Headwaters Incorporated Comments on Fifth Annual Analyst Day Conference.

SOUTH JORDAN, Utah -- Headwaters Incorporated (NYSE:HW) announced that it is conducting its fifth annual analyst day conference today at The Grand American Hotel in downtown Salt Lake City. During the half-day meeting, presentations will by given by Headwaters' senior management team addressing

Headwaters Energy Services division, its building products division, and various proprietary technologies. Scott Sorensen, Headwaters' CFO, will review the financial status of the Company, and Kirk Benson, Headwaters' CEO, will present a general overview of the Company. The following are the primary subjects to be covered:

Coal Cleaning

By the end of 2008, Headwaters anticipates operating at least 10 coal cleaning facilities, producing up to 2 million tons of quality coal generating up to $80 million in gross revenues. Headwaters is currently investigating more than ten sites to determine the feasibility of constructing and operating coal cleaning facilities and has twenty more sites in the pre-qualification stage. Related to the recently announced mineral lease in Indiana, the Company has identified additional waste reserves that it may be able to add to the current site.

HCAT

Headwaters believes that limited crude oil and refining capacity projected in the future provides economic tail winds for HCAT's commercialization. HCAT is a new resid hydrocracking catalyst technology that is a replacement technology for traditional processes used for upgrading residual heavy oil. Headwaters anticipates that ebullated bed hydrocracking, fixed bed catalytic hydrodesulfurization, coking, and solvent de-asphalting technologies could all be impacted by successful commercialization of HCAT.

There are multiple effects from HCAT that add value in a refinery operation. The Company believes that increased conversion, improved product quality, reaction gain, uptime, and reduced reliance upon other catalysts are some of the benefits from HCAT. Increased costs incurred by the refinery include the cost of the catalyst and hydrogen.

Headwaters' commercialization strategy is to introduce the HCAT technology as an additive to ebullated bed reactors. The Company successfully concluded three commercial runs of the HCAT technology with positive technical results and economic possibilities. Headwaters believes that the revenue generation from this market segment could be up to $2.00 per barrel.

Headwaters anticipates that the HCAT technology will improve resid economics compared to a coker. Depending upon feedstock and operating assumptions, HCAT can result in over 30% increase in liquid yields from treated resid, primarily in diesel and gasoline, with resulting improvement in economic performance. Headwaters believes that the revenue generation in a greenfield reactor could be up to $3.00 per barrel, in a projected greenfield resid market of up to 2.5 million barrels per day.

Building Products

Long-term trends for housing construction are positive. For example, some reports estimate that there are 105 million homes older than 15 years and over 6 million homes with existing problems with exterior siding or walls. Existing home sales peaked in 2005, but favorable economic conditions and improving marketability combine for projected increased sales in the future. Home ownership is increasing, led first by the baby boomers and now by the echo boomers, or children of the baby boomers. This large population is beginning to reach the age of home ownership.

Headwaters' building products strategy is two-fold. First, the Company plans to continue to introduce new products into its extensive distribution system. The Company is experiencing greater than 50% growth in products like specialty siding, slate roofing, and functional shutters. New brands like StoneCraft and Dutch Quality Stone also contribute to double digit overall growth in its new brands and new product strategy. The second part of its building products strategy is to improve its manufacturing efficiency. Headwaters has seen margin pressure from raw material cost increases, manufacturing inefficiencies, unfavorable sales mix, slow down of residential construction, and higher operating expenses. Headwaters expects that its efforts to improve efficiencies will counter the negative margin pressure over time. In its functional shutter brand the Company has seen margin improvements resulting from these efforts.

Resources

Resources had a record year in 2006 although the units of high value coal combustion products were down slightly, primarily because of short supply. Currently, demand for coal combustion products remains strong as reflected in our ability to raise prices. As shown by increases in capital spending for storage and distribution, Headwaters will continue to focus on increasing its supply of fly ash during the summer construction months. The Company anticipates that units shipped will expand in 2007 and that prices will continue to increase.

Utility Opportunities

Over the last several years Headwaters has developed a utility based strategy, offering multiple products and services to utility partners. Great River Energy is an example of this strategy. At GRE, Headwaters markets more than 350,000 tons of high quality fly ash as a substitute for Portland cement. The Blue Flint ethanol plant uses excess steam from GRE's boilers to make ethanol from corn. GRE has developed a coal drying technology installed at the boiler that increases combustion efficiency while also removing sulfur and mercury. Headwaters is in discussions with GRE concerning its role in the commercialization of the coal drying technology.

Although originally rooted together in utility relationships, Headwaters has developed two somewhat independent businesses, our developing energy business and our more mature building products business. As the two businesses continue to mature and grow, there may be a time when it will be appropriate for the businesses to be separated into their respective sectors.

Capital Structure

Recently, Headwaters has amended its senior credit facility, issued new convertible notes, and announced plans for an exchange offering for its convertible notes issued in 2005. The new notes raised $160 million in capital with a conversion price at $35 per share after consideration of a call spread. The Company has not launched its exchange offer as it waits for the SEC to complete its review of our S-4 filing. If Headwaters decides to launch the exchange, and if it is successful, the impact will be to reduce the number of shares potentially issued under the existing convertible debt by 5.75 million shares.

Additional information about Headwaters is available in its Annual Report on Form 10-K filed with the SEC on November 22, 2006 and other periodic and special reports filed by the company. Our website is www.headwaters.com which has links to all of our SEC reports. Stockholders may receive a hard copy of the company's complete audited financial statements and SEC reports free of charge upon request to Sharon Madden, Director of Investor Relations.

About Headwaters Incorporated

Headwaters Incorporated is a world leader in creating value through innovative advancements in the utilization of natural resources. Headwaters is a diversified growth company providing products, technologies and services to the energy, construction and home improvement industries. Through its alternative energy, coal combustion products, and building materials businesses, the Company earns a growing revenue stream that provides the capital needed to expand and acquire synergistic new business opportunities.

Forward-Looking Statements

Certain statements contained in this report are forward-looking statements within the meaning of federal securities laws and Headwaters intends that such forward-looking statements be subject to the safe-harbor created thereby. Forward-looking statements include Headwaters' expectations as to the managing and marketing of coal combustion products, the production and marketing of building materials and products, the licensing of technology and chemical sales to alternative fuel facilities, the receipt of product sales, license fees and royalty revenues, which are subject to tax credit phase out risks, the development, commercialization, and financing of new technologies and other strategic business opportunities and acquisitions, and other information about Headwaters. Such statements that are not purely historical by nature, including those statements regarding Headwaters' future business plans, the operation of facilities, the availability of tax credits in an environment of high oil prices and potential tax credit phase out, the availability of feedstocks, and the marketability of the coal combustion products, building products, and synthetic fuel, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Actual results may vary materially from such expectations. Words such as "expects," "anticipates," "targets," "goals," "projects," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to help identify such forward-looking statements. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking. In addition to matters affecting the coal combustion product, alternative fuel, and building products industries or the economy generally, factors which could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the captions entitled "Forward-looking Statements" and "Risk Factors" in Item 7 in Headwaters' Annual Report on Form 10-K for the fiscal year ended September 30, 2006, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses.

Although Headwaters believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that our results of operations will not be adversely affected by such factors. Unless legally required, we undertake no obligation to revise or update any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Our Internet address is www.headwaters.com. There we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our reports can be accessed through the investor relations section of our web site.