Segment Reporting

6 Months Ended

Mar. 31, 2015

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 fiscal 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. 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 March 31, 2014
(in thousands)	Building products			Construction materials			Energy technology			Corporate			Totals
Segment revenue	$	94,139		$	59,093		$	3,280		$	0		$	156,512
Depreciation and amortization	$	(9,546	)	$	(3,319	)	$	(479	)	$	(69	)	$	(13,413	)
Operating income (loss)	$	1,907		$	5,228		$	(821	)	$	(5,765	)	$	549
Net interest expense													(12,234		)
Other income (expense), net													(32		)
Income tax benefit													2,210
Loss from continuing operations													(9,507		)
Loss from discontinued operations, net of income taxes													(575		)
Net loss													$	(10,082	)
Capital expenditures	$	6,864		$	1,377		$	75		$	740		$	9,056
Segment assets as of September 30, 2014	$	411,968		$	325,140		$	22,674		$	136,524		$	896,306
	Three Months Ended March 31, 2015
(in thousands)	Building products			Construction materials			Energy 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
Loss from continuing operations													(24,988		)
Loss from discontinued operations, net of income taxes													(210		)
Net loss													$	(25,198	)
Capital expenditures	$	6,131		$	1,026		$	61		$	1,485		$	8,703
Segment assets as of March 31, 2015	$	396,568		$	308,750		$	27,131		$	70,787		$	803,236

	Six Months Ended March 31, 2014
(in thousands)	Building products			Construction materials			Energy technology			Corporate			Totals
Segment revenue	$	187,151		$	130,614		$	4,362		$	0		$	322,127
Depreciation and amortization	$	(18,758	)	$	(6,605	)	$	(967	)	$	(130	)	$	(26,460	)
Operating income (loss)	$	6,993		$	15,161		$	(3,107	)	$	(10,938	)	$	8,109
Net interest expense													(22,290		)
Other income (expense), net													(20		)
Income tax benefit													2,560
Loss from continuing operations													(11,641		)
Income from discontinued operations, net of income taxes													125
Net loss													$	(11,516	)
Capital expenditures	$	11,316		$	2,562		$	305		$	1,761		$	15,944

	Six Months Ended March 31, 2015
(in thousands)	Building products			Construction materials			Energy 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 benefit													2,980
Loss from continuing operations													(17,837		)
Loss from discontinued operations, net of income taxes													(277		)
Net loss													$	(18,114	)
Capital expenditures	$	12,152		$	2,374		$	229		$	2,719		$	17,474