Headwaters Inc. has a market cap of $227.8 million; its shares were traded at around $3.77 with and P/S ratio of 0.3. Headwaters Inc. had an annual average earning growth of 0.4% over the past 10 years.HW is in the portfolios of George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Summary. Our total revenue for 2010 was $192.2 million, up 10% from $175.2 million for 2009. Gross profit increased 22%, from $42.1 million in 2009 to $51.5 million in 2010. Our operating income increased from $5.4 million in 2009 to $13.4 million in 2010, while net income decreased from $2.0 million or diluted earnings per share of $0.05 in 2009, to $1.5 million, or $0.03 per diluted share, in 2010.
Summary. Our total revenue for 2010 was $460.0 million, down 4% from $479.1 million for 2009. Gross profit increased 12%, from $96.4 million in 2009 to $108.4 million in 2010. Our operating loss changed from $(482.2) million in 2009 to operating income of $2.8 million in 2010, and the net loss changed from $(410.0) million or a diluted loss per share of $(9.87) in 2009, to a net loss of $(25.4) million, or $(0.42) per diluted share, in 2010. Excluding goodwill impairment in 2009, the operating loss changed from $(16.5) million in 2009 to operating income of $2.8 million in 2010, and the net loss increased from $(9.3) million or a diluted loss per share of $(0.22) in 2009, to a net loss of $(25.4) million, or $(0.42) per diluted share, in 2010.
Operating Expenses. The decrease in amortization expense of $1.0 million from 2009 to 2010 was due primarily to accelerated amortization of certain intangible assets in 2009 along with intangible assets that have recently been fully amortized. Research and development expense decreased by $1.5 million from 2009 to 2010, primarily because of lower spending on our coal-to-liquids and hydrogen peroxide technologies beginning in January 2009. Selling, general and administrative expenses decreased $4.9 million, or 6%, to $82.9 million in 2010 from $87.8 million in 2009. The decrease in 2010 was due to reduced spending in most categories of expense, including personnel-related costs totaling approximately $6.0 million (excluding an increase in incentive pay of $2.5 million), which decreased primarily because of headcount reductions. Professional services expenses increased by approximately $1.8 million in 2010 due primarily to $3.3 million of consultation costs related to recapitalization transactions that occurred in early fiscal 2010 and other periods.
Summary of Cash Flow Activities. Net cash provided by operating activities in 2010 was $9.3 million, compared to $33.4 million in 2009. The net loss in 2010 was significantly less than the net loss in 2009; however, the $465.7 million non-cash charge for goodwill impairment in 2009 was the primary difference in the net loss between the two periods. The 2009 net loss, after adjusting for the goodwill impairment charge and the change in deferred taxes (most of which related to the goodwill impairment) was approximately $(18.6) million, compared to the 2010 net loss of $(25.4) million. Another significant non-cash component of our operating results in 2009 was a $20.4 million gain on debt extinguishment. There was no such gain in 2010. Also, there was a significant difference between periods in the non-cash results of unconsolidated joint ventures. In 2010, there was a net gain from equity-method investments of $12.9 million, compared to a net gain of only $0.2 million in 2009.
Capital expenditures are limited by the terms of our new ABL Revolver to $60.0 million in fiscal 2010, $55.0 million in 2011 and $60.0 million in 2012. As of June 30, 2010, we were committed to spend approximately $0.9 million on capital projects that were in various stages of completion. In 2009 and 2010, we realized $3.1 million and $3.6 million, respectively, of proceeds from the sale of property, plant and equipment, most of which represented non-strategic assets in our light building products segment. In 2010, we made net payments of approximately $7.2 million for primarily long-term deposits related to our energy segment coal cleaning operations. In 2009, there were $1.5 million of net reductions in long-term receivables and deposits.
The retrospective application of the new rules resulted in the following cumulative changes to the balance sheet as of September 30, 2009: a decrease of $0.7 million in debt issue costs; a decrease of $32.8 million in long-term debt; an increase of $11.8 million in the liability for deferred income taxes; a decrease in retained earnings (increase in accumulated deficit) of $25.7 million; and an increase in additional paid-in capital of $46.0 million. For 2009 and 2010, the application of the new rules resulted in an increase in interest expense of $5.3 million and $5.5 million, respectively; a decrease in other income of $8.9 million and $0, respectively; an increase in net loss of $14.2 million and $5.5 million, respectively; and an increase in the loss per share of $0.34 and $0.09, respectively. The consolidated statements of cash flows were also affected by the changes in interest expense and other income, which resulted in increases in the reported net losses of $14.2 million and $5.5 million,
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