Covia announced results for the third quarter ended Sept. 30.
- Total volumes decreased 5% sequentially to 7.8 million tons, and decreased 5% compared to the third quarter of 2018.
- Total revenues decreased 8% sequentially to $409.0 million, and decreased 22% compared to the third quarter of 2018
- Selling, general and administrative expenses decreased 8% sequentially to $35.6 million, and decreased 17% compared to the third quarter of 2018.
- Net income from continuing operations totaled $53.8 million, a sequential increase of $88.2 million. The increase was driven by the $127.2 million pre-tax gain on sale of assets.
“During the third quarter, we made significant progress in reducing our financial leverage, including closing on $240 million in non-core asset sales, structurally removing costs and streamlining our organization,” said Richard Navarre, chairman, president and chief executive officer. “Industrial profitability increased year-over-year, despite the sale of two businesses and temporary end market-related challenges. Energy performed consistent with guidance through August; however, customers sharply curtailed completions activity in September, which negatively impacted our results. We have taken further actions to consolidate our production into lower-cost facilities and reduce costs across the organization.”
Navarre added, “Energy demand is expected to soften further in the fourth quarter, due to customer budget exhaustion and seasonality. In the face of these challenging conditions, we remain committed to repositioning our Energy business, organically growing our Industrial segment and strengthening our balance sheet. We are confident that these strategies will best position Covia to navigate market challenges and deliver strong profitability as market conditions improve.”
Energy Segment results included:
- Volumes decreased 9% sequentially to 4.2 million tons.
- Revenues decreased 11% sequentially to $223.3 million, driven primarily by lower volumes in September and moderately lower pricing for both Northern White and local sand.
- Segment gross profit of $17.7 million compared to $33.9 million in the second quarter of 2019. Segment contribution margin of $24.6 million, a decrease of $16.3 million sequentially, driven primarily by lower pricing and lower fixed-cost absorption resulting from decreased volumes.
- In response to lower market demand, the company reduced its annual effective Northern White capacity by approximately 5 million tons, including the idling of the Kasota, Minn., facility, and the de-rating of capacity at several other facilities.