HEADWATERS INCORPORATED (HW) has reported a 46.34 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $6.67 million, or $0.09 a share in the quarter, compared with $12.42 million, or $0.17 a share for the same period last year. On the other hand, adjusted net income from continuing operations for the quarter stood at $13.10 million, or $0.17 a share compared with $16.20 million or $0.21 a share, a year ago.
Revenue during the quarter grew 17.01 percent to $255.58 million from $218.42 million in the previous year period. Gross margin for the quarter contracted 179 basis points over the previous year period to 27.63 percent. Total expenses were 92.43 percent of quarterly revenues, up from 88.64 percent for the same period last year. That has resulted in a contraction of 380 basis points in operating margin to 7.57 percent.
Operating income for the quarter was $19.34 million, compared with $24.82 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $41.90 million compared with $40.20 million in the prior year period. At the same time, adjusted EBITDA margin contracted 201 basis points in the quarter to 16.39 percent from 18.41 percent in the last year period.
"Headwaters entered into a definitive merger agreement with Boral Limited (BLD: ASX) pursuant to which Boral will acquire Headwaters Incorporated for US$24.25 per share in cash, representing an aggregate enterprise value of approximately US$2.6 billion. We are pleased to create value for our shareholders and through the combination of businesses create value for our customers as well," said Kirk A. Benson, chairman and chief executive officer of Headwaters.
Working capital declines
HEADWATERS INCORPORATED has witnessed a decline in the working capital over the last year. It stood at $165.26 million as at Dec. 31, 2016, down 6.68 percent or $11.83 million from $177.09 million on Dec. 31, 2015. Current ratio was at 2.39 as on Dec. 31, 2016, down from 2.75 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 53 days for the quarter from 70 days for the last year period. Days sales outstanding went down to 45 days for the quarter compared with 48 days for the same period last year.
Days inventory outstanding has decreased to 20 days for the quarter compared with 35 days for the previous year period. At the same time, days payable outstanding was almost stable at 13 days for the quarter, when compared with the previous year period.
Debt increases substantially
HEADWATERS INCORPORATED has witnessed an increase in total debt over the last one year. It stood at $740.40 million as on Dec. 31, 2016, up 31.79 percent or $178.60 million from $561.80 million on Dec. 31, 2015. Total debt was 60.68 percent of total assets as on Dec. 31, 2016, compared with 58.66 percent on Dec. 31, 2015. Debt to equity ratio was at 2.45 as on Dec. 31, 2016, up from 2.23 as on Dec. 31, 2015.
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