EX-99.2 3 cvia-ex992_147.htm EX-99.2 cvia-ex992_147.pptx.htm

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Investor Presentation May 9, 2019 Exhibit 99.2

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Forward Looking Statements Forward-Looking Statements   This presentation contains forward-looking statements intended to qualify for the protection of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly, descriptions of the Company’s objectives, strategies, plans, goals or targets are also forward-looking statements.   Forward-looking statements are based upon management’s then-current views and assumptions regarding future events and operating performance that may ultimately prove to be inaccurate. Although management believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of its knowledge, forward-looking statements involve risks, uncertainties and other factors which may materially affect the Company’s business, financial condition, results of operations or liquidity.   Forward-looking statements are not guarantees of future performance and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, the risks discussed in the Risk Factors section of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 22, 2019; and the other factors discussed from time to time in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC. This release should be read in conjunction with such filings, and you should consider all of such risks, uncertainties and other factors carefully in evaluating forward-looking statements. .   Pro Forma Information and Non-GAAP Financial Measures   This presentation includes pro forma financial results which include the combined results of operations for Fairmount Santrol and Unimin for periods preceding the June 1, 2018 merger. This presentation also includes non-GAAP financial measures, including EBITDA, adjusted EBITDA and other measures identified as “adjusted” results. Please refer to the Appendix for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Management believes this supplemental financial information enhances an investor’s understanding of Covia’s financial performance as it excludes those items which impact comparability of operating trends. The non-GAAP financial information should not be considered in isolation or viewed as a substitute for measures of performance calculated in accordance with GAAP, but should be viewed in addition to the results as reported by Covia. The inclusion of non-GAAP financial information as used in this presentation is not necessarily comparable to other similarly titled measures of other companies due to the potential inconsistencies in the method of presentation and items considered.

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Covia: A Leading Diversified Mineral and Material Solutions Company Covia is a leading provider of advanced mineral-based material solutions across Industrial and Energy markets Energy North America’s largest provider of sand-based proppants to the oil and gas sector 18 million tons of Northern White nameplate capacity at unit train capable facilities 8 million tons of in-basin capacity in the Permian and Mid-Con Broad array of proppant, cementing and dust mitigation products and last mile solutions serving every major shale play Integrated, low-cost distribution capabilities from mine to well Industrial More than 19 million tons of capacity Serving core markets - glass, ceramics, building products, coatings, polymers, metals and foundry across North America Diversified across minerals, markets and geographies providing resilient cash flow generation and multiple avenues of growth Expansive and strategically located footprint providing unique capabilities to serve a blue chip customer base

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1 Rate of all incidents reportable to MSHA. 2 MSHA All Incident rate from table 2 of the Mine Injury and Worktime, Quarterly Report (January – December 2018, Preliminary). Leading safety performance Clearly Covia™ Unique Culture with Strong Focus on Safety Total Recordable Incident Rate 2018 Safety First Be Different Deliver on Promise Do Good. Do Well. Act Responsibly.

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Unique Competitive Advantages Size, Scale and Geography Technical Innovation Distribution Network Product and Market Diversity

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Strength Through Diversity of Businesses, Geographies and Minerals Industrial 45% Energy 55% 2018 Pro Forma Industrial Revenues¹ 2015 - 2018 Pro Forma Volumes¹ Geographies² Minerals 1 – Excludes HPQ business 2 – Geographic destination

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INDUSTRIAL SEGMENT

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A Diverse Mix of End Markets Containers Touch screens Automotive Architectural Solar Tiles Sanitary ware Bathtubs & sinks Demonstrated leadership and customer knowledge across diversified end markets Grouts and mortars Commercial flooring Roofing shingles Quartz surfaces Fiberglass Transport - auto, rail & aerospace Equipment – construction agriculture & mining Household & building products Defense Paints Architectural coatings Agricultural films Antiblock additives Custom turf blends Golf bunker sand Play sand Commercial filtration Pool filters W&W Railroad GLASS BUILDING PRODUCTS FOUNDRY CASTINGS COATINGS & POLYMERS SPORTS & RECREATION OTHER CERAMICS 10-15% 10-15% <5% Percentage of Industrial revenues by end market <5% 10-15% 15-20% 40-45%

