Covia Holdings Corporation (CVIA) Reports Q4 Revenues Miss

Covia Holdings Corporation (NYSE: CVIA) reported Q4 revenue for the quarter came in at $313.3 million versus the consensus estimate of $339.26 million.

• Sold 6.6 million tons in the fourth quarter of 2019 and 30.5 million tons for full year 2019
• Generated cash flow from operating activities of $35 million in the fourth quarter of 2019 and $104 million for full year 2019
• Reported 2019 net loss of $1.3 billion driven by $1.4 billion impairment of Energy assets; 2019 Adjusted EBITDA of $143 million
• Reduced net debt by $256 million in 2019
• Resumed major Canadian nepheline syenite expansion and modernization project, and completed Canoitas, Mexico expansion

“Covia demonstrated strong execution capabilities in 2019 in the face of challenging market conditions,” said Richard Navarre, Chairman, President and Chief Executive Officer. “Our Industrial segment delivered a good year with profitability growth outside of the divested businesses. We continued to reposition and restructure our Energy segment, including the idling of more than 15 million tons of capacity, commissioning our in-basin production facilities, reducing our railcar fleet by more than 3,000 cars, and eliminating approximately $195 million in railcar purchase obligations. Finally, we took meaningful steps to improve cash flow through reduced capital expenditures, lower working capital, and non-core asset divestitures, resulting in a $256 million net debt reduction in 2019.”

Mr. Navarre added, “Recent events are expected to create a challenging environment in our Energy segment; however, we will remain focused on operating safely, controlling costs, and reliably delivering consistent, high-quality products to our Energy customers. We believe our Industrial segment is poised for long-term growth as we leverage our recently commissioned Canoitas, Mexico expansion, drive further cost reductions within our operations, invest in our nepheline syenite operations in Canada, and expand our product portfolio.”

Outlook

Based on preliminary results through February, the Company expects first quarter 2020 Industrial volumes to be in the range of 3.3 million to 3.4 million tons and Energy volumes to be up 10% to 15% sequentially. Adjusted EBITDA in the first quarter is expected to be between $22 million and $27 million.

The unknown impact of the Covid-19 virus and fluctuating oil and gas prices on market conditions makes forecasting 2020 challenging. The Company expects 2020 selling, general and administrative expenses to be between $135 million and $145 million, which includes approximately $10 million in non-cash stock compensation. The Company expects 2020 capital expenditures to be in the range of $60 million to $70 million, of which $20 million to $25 million is related to the modernization and expansion of the nepheline syenite operations in Canada.

For earnings history and earnings-related data on Covia Holdings Corporation (CVIA) click here.

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