Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding, par value $0.01 per share, as of ~~August 6,~~November 4, 2019: ~~131,514,312~~131,732,459

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018		2019			2018		2019			2018			2019			2018
	(in thousands, except per share amounts)					(in thousands, except per share amounts)					(in thousands, except per share amounts)						(in thousands, except per share amounts)
Revenues	$	444,936		$	508,418	$	873,182		$	878,239	$	408,957		$	523,368		$	1,282,139		$	1,401,607
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)		345,969			355,311		707,529			615,630		332,234			405,602			1,039,763			1,021,232

Operating expenses
Selling, general and administrative expenses		38,644			31,377		80,604			56,601		35,628			43,164			116,232			99,765
Depreciation, depletion and amortization expense		59,204			36,744		117,299			63,875		51,920			68,584			169,219			132,459
Asset impairments		-			12,300		-			12,300
Goodwill and other asset impairments												7,761			265,343			7,761			277,643
Restructuring and other charges		9,535			-		11,537			-		3,378			14,750			14,915			14,750
Gain on sale of subsidiaries												(127,195	)		-			(127,195	)		-
Other operating expense (income), net		1,670			1,150		(4,722	)		1,663		18			(974	)		(4,704	)		(330	)
Operating income (loss) from continuing operations		(10,086	)		71,536		(39,065	)		128,170		105,213			(273,101	)		66,148			(143,912	)

Interest expense, net		27,866			8,991		53,002			13,669		26,894			23,530			79,896			35,325
Other non-operating expense, net		1,571			38,923		3,758			44,223		1,924			9,043			5,682			56,159
Income (loss) from continuing operations before provision (benefit) for income taxes		(39,523	)		23,622		(95,825	)		70,278		76,395			(305,674	)		(19,430	)		(235,396	)

Provision (benefit) for income taxes		(5,136	)		6,454		(9,190	)		16,324		22,471			(16,848	)		13,281			(524	)
Net income (loss) from continuing operations		(34,387	)		17,168		(86,635	)		53,954		53,924			(288,826	)		(32,711	)		(234,872	)
Less: Net income from continuing operations attributable to the non-controlling interest		7			106		4			106
Less: Net income (loss) from continuing operations attributable to the non-controlling interest												152			(32	)		156			74
Net income (loss) from continuing operations attributable to Covia Holdings Corporation		(34,394	)		17,062		(86,639	)		53,848		53,772			(288,794	)		(32,867	)		(234,946	)

Income from discontinued operations, net of tax		-			3,830		-			12,587		-			-			-			12,587

Net income (loss) attributable to Covia Holdings Corporation	$	(34,394	)	$	20,892	$	(86,639	)	$	66,435	$	53,772		$	(288,794	)	$	(32,867	)	$	(222,359	)

Continuing operations earnings (loss) per share
Basic	$	(0.26	)	$	0.14	$	(0.66	)	$	0.44	$	0.41		$	(2.20	)	$	(0.25	)	$	(1.90	)
Diluted		(0.26	)		0.14		(0.66	)		0.44		0.41			(2.20	)		(0.25	)		(1.90	)

Earnings (loss) per share
Basic		(0.26	)		0.17		(0.66	)		0.55		0.41			(2.20	)		(0.25	)		(1.80	)
Diluted	$	(0.26	)	$	0.17	$	(0.66	)	$	0.54	$	0.41		$	(2.20	)	$	(0.25	)	$	(1.80	)

Weighted average number of shares outstanding
Basic		131,458			123,460		131,373			121,552		131,562			131,154			131,437			123,604
Diluted		131,458			124,166		131,373			122,258		131,745			131,154			131,437			123,604

