In a third-quarter earnings report noting 8 percent revenue and 11 percent EBIDTA gains against the same period in 2015, Utah-based Headwaters Inc. offers guidance on a rebound in the slightly lagging core area of its Construction Materials business: Fly ash and other coal combustion products (CCP) shipments.
“We believe that our fly ash supply in 2016 compared to 2015 was lower because of a temporary seasonal decline in production due primarily to lower electricity demand and unusually low natural gas prices, both impacted by unseasonably mild temperatures. Sales volumes were also impacted by rain,” the company tells investors. “Based on demand for high quality CCP, improvements to weather, and increasing natural gas prices, we expect sales volumes for CCP to normalize in the fourth quarter.”
“As demand for high quality CCP remains strong, we continue to develop additional fly ash sources, some of which are not dependent upon current electricity generation. We have been actively involved in creative strategies to secure additional supplies for some time, and believe that several of these will be operational in 2017,” Headwaters reports. “The American Coal Ash Association estimates that there are hundreds of millions of tons of potentially available CCP, much of which we believe could be reclaimed for use as fly ash. In addition, we are expanding our storage and blending capabilities. As we develop additional sources of supply, we forecast 2017 volumes in the range of 6.1 to 6.5 million tons, a 9 percent to 20 percent increase over 2016 projected volumes.
“We are pleased with the overall performance of the business and remain very optimistic that our key end markets will continue to grow in 2017. Efforts to increase our available fly ash supply should also add revenue and cash flow in the coming months, as well as in 2017 and beyond,” affirms Headwaters Chief Financial Officer Don Newman.