Segment Reporting

9 Months Ended

Jun. 30, 2014

Segment Reporting

Segment Reporting

2.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 product 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 4, Headwaters sold all of its coal cleaning facilities in fiscal 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.

	Three Months Ended June 30, 2013
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	118,035		$	75,114		$	3,881		$	0		$	197,030
Depreciation and amortization	$	(10,009	)	$	(3,222	)	$	(542	)	$	(77	)	$	(13,850	)
Operating income (loss)	$	15,509		$	12,823		$	(339	)	$	(4,808	)	$	23,185
Net interest expense													(11,111		)
Other income (expense), net													24
Income tax provision													(2,850		)
Income from continuing operations													9,248
Income from discontinued operations, net of income taxes													1,768
Net income													$	11,016
Capital expenditures	$	4,813		$	1,786		$	123		$	417		$	7,139
Segment assets as of September 30, 2013	$	306,686		$	358,684		$	34,509		$	24,130		$	724,009

	Three Months Ended June 30, 2014
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	140,572		$	80,636		$	2,191		$	0		$	223,399
Depreciation and amortization	$	(10,336	)	$	(3,444	)	$	(408	)	$	(66	)	$	(14,254	)
Operating income (loss)	$	18,691		$	15,019		$	(1,761	)	$	(6,258	)	$	25,691
Net interest expense													(12,121		)
Other income (expense), net													(36		)
Income tax provision													(2,410		)
Income from continuing operations													11,124
Loss from discontinued operations, net of income taxes													(231		)
Net income													$	10,893
Capital expenditures	$	6,604		$	1,968		$	93		$	758		$	9,423
Segment assets	$	420,527		$	382,274		$	30,234		$	35,205		$	868,240

	Nine Months Ended June 30, 2013
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	279,501		$	197,286		$	10,804		$	0		$	487,591
Depreciation and amortization	$	(28,102	)	$	(9,493	)	$	(1,627	)	$	(210	)	$	(39,432	)
Operating income (loss)	$	19,971		$	24,096		$	(1,462	)	$	(14,504	)	$	28,101
Net interest expense													(32,722		)
Other income (expense), net													262
Income tax provision													(550		)
Loss from continuing operations													(4,909		)
Income from discontinued operations, net of income taxes													1,793
Net loss													$	(3,116	)
Capital expenditures	$	15,704		$	3,846		$	392		$	1,604		$	21,546

	Nine Months Ended June 30, 2014
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	327,723		$	211,250		$	6,553		$	0		$	545,526
Depreciation and amortization	$	(29,094	)	$	(10,049	)	$	(1,375	)	$	(196	)	$	(40,714	)
Operating income (loss)	$	25,684		$	30,180		$	(4,868	)	$	(17,196	)	$	33,800
Net interest expense													(34,411		)
Other income (expense), net													(56		)
Income tax benefit													150
Loss from continuing operations													(517		)
Loss from discontinued operations, net of income taxes													(106		)
Net loss													$	(623	)
Capital expenditures	$	17,920		$	4,530		$	398		$	2,519		$	25,367