOR FURTHER INFORMATION
AT THE COMPANY:
Sharon Madden
Vice President of Investor Relations (801) 984-9400
ANALYST CONTACT:
Tricia Ross Financial Profiles (310) 622-8226
FOR IMMEDIATE RELEASE
FY 2015 Revenue Increased 13% to $895 Million
FY 2015 Adjusted EBITDA Increased 20% to $166 Million
FY 2015 Operating Income Increased 53% to $102 Million
FY 2015 Adjusted EPS Increased 61% to $1.13
Revenue increased 11% to $273 million, substantially all of which was organic growth
Gross profit increased 15% and gross margin expanded by 115 basis points
Operating income increased 26% to $41 million
Adjusted EBITDA increased 16% and Adjusted EBITDA margin expanded by 100 basis points
Building products revenue increased 5%, operating income increased 18%, and Adjusted EBITDA increased 10%
Construction materials revenue increased 14%, operating income increased 17%, and Adjusted EBITDA increased 15%
A non-routine income tax benefit of $97 million was recognized from the reversal of valuation allowances on NOL and tax credit carryforwards and certain other deferred income tax assets
'We are very pleased with our strong fourth quarter and fiscal year performance, increasing Adjusted EBITDA by 20%, and finishing in the upper range of our guidance,' said Kirk A. Benson, Chairman and Chief Executive Officer of Headwaters. 'In addition, our 18.5% fiscal year Adjusted EBITDA margin exceeded our 2006 peak by 60 basis points. In 2016, we anticipate continuing top line growth and margin expansion, leading us to initiate Adjusted EBITDA guidance in the range of $175 million to $190 million.
'We experienced organic growth of nearly 11% in the fourth quarter and 9% for the year, while bolt-on acquisitions accounted for 4% additional revenue growth in the year. Top line growth, combined with cost controls and benefits from our debt refinancing and repayments, led to a 61% increase in Adjusted EPS for the year, to $1.13 per share.
'Fourth quarter fly ash volumes rebounded from the weather impacted June quarter, resulting in quarter-over-quarter growth. Following strong 2015 portland cement pricing, the upward pricing trend for high value CCPs continued into the September quarter. The wrap around effect of existing CCP price levels should result in solid price comparisons in the first half of 2016 as the upward trend continues.
Mr. Benson concluded, 'In our building products segment, we improved Adjusted EBITDA margins by 90 basis points to 19.5%, while absorbing the initial lower margins in the introduction of new products and our bolt-on acquisitions. We anticipate 2016 margin expansion as our new products show revenue growth and synergies from bolt-on acquisitions continue to unfold.'
Headwaters' fourth quarter 2015 consolidated revenue increased by 11% to $272.7 million from
$245.9 million for the fourth quarter of 2014 and gross profit increased by 15% to $90.3 million, compared to $78.6 million in 2014. Operating income improved from $32.9 million in 2014 to
$41.4 million in 2015, and Adjusted EBITDA increased by $8.1 million to $58.9 million, or 16% over 2014.
After making adjustments consistent with Adjusted EBITDA, fourth quarter adjusted income from continuing operations was $38.3 million, or $0.51 per diluted share in 2015, compared to
$27.9 million, or $0.37 per diluted share in 2014. On an unadjusted basis, income from continuing operations was $126.8 million, or $1.68 per diluted share, for the fourth quarter of 2015, compared to $17.0 million, or $0.23 per diluted share, for the fourth quarter of 2014. The results for 2015 include a non-routine income tax benefit of $96.8 million from reversal of the valuation allowance on NOL and tax credit carryforwards and certain other deferred income tax assets. Discontinued operations were immaterial in both the September 2014 and 2015 quarters.
