Headwaters Sinks: Fool by Numbers

On Nov. 7, Motley Fool Rule Breakers pick Headwaters (NYSE: HW  ) released fourth-quarter 2006 earnings for the period ending Sept. 30, 2006.

  • Investors got a mixed bag in Q4. Per-share earnings easily beat estimates thanks to fewer shares on the books, but sales fell well short of projections despite a boost from lower oil prices.
  • Net profit declined 38% year over year, due primarily to the phase-out of alternative energy tax credits specified by Section 45K of the Internal Revenue Code.
  • Margins, too, took a beating. But it was operating margin that suffered the most, down more than 6% from last year's Q4.
  • For a look at Headwaters' full-year earnings results, click here.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q4 2006

Q4 2005

Change

Sales

$281,850

$275,226

$315,102

(12.7%)

Net Profit

--

$27,954

$44,877

(37.7%)

EPS

$0.48

$0.61

$0.95

(35.8%)

Diluted Shares

--

48,286

48,717

(0.9%)



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

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

32.33%

35.51%

(3.18)

Operating Margin

16.19%

22.29%

(6.10)

Net Margin

10.16%

14.24%

(4.08)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$79,151

$13,666

479.2%

Accounts Rec.

$131,608

$174,127

(24.4%)

Inventory

$62,519

$60,519

3.3%



Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$23,854

$43,857

(45.6%)

Long-Term Debt

$587,820

$601,811

(2.3%)

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: LR  )
  • 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.com for more of our in-depth discussion of what the numbers mean.

Headwaters isone of dozens in a market-beating Rule Breakers portfolio that features five stocks that have at least doubled in price. Want to find out who they are? Try out 30 days of free access to the service.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which other stocks he owns by checking Tim's Fool profile. The Motley Fool's disclosure policy always adds up.


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