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018		2019			2018			2019			2018
	(in thousands)						(in thousands)					(in thousands)						(in thousands)
Net income (loss) from continuing operations	$	(34,387	)	$	17,168		$	(86,635	)	$	53,954	$	53,924		$	(288,826	)	$	(32,711	)	$	(234,872	)
Income from discontinued operations, net of tax		-			3,830			-			12,587		-			-			-			12,587
Net income (loss) before other comprehensive income (loss)		(34,387	)		20,998			(86,635	)		66,541		53,924			(288,826	)		(32,711	)		(222,285	)
Other comprehensive income (loss), before tax
Foreign currency translation adjustments		906			(8,509	)		3,207			334		(3,055	)		5,195			152			5,529
Employee benefit obligations		115			6,757			5,017			8,321		3,056			2,958			8,073			11,279
Amortization and change in fair value of derivative instruments		(9,431	)		-			(17,272	)		-		(3,831	)		1,180			(21,103	)		1,180
Total other comprehensive income (loss), before tax		(8,410	)		(1,752	)		(9,048	)		8,655		(3,830	)		9,333			(12,878	)		17,988
Provision (benefit) for income taxes related to items of other comprehensive income		(3,465	)		1,673			(3,986	)		2,143		985			950			(3,001	)		3,093
Comprehensive income (loss), net of tax		(39,332	)		17,573			(91,697	)		73,053		49,109			(280,443	)		(42,588	)		(207,390	)
Comprehensive income attributable to the non-controlling interest		7			106			4			106
Comprehensive income (loss) attributable to the non-controlling interest													152			(32	)		156			74
Comprehensive income (loss) attributable to Covia Holdings Corporation	$	(39,339	)	$	17,467		$	(91,701	)	$	72,947	$	48,957		$	(280,411	)	$	(42,744	)	$	(207,464	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
	(in thousands, except par value)						(in thousands, except par value)
Assets
Current assets
Cash and cash equivalents	$	112,143		$	134,130		$	340,126		$	134,130
Accounts receivable, net of allowance for doubtful accounts of $3,071 and $4,488
at June 30, 2019 and December 31, 2018, respectively		284,864			267,268
Accounts receivable, net of allowance for doubtful accounts of $3,550 and $4,488
at September 30, 2019 and December 31, 2018, respectively								247,440			267,268
Inventories, net		151,801			162,970			139,061			162,970
Other receivables		32,535			40,306			33,943			40,306
Prepaid expenses and other current assets		16,400			20,941			20,174			20,941
Assets held for sale		133,377			-			5,797			-
Total current assets		731,120			625,615			786,541			625,615

Property, plant and equipment, net		2,682,819			2,834,361			2,629,950			2,834,361
Operating right-of-use assets, net		396,680			-			379,569			-
Deferred tax assets, net		7,362			8,740			7,450			8,740
Goodwill		119,822			131,655			119,822			131,655
Intangibles, net		68,212			137,113			60,638			137,113
Other non-current assets		30,799			18,633			30,256			18,633
Total assets	$	4,036,814		$	3,756,117		$	4,014,226		$	3,756,117

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	15,405		$	15,482		$	14,509		$	15,482
Operating lease liabilities, current		67,720			-			65,880			-
Accounts payable		118,199			145,070			97,124			145,070
Accrued expenses		130,025			120,424			116,361			120,424
Deferred revenue		18,361			9,737			13,111			9,737
Liabilities held for sale		23,306			-
Total current liabilities		373,016			290,713			306,985			290,713

Long-term debt		1,607,041			1,612,887			1,604,095			1,612,887
Operating lease liabilities, non-current		296,678			-			282,843			-
Employee benefit obligations		54,209			54,789			58,048			54,789
Deferred tax liabilities, net		249,001			267,350			267,620			267,350
Other non-current liabilities		87,516			75,425			73,878			75,425
Total liabilities		2,667,461			2,301,164			2,593,469			2,301,164

Commitments and contingent liabilities (Note 18)
Equity
Preferred stock: $0.01 par value, 15,000 authorized shares at
June 30, 2019 and December 31, 2018
Shares outstanding: 0 at June 30, 2019 and December 31, 2018		-			-
September 30, 2019 and December 31, 2018
Shares outstanding: 0 at September 30, 2019 and December 31, 2018								-			-
Common stock: $0.01 par value, 750,000 authorized shares
at June 30, 2019 and December 31, 2018
Shares issued: 158,195 at June 30, 2019 and December 31, 2018
Shares outstanding: 131,472 and 131,188 at June 30, 2019
at September 30, 2019 and December 31, 2018
Shares issued: 158,195 at September 30, 2019 and December 31, 2018
Shares outstanding: 131,732 and 131,188 at September 30, 2019
and December 31, 2018, respectively		1,777			1,777			1,777			1,777
Additional paid-in capital		389,000			388,027			386,600			388,027
Retained earnings		1,561,320			1,647,959			1,615,092			1,647,959
Accumulated other comprehensive loss		(100,287	)		(95,225	)		(105,102	)		(95,225	)
Total equity attributable to Covia Holdings Corporation before treasury stock		1,851,810			1,942,538			1,898,367			1,942,538
Less: Treasury stock at cost
Shares in treasury: 26,723 and 27,007 at June 30, 2019
Shares in treasury: 26,463 and 27,007 at September 30, 2019
and December 31, 2018, respectively		(483,018	)		(488,141	)		(478,322	)		(488,141	)
Total equity attributable to Covia Holdings Corporation		1,368,792			1,454,397			1,420,045			1,454,397
Non-controlling interest		561			556			712			556
Total equity		1,369,353			1,454,953			1,420,757			1,454,953
Total liabilities and equity	$	4,036,814		$	3,756,117		$	4,014,226		$	3,756,117

