SHAREHOLDERS PRESENTATION

Forward Looking Statements

Certain statements contained in this press release 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 production and marketing of cleaned coal, the licensing of residue hydrocracking technology and catalyst sales to oil refineries, the availability of refined coal tax credits, 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 feedstocks, and the marketability of the coal combustion products, building products, cleaned coal, catalysts, and the availability of tax credits, 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 “may,” “should,” “intends,” “plans,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “believes,” “seeks,” “estimates,” “forecasts,” or variations of such words and similar expressions, or the negative of such terms, may 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 products, building products, and energy industries or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the caption entitled “Risk Factors” in Item 1A in Headwaters’ Annual Report on Form 10-K for the fiscal year ended September 30, 2010, 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 press release. 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.

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Vision Statement

Headwaters improves sustainability by transforming underutilized resources into valuable products page 3

Business Overview

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Headwaters Incorporated

Headwaters Light Building Products (HBP) Leading market positions Diversified revenue stream Innovative product development expertise Unmatched national distribution network Efficient manufacturing Margins among highest in peer group Headwaters Resources (HRI) Clear market leader in fly ash Increasing market share Unrivaled national footprint Attractive long-term market fundamentals Strong margins and cash flow Headwaters Energy Services (HES) Low-cost producer of high-quality coal Innovative product development Strong momentum in operating trends Well-positioned alternative energy platform Refined coal products qualify for tax credits Revenue Breakdown HBP 48% 40% HRI FY 2010 Revenue of $655 Million EBITDA Margins (Before asset impairments ) Diversified End Markets HBP HRI

Institutional Construction Utilities Services Coal Sales/Other New Residential Construction

16.5% 19.9%

Commerical Construction

12% HES 9.1% HES

Residential Repair/ Remodeling Infrastructure Construction

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Headwaters Light Building Products

FISCAL YEAR 2010

Revenue: $317 million 48% of Total Revenue

2010 EBITDA 2011 EBITDA

Q1 – 15.3% Q1 – 9.4% Q2 - 9.3% Q3 – 20.2% Q4 – 18.6% page 6

Headwaters Light Building Products

Defensible Positions in Attractive Markets Fiscal 2010 Revenue of $317 Million Percentage of Revenue Siding Accessories, Roofing and Tools Manufactured Stone Provides siding accessories and professional tools for exterior residential home improvement and construction Manufactures one of the most authentic architectural stone products in the world Low cost competitive manufacturing advantage

48% 29%

Multiple national brands for optimal customer segmentation National manufacturing platform Diversified customer base

23%

Major supplier of products to Lowe’s and Home Depot Texas Concrete Block Offers a variety of concrete based masonry unit products Regional branding Regional distribution Low cost producer

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Leading Market Positions in Niche Product Categories

Siding Accessories Manufactured Stone Texas Concrete Block

Core BP Pinckney Girardin Other Source: management estimates SWC Other page 8

High-Quality Product Offerings

Leading Building Products Brands

30% 45% Remodel New Residential 25%

Comprehensive Set of Products for Construction Applications

Commerical/ Institutional page 9

Light Building Products Growth Initiatives

Develop and introduce new niche products featuring: – Early stage product life cycle – Faster than average growth – Examples • Specialty siding • Functional Shutters • Dutch Quality and Stone Craft brands • Synthetic slate roofing Leverage the most extensive distribution system in the industry 25% 20% 15% 10% 5% 0% 4% 2005 9% 2006 15% 2007 20% 20% 22% 2008 2009 2010 Percentage of Total Revenue From New Products & Brands Since 2005 page 10

Sustainability Within Building Products

Headwaters Light Building Products division is committed to continuous improvement in its processes and products – Tapco utilizes roughly 99% of its internal regrind material in various products – Foundry is purchasing up to 30% to 35% recycled raw materials – SCP incorporates fly ash in up to 25% of its products, and internal regrind is added to all gray products – Eldorado Stone incorporates fly ash and internal regrind into over 20% of its products

Fly Ash Magnified 90x

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Headwaters Light Building Products Generates Higher Margins Relative to Peers

Average EBITDA margin (2008- 2010)

20% 15% 10% 5% 0% 15.4%

9.7%

HBP Peer group median Note: The peer group median margins reflect the margins of CPG, Trex, Owens Corning, Ply Gem, Masco, Associated Materials, and USG.

