Polluted Headwaters: Fool by Numbers

On July 27 2006, Motley Fool Rule Breakers selection Headwaters (NYSE: HW  ) released Q3 2006 earnings for the period ended June 30, 2006.

  • Both sales and earnings came in below estimates, as the impact of a sharp reduction in Section 29 tax credits began to take effect.
  • Guidance also took a hit. Headwaters now says that unless legislative action is taken, it will earn between $2.00 and $2.15 per stub for the full year.
  • Headwaters also cancelled a $150 million debt offering, because of what it says were unfavorable market conditions.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$302,350

$295,929

$308,729

(4.1%)

Net Profit

--

$27,407

$36,458*

(24.8%)

EPS

$0.59

$0.58

$0.78*

(25.6%)

Diluted Shares

48,543

47,996

1.1%

* Adjusted for a one-time gain and stock option expenses.

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change**

Gross Margin

32.04%

39.42%

(7.38)

Operating Margin

16.64%

18.53%*

(1.89)

Net Margin

9.26%

11.81%*

(2.55)

* Adjusted for a one-time gain and stock option expenses.
** Change reported in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$59,663

$10,878

448.5%

Accounts Rec.

$144,086

$162,296

(11.2%)

Inventory

$72,879

$61,749

18%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$32,964

$33,348

(1.2%)

Total Debt

$595,301

$674,338

(11.7%)



Learn the ways of the balance sheet.

Cash Flow Checkup

No cash flow statement provided. (Whatever.)

Find out why Fools always follow the money.

Related Companies:

  • Arch Coal (NYSE: ACI  )
  • Alliance Resource Partners (Nasdaq: ARLP  )
  • Cemex (NYSE: CX  )
  • Foundation Coal (NYSE: FCL  )
  • Lafarge North America (NYSE: LAF  )
  • Nalco (NYSE: NLC  )

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.comfor more of our in-depth discussion of what the numbers mean.

Headwaters isa Motley Fool Rule Breakers selection. Ask us for an all-access pass to the service to get a closer look at the four multibagger stocks the team has uncovered. Go ahead, you've got nothing to lose. Your pass is free and it's good for 30 days.

Fool contributor Tim Beyers owns shares of Headwaters. You can find out what else is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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