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Equity attributable to Covia Holdings Corporation																												Equity attributable to Covia Holdings Corporation
			Shares of			Additional						Accumulated Other						Shares of						Non-							Shares of		Additional						Accumulated Other						Shares of						Non-
	Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling					Common		Common		Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling
	Stock		Stock			Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest		Total			Stock		Stock		Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest			Total
	(in thousands)																												(in thousands)
Three Months Ended June 30, 2018
Three Months Ended September 30, 2018
Beginning balance																													$	1,777		131,120	$	383,771		$	1,984,892		$	(121,716	)	$	(486,092	)		27,075		$	1,762,632		$	559		$	1,763,191
Net loss																														-		-		-			(288,794	)		-			-			-			(288,794	)		(32	)		(288,826	)
Other comprehensive income																														-		-		-			-			8,383			-			-			8,383			-			8,383
Share-based awards exercised or distributed																														-		51		(912	)		-			-			911			(51	)		(1	)		-			(1	)
Stock compensation expense																														-		-		2,654			-			-			-			-			2,654			-			2,654
Ending balance																													$	1,777		131,171	$	385,513		$	1,696,098		$	(113,333	)	$	(485,181	)		27,024		$	1,484,874		$	527		$	1,485,401

Three Months Ended September 30, 2019
Beginning balance	$	1,777		119,645		$	43,941		$	1,964,000		$	(118,291	)	$	(610,632	)		38,550		$	1,280,795		$	-	$	1,280,795		$	1,777		131,472	$	389,000		$	1,561,320		$	(100,287	)	$	(483,018	)		26,723		$	1,368,792		$	561		$	1,369,353
Net income		-		-			-			20,892			-			-			-			20,892			106		20,998			-		-		-			53,772			-			-			-			53,772			152			53,924
Other comprehensive income		-		-			-			-			(3,425	)		-			-			(3,425	)		-		(3,425	)
Distribution of HPQ Co. to Sibelco		-		(15,097	)		-			-			-			(162,109	)		15,097			(162,109	)		-		(162,109	)
Cash Redemption		-		(18,528	)		-			-			-			(520,377	)		18,528			(520,377	)		-		(520,377	)
Consideration transferred for share-based awards		-		-			40,414			-			-			-			-			40,414			-		40,414
Issuance of Covia common stock to Fairmount Santrol Holdings Inc. stockholders		-		45,044			296,221			-			-			807,026			(45,044	)		1,103,247			-		1,103,247
Other comprehensive loss																														-		-		-			-			(4,815	)		-			-			(4,815	)		-			(4,815	)
Share-based awards exercised or distributed		-		56			2			-			-			-			(56	)		2			-		2			-		260		(4,696	)		-			-			4,696			(260	)		-			-			-
Stock compensation expense		-		-			3,193			-			-			-			-			3,193			-		3,193			-		-		2,296			-			-			-			-			2,296			-			2,296
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			453		453			-		-		-			-			-			-			-			-			(1	)		(1	)
Ending balance	$	1,777		131,120		$	383,771		$	1,984,892		$	(121,716	)	$	(486,092	)		27,075		$	1,762,632		$	559	$	1,763,191		$	1,777		131,732	$	386,600		$	1,615,092		$	(105,102	)	$	(478,322	)		26,463		$	1,420,045		$	712		$	1,420,757

Three Months Ended June 30, 2019
Beginning balance	$	1,777		131,420		$	386,585		$	1,595,714		$	(95,342	)	$	(483,956	)		26,775		$	1,404,778		$	554	$	1,405,332
Net loss		-		-			-			(34,394	)		-			-			-			(34,394	)		7		(34,387	)
Other comprehensive loss		-		-			-			-			(4,945	)		-			-			(4,945	)		-		(4,945	)
Share-based awards exercised or distributed		-		52			(900	)		-			-			938			(52	)		38			-		38
Stock compensation expense		-		-			3,315			-			-			-			-			3,315			-		3,315
Ending balance	$	1,777		131,472		$	389,000		$	1,561,320		$	(100,287	)	$	(483,018	)		26,723		$	1,368,792		$	561	$	1,369,353

