Covia announced results for the second quarter ended June 30. As a result of the merger that closed on June 1, 2018, Covia’s 2018 reported results under U.S. generally accepted accounting principles include the consolidated financial results of both Unimin Corp. and Fairmount Santrol Holdings Inc. for the seven months ended Dec. 31, 2018, as well as the stand-alone results for Unimin for the five months ended May 31, 2018, including the high-purity quartz (HPQ) business reported as discontinued operations.
- Total volumes increased 2% sequentially to 8.2 million tons, and decreased 19% compared to the second quarter of 2018 on a pro forma basis.
- Total revenues increased 4% sequentially to $444.9 million, and decreased 38% compared to the second quarter of 2018 on a pro forma basis.
The company also announced that its board of directors has appointed Richard Navarre president and chief executive officer, effective Sept. 1.
“I am honored the board has chosen me to lead Covia as its president and CEO,” said Navarre. “From my experience with the company as board chair and more recently, while serving as interim president and CEO, I know the exceptional quality of the people and assets at Covia. I look forward to working with our employees, customers and other stakeholders to create both near-term and long-term value.”
In conjunction with Navarre’s appointment, he will continue to serve as Covia’s board chair and Matthew LeBaron has been appointed to serve as the company’s lead independent director.
“During the second quarter, our team delivered strong sequential profitability growth through a combination of improved volumes and pricing, and lower costs. These successes, aided by improved working capital, translated into operating cash flow of $107 million during the quarter,” said Navarre. “In addition to these operational achievements, we also announced the divesture of non-core assets for $240 million to accelerate the strengthening of our balance sheet.
“As we move forward, we are executing on multiple initiatives across the organization to reduce costs, optimize assets and organically grow our Industrial segment. We believe these initiatives will improve margins and drive cash flow generation,” Navarre added. “These actions should serve not only to solidify our balance sheet, but also strengthen our position as a low-cost leader, allowing us to successfully navigate changes in market conditions and capture growth opportunities.”
Industrial Segment results:
- Volumes of 3.6 million tons, a decrease of 6% compared to the second quarter of 2018 on a pro forma basis, driven primarily by softness in building products, which was impacted by unseasonably wet weather.
- Revenues of $193.4 million, a decrease of 6% from the second quarter of 2018 on a pro forma basis, driven primarily by lower transportation-related revenues.
- Segment gross profit and segment contribution margin of $65.1 million, an increase of $3.0 million from the second quarter of 2018 on a pro forma basis, due to increased pricing and cost improvements.
- Signed several multi-year contracts with Industrial customers since the beginning of the year, representing over 2 million tons of annual volume commitments, which will help leverage fixed costs across Industrial and hybrid plants.
Energy Segment results:
- Volumes of 4.6 million tons, an increase of 3% sequentially, driven primarily by growth in local sand volumes.
- Revenues of $251.5 million, an increase of 7% sequentially, driven primarily by higher pricing for Northern White Sand.
- Segment gross profit of $33.9 million. Segment contribution margin of $40.9 million, an increase of $18.9 million sequentially, driven primarily by improved Northern White Sand pricing and lower costs.