Segment Reporting

12 Months Ended

Sep. 30, 2014

Segment Reporting

Segment Reporting

3. Segment Reporting

        Headwaters currently operates three business segments: light building products, heavy construction materials and energy technology. These segments are managed and evaluated separately by management due to differences in their markets, operations, products and services. Revenues for the light building products segment consist of product sales to wholesale and retail distributors, contractors and other users of building products. Revenues for the heavy construction materials segment consist primarily of CCP sales to ready-mix concrete businesses, with a smaller amount from services provided to coal-fueled electric generating utilities. Currently, continuing revenues for the energy technology segment consist primarily of catalyst sales to oil refineries. Historically, revenues for the energy technology segment consisted primarily of coal sales; however, as described in Note 5, Headwaters sold all of its coal cleaning facilities in 2012 and 2013. Coal sales revenue and results of operations have been reflected as discontinued operations in the accompanying statements of operations for all periods. Intersegment sales are immaterial.

        The following segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segment performance is evaluated primarily on revenue and operating income, although other factors are also used, such as Adjusted EBITDA. Headwaters defines Adjusted EBITDA as net income plus net interest expense, income taxes, depreciation and amortization, stock-based compensation, cash-based compensation tied to stock price, goodwill and other impairments, and other non-routine adjustments that arise from time to time.

        Segment costs and expenses considered in deriving segment operating income (loss) include cost of revenue, amortization, and segment-specific selling, general and administrative expenses. Amounts included in the Corporate column represent expenses that are not allocated to any segment and include administrative departmental costs and general corporate overhead. Segment assets reflect those specifically attributable to individual segments and primarily include cash, accounts receivable, inventories, property, plant and equipment, goodwill and intangible assets. Certain other assets are included in the Corporate column. The net operating results of the discontinued coal cleaning business are reflected in the single line item for discontinued operations.

	2012
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	339,632		$	281,672		$	11,483		$	0		$	632,787
Depreciation and amortization	$	(35,724	)	$	(13,322	)	$	(2,287	)	$	(148	)	$	(51,481	)
Operating income (loss)	$	25,553		$	40,254		$	(6,045	)	$	(25,359	)	$	34,403
Net interest expense														(52,678	)
Other income (expense), net														(7,493	)
Income tax provision														(661	)
Loss from continuing operations														(26,429	)
Loss from discontinued operations, net of income taxes														(35,819	)
Net loss													$	(62,248	)
Capital expenditures	$	17,707		$	5,240		$	1,472		$	2,028		$	26,447
Segment assets	$	271,554		$	338,753		$	36,377		$	34,253		$	680,937

	2013
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	394,324		$	293,000		$	15,252		$	0		$	702,576
Depreciation and amortization	$	(37,065	)	$	(12,809	)	$	(2,153	)	$	(290	)	$	(52,317	)
Operating income (loss)	$	34,194		$	43,519		$	(1,939	)	$	(21,363	)	$	54,411
Net interest expense														(42,566	)
Other income (expense), net														364
Income tax provision														(3,924	)
Income from continuing operations														8,285
Loss from discontinued operations, net of income taxes														(1,148	)
Net income													$	7,137
Capital expenditures	$	21,455		$	4,851		$	634		$	2,179		$	29,119
Segment assets	$	306,686		$	358,684		$	34,509		$	24,130		$	724,009

	2014
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	472,434		$	309,337		$	9,676		$	0		$	791,447
Depreciation and amortization	$	(39,425	)	$	(13,706	)	$	(1,731	)	$	(272	)	$	(55,134	)
Operating income (loss)	$	46,888		$	51,503		$	(6,829	)	$	(24,838	)	$	66,724
Net interest expense														(46,329	)
Other income (expense), net														(348	)
Income tax provision														(3,574	)
Income from continuing operations														16,473
Loss from discontinued operations, net of income taxes														(415	)
Net income													$	16,058
Capital expenditures	$	25,307		$	5,721		$	473		$	4,298		$	35,799
Segment assets	$	411,968		$	325,140		$	22,674		$	143,645		$	903,427