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Multi-Functional Products Serve Wide Customer Base Product Glass Coatings & Polymers Ceramics Building Products Foundry Castings Filtration Sports & Recreation Silica ü ü ü ü ü ü ü Nepheline Syenite ü ü ü ü ü Feldspar ü ü Clay & Kaolin ü ü ü ü ü Lime ü ü ü ü Coated Products ü ü Custom Blending ü ü ü ü Resin Systems ü DST™ (Dust Suppression Technology) ü ü ü ü

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Multiple Pathways to Capture Growth Largest reserves in North America Used primarily in glass, coatings & polymers and ceramics Share gains from substitute minerals driving growth Further expanding capacity to serve growing containerized glass market High-quality specification for glass manufacturers including low-iron content Fueled by Mexican brewers, who are experiencing strong export growth Well positioned to supply building products in region with robust construction Multi-product offering enhances value proposition to customers Plants Industrial Hybrid Mineral: Nepheline Syenite Market: Mexican Glass Geography: Southeast U.S.

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Why Customers Choose Covia Understanding customer needs and expectations to deliver total solutions Delivering the right product, at a consistent specification, at the right time is critical to customer operations Technical collaboration with customers to make tomorrow’s products today Proven commitment to industrial customer throughout cycles Expansive coverage to serve North America’s largest industrial customers Over 2,000 customers across diversified end markets Customer Knowledge Reliability & Consistent Quality Technology & Expertise Commitment Strategically Located

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Resilient Industrial Segment Through Cycles Pro Forma Industrial Gross Profit¹ In millions 1 – Excludes gross profit generated by HPQ business Industrial margins resilient, even through energy downturns

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ENERGY SEGMENT

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Energy Scale to Meet Demand Plants Energy Hybrid Coating Terminals Map excludes two terminals located in Canada Scale Matters Simplification of customers’ supply chains Substantial operating leverage Flexibility to scale production with market demand Ability to serve every basin from tier-1 assets at industry-leading costs

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Tier 1 Proppant Asset Portfolio In-Basin Plants Primary Basin(s) Served Logistics Energy Capacity (mtpa) Kermit, TX Crane,TX Seiling, OK Permian, Mid-Con 8.0 N/A Unit Train Capable Wedron, IL Oregon, IL Bakken, Mid-Con Rockies, Permian, Eagle Ford Yes Utica, IL Northeast Yes Tunnel City, WI Bakken, Canada Yes 3.0² Permian, Midcon, Rockies, Eagle Ford, Haynesville Yes Unrivaled optionality of low-cost Northern White plants, complemented by low-cost in basin plants and 3.7 million tons of flexible hybrid capacity 8.5 3.1 3.2¹ Kasota, MN 1 – Currently rated to 1.2 mtpa 2 – Currently rated to 1.7 mtpa

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Size and Scale Leading Logistics Capabilities Local In-Basin Northern White Curable & Tempered Propel SSP® DST™ Solutions for All Well Environments Raw Sand Resin Coated Sand Proppant Transport Dust Mitigation Well-located plants serving Permian and MidCon basins High-quality raw sand used in all basins Addresses flowback and high-pressure challenges Polymer coating improves completions efficiency, proppant placement and well productivity Coating to reduce respirable silica more cost effectively than engineered alternatives Product Portfolio Unmatched in Industry Multi-basin local sand Northern White Resin Coated Sand SSP Dust Mitigation Coating Last Mile CVIA ü ü ü ü ü ü Public Peer 1 ü ü Public Peer 2 ü ü ü Public Peer 3 ü ü ü Public Peer 4 ü ü Mine to Well Last Mile Offering integrated mine to well-site solutions thru multiple partnerships

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Higher Productivity from Northern White Northern white sand has the ability to better withstand formation stress, and therefore achieve better conductivity. 100 Mesh 6k Continuous Hold Conductivity Testing Conductivity, mD-ft Greater Northern White conductivity after two weeks of testing 1.7x Northern White West Texas 60% decline 16% decline Northern White after 6k testing for 2 weeks WTX sample after 6k testing for 2 weeks Sand Type Typical Crush Strength (psi) 100 mesh White Sand 11-12k WTX Regional 9-10k With as little as a 2% average decline in productivity from using inferior proppant, lost revenue can exceed initial cost savings in less than a year Days Source: Stim-Lab and Covia