Fourth Quarter Business Segment HighlightsBusiness Segment | 2015 Revenue | 2015 Adjusted EBITDA | 2015 Adjusted EBITDA Margin | 2014 Adjusted EBITDA Margin |
Building Products | $151.9 million | $35.1 million | 23.1% | 22.1% |
Construction Materials | $111.5 million | $28.9 million | 25.9% | 25.7% |
Business Segment | 2015 Operating Income | 2014 Operating Income | 2015 Operating Income Margin | 2014 Operating Income Margin |
Building Products | $25.0 million | $21.2 million | 16.5% | 14.7% |
Construction Materials | $24.9 million | $21.3 million | 22.3% | 21.7% |
Revenue for the year ended September 30, 2015 was $895.3 million, up 13% from $791.4 million for 2014. Gross profit increased 20%, from $225.7 million in 2014 to $269.9 million in 2015. Operating income of $66.7 million in 2014 improved by 53%, to $102.1 million in 2015. Income from continuing operations of $16.5 million, or diluted income per share of $0.21, in 2014 improved to $132.1 million, or $1.74 per diluted share, in 2015. The results for 2015 include
$24.8 million of incremental interest expense recorded in the March 2015 quarter related to early debt repayments. Results for 2015 also include the non-routine income tax benefit of $96.8 million from reversal of the income tax valuation allowance. Adjusted EBITDA increased by $27.8 million or 20%, from $137.8 million to $165.6 million for the year ended September 30, 2015 as compared to 2014, and Adjusted EPS increased by 61%, from $0.70 in 2014 to $1.13 in 2015.
Headwaters' building products segment is a national brand leader in innovative building products through superior design, manufacturing and channel distribution. The segment markets a wide variety of niche building products, including siding accessories, manufactured architectural stone, block and roofing products.
Building products revenue increased 5%, from $144.7 million in the fourth quarter of 2014 to
$151.9 million in the fourth quarter of 2015, with substantially all of the growth being organic. In the fourth quarter of 2015, gross profit increased by 6%, to $49.2 million from $46.3 million in 2014, and operating income increased by 18%, to $25.0 million from $21.2 million. Adjusted EBITDA in the fourth quarter of 2015 increased by 10%, from $32.0 million in 2014 to $35.1 million in 2015.
Our Texas block product group is performing particularly well as we enjoy strong demand for both our standard block products as well as our higher margin specialty blocks. In September 2015, we completed a small bolt-on acquisition that strengthens our market position in the robust Austin market. We anticipate that the transaction after synergies will meet our investment targets and will result in incremental sales in Austin.
In the quarter, several of our product groups benefited from lower raw material, transportation and energy costs, which more than offset increased costs in other areas. Adjusted EBITDA margin was 23.1%, an increase of 100 basis points compared to the September 2014 quarter. Gross margin increased by 40 basis points and operating income margin increased by 180 basis points.
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 2015 revenues increased by 14% to $111.5 million, compared to $98.1 million in 2014. Service revenue represented approximately 18% of total segment revenue for the fourth quarter of 2015, as compared to 20% for the fourth quarter of 2014. Service revenue was 21% for all of fiscal 2015 and 25% for fiscal 2014. The increase in revenue is primarily attributable to positive pricing and increases in volume of high-value CCPs.
The weighted average increase in high quality CCP net pricing was higher in the September quarter than in the June quarter. The continued favorable pricing environment results from solid demand for high quality CCPs to replace portland cement and continued resilience in portland cement demand and pricing.
The volume of high-value CCPs exceeded 5.8 million tons for the fiscal year, an increase of 10% over 2014. An important aspect of our strategy is to continue to increase our supply of high value CCPs for marketing during the construction season. Since 2007, we have increased supply by approximately 1.6 million tons and we anticipate that our supply will increase again in 2016 through additional installations of our RestoreAir™ technology and incremental storage.
Gross profit increased by 19% to $36.5 million in 2015, compared to $30.7 million in 2014, and gross margin increased by 140 basis points to 32.7%. Operating income increased $3.6 million, or 17%, from $21.3 million in 2014 to $24.9 million in 2015. Adjusted EBITDA increased $3.7 million from $25.2 million in 2014 to $28.9 million in 2015, or 15%. Adjusted EBITDA margin in the quarter was comparable to last year at 25.9%. The increase in Adjusted EBITDA was primarily attributable to the increase in revenues from high-value CCPs.
Energy technology revenue for fiscal year 2015 was $19.4 million, compared to $9.7 million in 2014, and Adjusted EBITDA for fiscal year 2015 was $2.2 million compared to a loss of $(2.0)
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