Segment Reporting

9 Months Ended

Jun. 30, 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 Income 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 income from continuing operations 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 June 30, 2015
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	147,830	$	91,900	$	3,564	$	0	$	243,294
Depreciation and amortization	$	(9,660)	$	(3,774)	$	(345)	$	(158)	$	(13,937)
Operating income (loss)	$	22,838	$	18,427	$	(993)	$	(6,973)	$	33,299
Net interest expense										(8,083)
Other income (expense), net										122
Income tax expense										(2,220)
Income from continuing operations										23,118
Loss from discontinued operations, net of income taxes										(110)
Net income									$	23,008
Capital expenditures	$	6,062	$	1,521	$	44	$	1,423	$	9,050
Segment assets as of September 30, 2015	$	412,867	$	294,057	$	45,671	$	226,424	$	979,019

	Three Months Ended June 30, 2016
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	162,642	$	97,741	$	2,083	$	0	$	262,466
Depreciation and amortization	$	(10,118)	$	(4,535)	$	(326)	$	(177)	$	(15,156)
Operating income (loss)	$	24,603	$	20,945	$	(1,106)	$	(8,348)	$	36,094
Net interest expense										(9,270)
Other income (expense), net										(207)
Income tax expense										(9,090)
Income from continuing operations										17,527
Income from discontinued operations, net of income taxes										258
Net income									$	17,785
Capital expenditures	$	8,101	$	1,712	$	14	$	710	$	10,537
Segment assets as of June 30, 2016	$	483,371	$	326,409	$	38,955	$	164,081	$	1,012,816

	Nine Months Ended June 30, 2015
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	371,770	$	240,802	$	10,044	$	0	$	622,616
Depreciation and amortization	$	(27,075)	$	(11,309)	$	(1,039)	$	(370)	$	(39,793)
Operating income (loss)	$	39,465	$	40,090	$	(1,131)	$	(17,723)	$	60,701
Net interest expense										(56,000)
Other income (expense), net										(180)
Income tax benefit										760
Income from continuing operations										5,281
Loss from discontinued operations, net of income taxes										(387)
Net income									$	4,894
Capital expenditures	$	18,214	$	3,895	$	273	$	4,142	$	26,524

	Nine Months Ended June 30, 2016
	Building		Construction		Energy
(in thousands)	products		materials		technology		Corporate		Totals
Segment revenue	$	423,682	$	255,494	$	4,040	$	0	$	683,216
Depreciation and amortization	$	(29,275)	$	(12,318)	$	(973)	$	(487)	$	(43,053)
Operating income (loss)	$	50,508	$	47,113	$	(3,990)	$	(20,534)	$	73,097
Net interest expense										(25,543)
Other income (expense), net										(288)
Income tax expense										(14,190)
Income from continuing operations										33,076
Loss from discontinued operations, net of income taxes										(186)
Net income									$	32,890
Capital expenditures	$	25,249	$	3,688	$	14	$	2,468	$	31,419