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Financial Transition Slide FINANCIALS and OUTLOOK

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Financial Highlights Highlights Q1 2019 Industrial and Energy volumes squarely within guidance Sequential strengthening across both segments in March Q2 2019 Industrial and Energy volume outlook remains in-line with previous guidance Expected tailwinds to improved Q2 results: Seasonal increase in sequential Industrial demand Improving Energy market conditions Growing local sand volumes Northern White sand price increases Lower costs Realization of profit optimization initiatives 2017 Q3 18 LTM

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Repositioning for Energy Market Changes NWS capacity consolidated into low-cost footprint Millions of tons Millions 18.4% decrease Continued focus on optimizing costs Local sand capacity to meet customer needs

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Q1 2019 Results In millions Industrial Energy Total Company Volumes (tons) 3.6 4.4 8.0 Revenue $192.2 $236.1 $428.2 Gross Profit $51.6¹ $15.1 ² $66.7³ SG&A -- -- $42.04 Adjusted EBITDA -- -- $34.95 1 - Includes $0.5mm in purchase accounting charges 2 - Includes negative impacts of $2.1 mm from Voca shutdowns, $2.1 mm lease expense from lease accounting standard change and $0.4mm in purchase accounting charges 3 - Includes negative impacts of $2.1 mm from Voca shutdowns, $2.1 mm lease expense from lease accounting standard change and $0.9mm in purchase accounting charges 4 - Includes $2.8mm non-cash stock comp and $0.7mm in integration expenses 5 - Includes negative impact of $2.1mm from Voca shutdowns and $0.9mm in purchase accounting charges

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Outlook Industrial Q2 2019 Volumes ~3.8 million tons Energy Q2 2019 Volumes 5.0 to 5.3 million tons Total Company FY19 SG&A $160 - $170 million Includes ~$10mm in non-cash stock comp Capex $80 to $100 million

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Focus on Cash Flows and Deleveraging Optimize Assets Pathway to Net Debt Deleveraging Maximize Cash Flow Reduce Net Debt Predictable Industrial business: $225 million gross profit in 2018 Advantaged Energy assets that have been consolidated into low-cost footprint Capital discipline and reduced capital expenditures as 2019 progresses Structural cost improvements Improved working capital

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Appendix

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Appendix: Non-GAAP Reconciliation 2019 As Reported Net income (loss) from continuing operations attributable to Covia Holdings Corporation (52,245 Interest expense, net 25,603 Provision (benefit) for income taxes (4,054 Depreciation, depletion and amortization expense 58,095 EBITDA 27,399 Non-cash charges relating to operating leases(1) 2,100 Non-cash stock compensation expense(2) 2,767 Costs and expenses related to the Merger and integration(3) 651 Restructuring expenses(4) 2,002 Adjusted EBITDA $ 34,919 Net Income (Loss) Information & Reconciliation to Non-GAAP Measures (unaudited) The following table reconciles EBITDA and Adjusted EBITDA, non-GAAP financial measures, to the most directly comparable GAAP measure, net income (loss) from continuing operations (amounts in thousands) (1) Represents amount of operating lease expense incurred for the three months ended March 31, 2019 related to intangible assets that were reclassified to Operating right-of-use assets, net on the Condensed Consolidated Balance Sheets, as a result of the adoption of Topic 842. The expense, previously recognized as non-cash amortization expense, is now recognized in Cost of goods sold (excluding depreciation, depletion, and amortization shown separately) on the Condensed Consolidated Statement of Income (Loss). (2) Represents the non-cash expense for stock-based awards issued to employees and outside directors. Stock compensation expenses are reported in Selling, general & administrative expenses ("SG&A"). (3) Costs and expenses related to the Merger with Fairmount Santrol include legal, accounting, financial advisory services, severance, debt extinguishment, and integration expenses. (4) Represents expenses associated with restructuring activities as a result of the Merger and idled plant facilities, including, pension and severance expenses, in addition to other liabilities recognized.