Headwaters profit up 69% on sales boost

South Jordan-based Headwaters Inc. said its fiscal third-quarter profit rose 69 percent, more than analysts expected, on increased sales of coal-combustion materials and alternative-fuel technology. The company's shares rose almost 8 percent, their biggest gain in two years.

Net income rose to $46.4 million, or 98 cents a share, in the three months ended June 30 from $27.4 million, or 58 cents, a year earlier, Headwaters said in a statement Tuesday. The company was expected to earn 46 cents a share, the average of seven analyst estimates compiled by Bloomberg. Sales rose 14 percent to $336.3 million.

Sales of byproducts of coal combustion including fly ash rose 12 percent to $83.2 million, and revenue from the company's alternative-energy business rose 63 percent to $97.5 million.

"The real surprise on the numbers being up so significantly was the engineered-fuel business," said William Gibson, an analyst at Nollenberger Capital Partners in San Francisco, who expected the company to earn 33 cents a share. Gibson rates Headwaters shares at "neutral" and owns none.

Shares of Headwaters rose $1.15, or 7.7 percent, to close at $16.13 on the New York Stock Exchange, the biggest one-day gain for the stock since July 2005. Before today, the stock had fallen 37 percent this year.

Headwaters also provides technology and chemical reagents to the coal-based synthetic fuels industry. License fees from that business more than doubled to $33.6 million from $12.4 million a year earlier. Some of the fees reported for the most-recent quarter were collected earlier and not recorded in anticipation that the business might be phased out, the company said.

Revenue from sales of construction materials fell 4 percent to $155.6 million, the company said. Headwaters sells building products including stone veneer, concrete block, brick, mortar and stucco.

Headwaters is raising its forecast for 2007 net income to $2.35 to $2.50 a share, Chief Financial Officer Scott Sorensen said in the statement. In May, Sorensen forecast profit of $1.60 to $1.80.