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Headwaters Inc. (HW)
F1Q2011 (12/31/10) Earnings Conference Call
February 1, 2011 11:00 AM ET
Sharon Madden – VP, IR
Kirk Benson – Chairman and CEO
Don Newman – CFO
Dave Ulmer – President, Tapco International
Bill Gehrmann – President, Headwaters Resources and Heavy Construction Material
Steve Sanders – Stephens Incorporated
Al Kaschalk – Wedbush Securities
Chip Moore – Canaccord
Dan Mannes – Avondale Partners
Edward McCabe [ph] – Clean Value Partners
Previous Statements by HW
» Headwaters CEO Discusses F4Q2010 Results – Earnings Call Transcript
» Headwaters Incorporated F3Q10 (Qtr End 30/07/2010) Earnings Call Transcript
» Headwaters Incorporated F2Q10 (Qtr End 03/31/10) Earnings Call Transcript
Hello, we lost Trisha. She’ll probably join us shortly. My name is Sharon Madden, I’m Vice President of Investor Relations for Headwaters Incorporated. I would like to welcome all of you to our call today as we report our fiscal 2011 Q1 results.
Today’s call will be conducted by Kirk Benson, who is Headwaters Chairman and Chief Executive Officer, and Don Newman, Headwaters’ new Chief Financial Officer. Also joining us will be Bill Gehrmann, who is President of Headwaters Resources and Heavy Construction Material segment as well as Dave Ulmer, who is President of Tapco International. Dave will be discussing Headwaters Life Building Products segment.
Before we get started with the call this morning, I would like to take a moment and remind everyone of Headwaters upcoming analyst and investor day conference being held in Salt Lake City on March 4 at the Grand America Hotel. It is a half day conference beginning at 8:00 am and concludes around 1:00 pm Mountain time. If you’re interested in attending, please feel free to contact me directly at 801-984-9428 or you can email me at firstname.lastname@example.org.
As we start out call this morning, I would like to remind you that certain statements made during this call including statements relating to our expected future business and financial performance, may be 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 in their nature, address matters that are, to a different degree, 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 my be required by.
You may find Headwaters’ annual report on Form 10-K, quarterly report on Form 10-Q and SEC filings readily available from the SEC’s website.
I would now like to turn the call over to Kirk Benson, our Chairman and CEO. Kirk.
Thank you Sharon. We’re very pleased with the quarter overall. Performance of our Heavy Construction Materials segment exceeded expectations for revenue and EBITDA margins. We anticipated that Light Building Products revenue would be soft compared to last year because of the end of the government home buyer incentive that expired in April 2010. We were also negatively impacted by increasing raw material costs in our Accessory Product group. The Energy segment had a very good quarter.
We had two major changes in personnel and this morning I’d like to introduce you to Don Newman, who has agreed to become Headwaters’ new Chief Financial Officer. We thank Steve Stewart to his commitment to Headwaters and the great service that he’s provided to us and wish him well in his second retirement from Headwaters. We welcome Don.
The second change happened in January. We announced that Jack Lawless would no longer be with us to direct our Light Building Products segment. Jack was with Tapco for many years and helped guide the company during his tenure. We felt the timing for a change was appropriate for Jack and Headwaters. The change removes one layer of management, reduces costs and evidence as Headwaters commitment to rebranding itself as a Light Building Construction Materials company.
The leaders of each of our major product categories will report directly to the CEO. We are already working on additional changes that will more closely integrate our product categories, which will lead to improved efficiencies and customer responsiveness.
We’ve invited Dave Ulmer, as the leader of our Siding Accessory product category, to present the Light Building Products script today. Dave will be taking Jack’s place at our accessories unit. Dave has over 20 years of experience in building products and ten years’ experience with siding accessories. We are very pleased to have Dave with us, and look forward to working with him to continue the development of our Light Building Products segment.
[Merky Lance] will continue to lead our Architectural Stone category and [Bob Wisnet] will continue to lead our Texas Block business.
Now we’d be happy to take any questions on either change in the question and answer period of the call.
Now turning to slide two, you can see Headwaters had a very good first quarter. Strong Heavy Construction Materials and Energy revenue led the way for an 11% increase in revenue and a 23% increase in adjusted EBITDA.
We repaid $10 million of our 16% debt, reducing interest expense for the 12 months by $1.6 million. Don will discuss our financial performance in more detail. Dave Ulmer will discuss Light Building Products and Bill Gehrmann will go through the Heavy Construction Materials and Energy.