The synthetic fuels and construction-materials conglomerate, which is based in South Jordan, reported that net income for the period ended Dec. 31 fell to $9.9 million, or 23 cents per share.
A year ago, Headwaters recorded first-quarter net income of $17 million, or 37 cents a share.
In a conference call with securities analysts earlier this week, Headwaters CEO Kirk Benson said despite the nationwide weakness in residential construction and its impact on demand for building products, the company remains in shape to ward off further impacts should the economy slip into recession.
"In the building products space . . . we're already in a recession and we're already experiencing a downturn," Benson said. And "if the U.S. goes into recession, it will extend and exacerbate the problems we're already facing."
Yet Benson noted he expects the company's fly ash business to continue to perform well in the coming year.
"Demand still exceeds supply. There is a fairly good chance that a recession would not have an impact" on that sector of operations. Headwaters is a major supplier of fly ash, which is used to strengthen concrete.
Benson told analysts the company's coal-cleaning business also shouldn't be harmed by any further deterioration in the economy.
"There is really no reason to believe that coal is going to be significantly negatively impacted by a recession," Benson said, noting that projections show there will be record production and sales in 2008.
And he said that is exciting for Headwaters "because that's [a business] where we're just getting started."
The company's coal-cleaning technology is designed to treat the more than 6,000 massive heaps of low-grade coal known as "gob piles" that are found throughout the coal mining regions of the country.
Untreated, those mounds, which contain an estimated 3 billion to 5 billion tons of coal, are of little value because they contain too much ash, sulphur and mercury.
Headwaters operates five coal-cleaning facilities - one each in Utah, Kentucky and Indiana and two in Alabama. It expects to have nine to 10 facilities operating by the end of the year.
Steven G. Stewart, Headwater's chief financial officer, said as the coal-cleaning operations continue to grow and mature they will come to make up a significant portion of the company's operating revenue.
Stewart also reported that at the end of the first quarter, Headwaters had about $20 million cash on hand and $50 million available on a revolving line of credit, for total liquidity of approximately $70 million.
In a report on Headwaters issued Wednesday, securities analyst Al Kaschalk of Wedbush Morgan Securities indicated he decreased his fiscal 2008 earnings estimate for the company from $1.08 per share to $1.03, but increased the 2009 estimate from 98 cents to $1.00.
Kaschalk said he is maintaining his "buy" rating on Headwaters shares, with a 12-month target price of $14. On Wednesday, shares closed at $10.94, down 76 cents.
steve@sltrib.com
The South Jordan synthetic fuels and construction- materials conglomerate generates revenue streams from the following:
* Major supplier of fly ash, which is used to strengthen concrete.
* Operates five coal-cleaning facilities, one each in Utah, Kentucky and Indiana and two in Alabama. The company expects to have nine to 10 facilities operating by the end of the year.
