Segment Reporting

6 Months Ended

Mar. 31, 2016

Segment Reporting

Segment Reporting

2.Segment Reporting

Headwaters currently operates three business segments: building products, construction materials and energy technology. These segments are managed and evaluated separately by management due to differences in their operations, products and services. Revenues for the building products segment consist of product sales to wholesale and retail distributors, contractors and other users of building products. Revenues for the 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. Continuing revenues for the energy technology segment consist primarily of catalyst sales to oil refineries. As described in Note 4, Headwaters sold all of its coal cleaning facilities in 2012 and 2013 and the 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, a non-GAAP financial measure. 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 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 March 31, 2015
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	106,406	$	67,498	$	5,821	$	0	$	179,725
Depreciation and amortization	$	(8,702)	$	(3,799)	$	(341)	$	(104)	$	(12,946)
Operating income (loss)	$	4,679	$	8,175	$	1,473	$	(6,097)	$	8,230
Net interest expense										(35,965)
Other income (expense), net										(33)
Income tax benefit										2,780
Income from continuing operations										(24,988)
Loss from discontinued operations, net of income taxes										(210)
Net income									$	(25,198)
Capital expenditures	$	6,131	$	1,026	$	61	$	1,485	$	8,703
Segment assets	$	412,867	$	294,057	$	45,671	$	226,424	$	979,019

	Three Months Ended March 31, 2016
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	129,195	$	71,755	$	1,382	$	0	$	202,332
Depreciation and amortization	$	(9,691)	$	(3,949)	$	(324)	$	(151)	$	(14,115)
Operating income (loss)	$	10,820	$	9,215	$	(1,163)	$	(6,692)	$	12,180
Net interest expense										(8,056)
Other income (expense), net										(12)
Income tax provision										(1,500)
Income from continuing operations										2,612
Loss from discontinued operations, net of income taxes										(228)
Net income									$	2,384
Capital expenditures	$	11,144	$	1,197	$	0	$	856	$	13,197
Segment assets	$	461,565	$	311,693	$	39,529	$	157,867	$	970,654

	Six Months Ended March 31, 2015
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	223,940	$	148,902	$	6,480	$	0	$	379,322
Depreciation and amortization	$	(17,415)	$	(7,535)	$	(694)	$	(212)	$	(25,856)
Operating income (loss)	$	16,627	$	21,663	$	(138)	$	(10,750)	$	27,402
Net interest expense										(47,917)
Other income (expense), net										(302)
Income tax provision										2,980
Income from continuing operations										(17,837)
Loss from discontinued operations, net of income taxes										(277)
Net income									$	(18,114)
Capital expenditures	$	12,152	$	2,374	$	229	$	2,719	$	17,474

	Six Months Ended March 31, 2016
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	261,040	$	157,753	$	1,957	$	0	$	420,750
Depreciation and amortization	$	(19,157)	$	(7,783)	$	(647)	$	(310)	$	(27,897)
Operating income (loss)	$	25,905	$	26,168	$	(2,884)	$	(12,186)	$	37,003
Net interest expense										(16,273)
Other income (expense), net										(81)
Income tax provision										(5,100)
Income from continuing operations										15,549
Loss from discontinued operations, net of income taxes										(444)
Net income									$	15,105
Capital expenditures	$	17,148	$	1,976	$	0	$	1,758	$	20,882