- Strong end market demand in both
construction materials and building products continues; expect top
line growth in all major product categories
- Stable and adequate fly ash supply with
ample demand from infrastructure and new residential end
markets
- Accretive bolt-on acquisition strategy,
including announcement of definitive agreement to acquire Synthetic
Materials LLC, subject to certain closing conditions
- Substantial increase in sales and
Adjusted EBITDA from niche roofing products
- 2016 Adjusted EBITDA guidance of $180
million to $200 million reaffirmed
HEADWATERS INCORPORATED (NYSE: HW), a building products
company dedicated to improving lives through innovative
advancements in construction materials, today announced highlights
from its Fourteenth Annual Analyst and Investor Day, which was held
Wednesday, March 2, 2016 in New York City, NY.
The event featured a business strategy overview by Chairman and
Chief Executive Officer Kirk A. Benson. Other commentary included
presentations on Headwaters’ Construction Materials segment and an
update on coal combustion product trends from The American Coal Ash
Association (ACAA). The meeting concluded with a financial overview
presented by Chief Financial Officer Don P. Newman.
Select highlights follow:
CEO Commentary – Kirk A. Benson – Business Overview and
Bolt-on Acquisition Strategy
“Headwaters continues to experience strong growth and financial
performance in its core building products and construction
materials segments. We are confident that we will experience
continued growth in our end markets and expect top line growth in
all our major product categories. We are well positioned for
continued margin expansion in FY 2016 and into 2017 on top of
achieving record margins of 18.8% for the twelve months ended
December 31, 2015. Our costs continue to remain under control and
we reiterate that we feel comfortable with our previously stated
guidance range of $180 million to $200 million in Adjusted EBITDA
for FY 2016.
“Our construction materials segment, where we manage and sell
fly ash, has its largest end market exposure to infrastructure; an
end market with strong fundaments which is driving demand for high
quality fly ash. These conditions are expected to continue in
fiscal 2016 and beyond. We also have strong and adequate supply to
fly ash to meet increasing demand.
“Our overall strategy is for top line growth through increasing
product sales to our core customers. In the last six months, we
have completed four successful bolt-on acquisitions with annual
revenue of approximately $40 million for a total purchase price of
$65 million, priced at a 5x to 7x post-synergy EBITDA
multiple.”
Construction Materials Commentary - Bill Gehrmann
Bill Gehrmann is President of Headwaters Resources. Bill
discussed that Headwaters announced it has entered into a
definitive agreement to purchase 100% of the membership interests
of Synthetic Materials LLC based in Louisville, Kentucky. Synthetic
Materials is a leader in the synthetic gypsum processing and
management industry and the acquisition complements the coal
combustion product management operations of Headwaters’. The
acquisition, which is subject to the satisfaction of certain
closing conditions, is expected to close in Headwaters current
fiscal year.
Synthetic Materials has 21 years of experience providing
services to the flue gas desulfurization industry, including the
design and construction of gypsum dewatering systems, gypsum
marketing, landfill and pond management. Synthetic Materials also
currently provides operations and maintenance services at 10
different utility sites and manages over 4 million tons of bulk
synthetic gypsum on an annual basis, generating approximately $25
million in annual revenue. The expected purchase price will range
between $38 million and $45 million, depending upon certain
conditions, which would represent a price to EBITDA ratio of
between 6x and 7x.
Chairman of The Government Relations Committee of The
American Coal Ash Association (ACAA) – John Ward
Special guest John Ward presented the results of a recent study
conducted by The ACAA on the future supply and demand of coal
combustion products (CCPs). The study indicated 5% growth in CCPs
from 2016 through 2032, reflecting a stable supply of CCPs. It also
forecast consumption of CCPs will increase over the next decade due
to regulatory certainty. He indicated that the CCP industry has
resumed growth levels that were most recently seen in the early
2000s.
CFO Commentary — Don P. Newman
“Headwaters continues to generate solid organic top line growth,
supplemented with our bolt-on acquisitions. Our revenue has grown
at a CAGR of 11% since 2011 and we have delivered eighteen
consecutive quarters of revenue and EPS growth.
“We believe we are well below mid-cycle volumes in our key end
markets and have an opportunity to continue our pattern of organic
growth. We also believe we have margin expansion opportunities
through 2016 and 2017 leading to continued leadership economics. We
are confident in our Adjusted EBITDA guidance range of $180 million
to $200 million, which represents growth of between 9% and 21% over
2015 levels.”
Headwaters Incorporated
Headwaters Incorporated is improving lives through innovative
advancements in construction materials through application, design,
and purpose. Headwaters is a diversified growth company providing
products, technologies and services to the construction materials
and building products markets. Through its coal combustion
products, building products, and energy businesses, the Company has
been able to improve sustainability by transforming underutilized
resources into valuable products. www.headwaters.com
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements relating
to Headwaters’ operations that are based on management’s current
expectations, estimates and projections about the industries in
which Headwaters operates. Words such as “may,” “should,”
“anticipates,” “expects,” “intends,” “plans,” “targets,”
“forecasts,” “projects,” “believes,” “seeks,” “schedules,”
“estimates,” “budgets,” “goals,” “outlook” and similar expressions
are intended to help identify such forward-looking statements.
Forward-looking statements include Headwaters’ expectations as to
the managing and marketing of coal combustion products, the
production and marketing of building products, the sales to oil
refineries of residue hydrocracking catalysts, the development,
commercialization, and financing of new products and other
strategic business opportunities and acquisitions, and other
information about Headwaters which are not purely historical by
nature, including those statements regarding Headwaters’ future
business plans, the operation of facilities, the availability of
feedstocks, and the marketability of the coal combustion products,
building products and catalysts. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and other factors, many of which are beyond the
Company’s control and are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements. The reader should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Unless legally
required, Headwaters undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new
information, future events or otherwise. Among the important
factors that could cause actual results to differ materially from
those in the forward-looking statements are: changing feedstock and
energy prices; actions of competitors or regulators; technological
developments; potential disruption of the Company’s production
facilities, transportation networks and information technology
systems due to war, terrorism, malicious attack, civil accidents,
political events, civil unrest or severe weather; potential
environmental liability or product liability under existing or
future laws and litigation; potential liability resulting from
other pending or future litigation; changed accounting rules under
generally accepted accounting principles promulgated by
rule-setting bodies; and the factors set forth under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K,
quarterly reports on Form 10-Q and other periodic reports. In
addition, such results could be affected by general domestic and
international economic and political conditions and other
unpredictable or unknown factors not discussed in this press
release which could have material adverse effects on
forward-looking statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20160302006318/en/
AT THE COMPANY:Headwaters IncorporatedSharon MaddenVice
President of Investor Relations(801) 984-9400orANALYST
CONTACT:Financial ProfilesTricia Ross(310) 622-8226
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