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New Housing Market – In Process of Stabilizing

Annualized monthly Housing Starts Since Oct 2009

700 600 500 400 524 580 557 609 616 626 672 578 537 541 608 610 519 534 529 Source: U.S. Census and NAHB

Historical median since 1959: 1.5 million Annualized housing starts have shown multiple consecutive months of positive growth, suggesting that the new housing market is in the process of stabilizing and positioned for growth in 2010

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Headwaters Resources

Heavy Construction Materials Utilizing Coal Combustion Products

FISCAL YEAR 2010

Revenue: $258 Million 40% of Total Revenue

2010 EBITDA 2011 EBITDA

Q1 – 16.8% Q1 – 18.7% Q2 – 12.4% Q3 – 22.3%* Q4 – 24.1%*

* Adjusted for asset impairment

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Heavy Construction Materials

Converting Residuals Into Valuable Products

Why Fly Ash?

Improved product performance – More durable – Greater long-term strength – More workable and pumpable – Mitigates problems caused by salts, chemicals, and some aggregates Cost savings – 20% to 60% less expensive Positive environmental impacts – Reduces landfill utilization – Displaces portland cement production which emits approximately one ton of CO 2 for every ton of product page 15

Heavy Construction Materials

Competitive Advantages

Exclusive long-term contracts – 100 power plants in 35 states – Complete utility service capabilities Nationwide infrastructure – 22 terminals – ~100 plant site supply facilities – ~175 trucks – ~1,100 railcars Technology advancements – Ammonia Slip – Carbon Fixation Fly Ash Distribution Terminal, Riviera Beach, Florida page 16

Fly Ash – Leading Market Share

Headwaters Resources’ Fly Ash Shipments (in thousands)

6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Estimated Market Share*

* Estimated Industry Data Provided by ACAA

Boral Lafarge Headwaters Other

Fly ash has been taking market share from portland cement – Driven by regulatory initiatives and cost consciousness Headwaters has increased market share in fly ash page 17

Headwaters Resources Market Share – Fly Ash in Concrete Products

* Estimated Industry Total provided by ACAA.

Our capital investments in storage and rail terminals have allowed us to increase market share page 18

Proposed EPA Regulations for Fly Ash

Public comment period ended November 19, 2010 after 8 public hearings and over 400,000 comments submitted

Beneficial use of coal ash expected to remain exempt from regulation

EPA has informally indicated that it will take 2 years to review comments and formulate a final proposal rule – no formal time line has been set Headwaters Resources Utility Services Group is likely to benefit from proposed regulations Potential for litigation over final rule may delay enactment page 19

Headwaters Technology Segment FISCAL YEAR 2010

Revenue: $80 Million 12% of Total Revenue

2010 EBITDA 2011 EBITDA

Q1 – (42.0)% Q1 – 15.2% Q2 - 7.8% Q3 - 26.6% Q4 – 18.7%*

*Without Asset Impairment

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Coal Cleaning Overview Converting Waste Coal Into a Valuable Product

Strategic Rationale to be in Coal Cleaning

Continuation of our waste coal expertise Synergies with Headwaters Resources Large addressable market – 3-5 bn tons of waste Federal tax credit of $6 per ton Environmental benefits – Solid waste utilization, land reclamation, emissions reductions from processed fuel

HW Coal Cleaning Assets

11 facilities (9 in operation) –Wet and dry processing technologies

Coal Recovery Facility (Dry Technology) Wellington, Utah

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Coal Cleaning Production & Sales

600 000 500 000 400 000 300 000 Production & Shipments 200 000 100 000 0 F10 Q1 F10 Q2 F10 Q3 F10 Q4 F11 Q1 Production Shipments

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Financial Overview

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(dollars in millions)

REVENUE

Excludes Section 45K Results page 24

Fiscal 2010

EBITDA By Segment

(dollars in millions)

$52.3 $51.4* $7.2* Light Building Products CCPs - Heavy Construction Materials HES

* Without asset impairments

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CAPITAL STRUCTURE

(in thousands)

Debt

Senior Secured Debt 16.0% Convertible Debt 2.5% Convertible Debt 14.75% Convertible Debt

Total Debt Equity

Outstanding Shares

Cash on Hand Dec 31, 2010 Carrying Value

$ 325,950 8,773 102,485 24,986

$ 462,194 Par Value

$ 328,250 9,233 120,900 27,370

$ 485,753 Rate

11.375% 16.00% 2.50% 14.75% 60,752

$67,998

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HEADWATERS

“Improving sustainability by transforming underutilized resources into valuable products”

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