) reported a loss from continuing operations of $10.3 million or
14 cents per share in the second-quarter of 2013 compared to the
prior-year loss of $18.2 million or 30 cents a share. The loss
per share was wider than the Zacks Consensus Estimate of a loss
per share of 10 cents.
Total revenues were $141 million in the reported quarter, up 9%
year over year, exceeding the Zacks Consensus Estimate of $138
Cost of sales increased 10.7% to $108.6 million in the second
quarter from $98 million in the year-ago quarter. Gross profit
improved 3% year over year to $32.4 million. However, gross
margin contracted 130 basis points (bps) to 23% in the quarter.
Selling, general and administrative expenses went up 2.8% year
over year to $26.4 million. Adjusted operating loss in the
reported quarter was $1.1 million in the reported quarter
compared to $1 million in the year-ago quarter.
Light Building Products:
Revenues in the Light Building Products segment increased 14%
year over year to $84.8 million in the reported quarter, driven
by a strong Texas market and strength in new residential
construction. The segment revenues were also benefited by the
Kleer acquisition. The rise was partly offset by a decline in
revenue in siding product group and challenging winter
conditions. Operating income declined 38% year over year to $1.3
million in the quarter.
Heavy Construction Materials:
Heavy Construction Materials segment revenues in the quarter were
54 million, up 5% compared to $51.2 million in the prior-year
quarter. The improvement was mainly due to new service contracts
and price increase on fly ash sales, partly offset by adverse
weather conditions in the Midwest and Northeast. The segment's
operating income improved 27.6% year over year to $3.7 million in
the second quarter.
The Energy Technology segment reported sales of $2.2 million, a
decline of 42% from the year-ago quarter. The segment reported an
operating loss of $1.2 million compared to $0.7 million in the
As of Mar 31, 2013, cash and cash equivalents amounted to $63.6
million versus $53.7 million as of Sep 30, 2012. Long-term debt
was $449 million as of Mar 31, 2013, compared with $500.5 million
as of Sep 30, 2012.
For full-year 2013, Headwaters expects adjusted EBITDA range of
$110 to $125 million. The company is optimistic that revenue will
improve in the remaining year led by a positive demand in the
repair and remodel markets. It will also continue to pursue
opportunities to repay the debt maturing in 2014 even before its
Headwaters is well positioned to benefit from its strong presence
in light building products and heavy construction materials. A
significant contribution from margins together with the up-cycle
in demand will help the company generate adequate cash,
facilitating debt reduction and promising capital return to
Macro drivers comprising population growth, household formation,
inventory trends and psychology of customers bolster the
company's long-term growth. Headwaters will be successful in
achieving its goal largely due a to multi-year appreciation cycle
and positive remodel trends in the housing market, which will
provide significant opportunities to serve the residential real
estate end markets.
South Jordan, UT-based Headwaters is a diversified growth company
providing building products, technologies and services to the
heavy construction materials, light building products, and energy
Headwaters currently retains a Zacks Rank #3 (Hold). Other
companies in the building and construction industry are
James Hardie Industries plc
Armstrong World Industries, Inc.
ARMSTRONG WORLD (AWI): Free Stock Analysis
HEADWATERS INC (HW): Free Stock Analysis
JAMES HARDI-ADR (JHX): Free Stock Analysis
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