On May 1, diversified nanotech and alternative energy player Headwaters (NYSE:HW) released second-quarter earnings for the period ended March 31.

  • A slowdown in new home construction harmed the construction materials segment, but that was offset by strong showings in the synthetic fuel business and the coal combustion segment.
  • For a more detailed look at this Rule Breakers recommendation, be sure to read Jack Uldrich's Take on Headwaters' earnings.
  • The stock rates an above-average four stars in Motley Fool CAPS.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Sales

$274.1

$269.7

1.6%

Net Profit

$27.2

$18.4

47.8%

EPS

$0.59

$0.40

47.5%

Diluted Shares

48.4

48.9

(1.1%)

Get back to basics with the income statement.

Margin Checkup

Q2 2007

Q2 2006

Change*

Gross Margin

34.4%

29.5%

5.0

Operating Margin

16.6%

14%

2.6

Net Margin

9.9%

6.8%

3.1

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash + ST Invest.

$29.3

$56.8

(48.4%)

Accounts Rec.

$150.2

$127.5

17.8%

Inventory

$64.7

$68.2

(5.1%)

Liabilities

Q2 2007

Q2 2006

Change

Accounts Payable

$31.3

$32.0

(2.3%)

Long-Term Debt

$595.0

$587.8

1.2%

The balance sheet reflects the company's health.

Cash Flow Highlights

No data; management fails us again.

Free cash flow is a Fool's best friend.

Related Foolishness:

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