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Equity attributable to Covia Holdings Corporation																												Equity attributable to Covia Holdings Corporation
			Shares of			Additional						Accumulated Other						Shares of						Non-							Shares of			Additional						Accumulated Other						Shares of						Non-
	Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling					Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling
	Stock		Stock			Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest		Total			Stock		Stock			Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest		Total
	(in thousands)																												(in thousands)
Six Months Ended June 30, 2018
Nine Months Ended September 30, 2018
Beginning balance	$	1,777		119,645		$	43,941		$	1,918,457		$	(128,228	)	$	(610,632	)		38,550		$	1,225,315		$	-	$	1,225,315		$	1,777		119,645		$	43,941		$	1,918,457		$	(128,228	)	$	(610,632	)		38,550		$	1,225,315		$	-	$	1,225,315
Net income		-		-			-			66,435			-			-			-			66,435			106		66,541
Net loss																														-		-			-			(222,359	)		-			-			-			(222,359	)		74		(222,285	)
Other comprehensive income		-		-			-			-			6,512			-			-			6,512			-		6,512			-		-			-			-			14,895			-			-			14,895			-		14,895
Distribution of HPQ Co. to Sibelco		-		(15,097	)		-			-			-			(162,109	)		15,097			(162,109	)		-		(162,109	)		-		(15,097	)		-			-			-			(162,109	)		15,097			(162,109	)		-		(162,109	)
Cash Redemption		-		(18,528	)		-			-			-			(520,377	)		18,528			(520,377	)		-		(520,377	)		-		(18,528	)		-			-			-			(520,377	)		18,528			(520,377	)		-		(520,377	)
Consideration transferred for share-based awards		-		-			40,414			-			-			-			-			40,414			-		40,414			-		-			40,414			-			-			-			-			40,414			-		40,414
Issuance of Covia common stock to Fairmount Santrol Holdings Inc. stockholders		-		45,044			296,221			-			-			807,026			(45,044	)		1,103,247			-		1,103,247			-		45,044			296,221			-			-			807,026			(45,044	)		1,103,247			-		1,103,247
Share-based awards exercised or distributed		-		56			2			-			-			-			(56	)		2			-		2			-		107			(910	)		-			-			911			(107	)		1			-		1
Stock compensation expense		-		-			3,193			-			-			-			-			3,193			-		3,193			-		-			5,847			-			-			-			-			5,847			-		5,847
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			453		453			-		-			-			-			-			-			-			-			453		453
Ending balance	$	1,777		131,120		$	383,771		$	1,984,892		$	(121,716	)	$	(486,092	)		27,075		$	1,762,632		$	559	$	1,763,191		$	1,777		131,171		$	385,513		$	1,696,098		$	(113,333	)	$	(485,181	)		27,024		$	1,484,874		$	527	$	1,485,401

Six Months Ended June 30, 2019
Nine Months Ended September 30, 2019
Beginning balance	$	1,777		131,188		$	388,027		$	1,647,959		$	(95,225	)	$	(488,141	)		27,007		$	1,454,397		$	556	$	1,454,953		$	1,777		131,188		$	388,027		$	1,647,959		$	(95,225	)	$	(488,141	)		27,007		$	1,454,397		$	556	$	1,454,953
Net loss		-		-			-			(86,639	)		-			-			-			(86,639	)		4		(86,635	)		-		-			-			(32,867	)		-			-			-			(32,867	)		156		(32,711	)
Other comprehensive loss		-		-			-			-			(5,062	)		-			-			(5,062	)		-		(5,062	)		-		-			-			-			(9,877	)		-			-			(9,877	)		-		(9,877	)
Share-based awards exercised or distributed		-		284			(5,109	)		-			-			5,123			(284	)		14			-		14			-		544			(9,805	)		-			-			9,819			(544	)		14			-		14
Stock compensation expense		-		-			6,082			-			-			-			-			6,082			-		6,082			-		-			8,378			-			-			-			-			8,378			-		8,378
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			1		1
Ending balance	$	1,777		131,472		$	389,000		$	1,561,320		$	(100,287	)	$	(483,018	)		26,723		$	1,368,792		$	561	$	1,369,353		$	1,777		131,732		$	386,600		$	1,615,092		$	(105,102	)	$	(478,322	)		26,463		$	1,420,045		$	712	$	1,420,757

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Six Months Ended June 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(in thousands)						(in thousands)
Net income (loss) attributable to Covia Holdings Corporation	$	(86,639	)	$	66,435
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net loss attributable to Covia Holdings Corporation							$	(32,867	)	$	(222,359	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion, and amortization		117,299			68,396			169,219			132,459
Amortization of deferred financing costs		2,977			-			4,626			6,001
Prepayment penalties on Senior Notes		-			2,213			-			2,213
Asset impairments		-			12,300
Goodwill and other asset impairments								7,761			277,643
Inventory write-downs								-			6,744
(Gain) loss on disposal of fixed assets		1,959			(81	)		2,255			(90	)
Gain on sale of subsidiaries								(127,195	)		-
Change in fair value of interest rate swaps, net		-			(1,581	)		-			(2,658	)
Deferred income tax provision (benefit)		(13,035	)		1,564			6,414			(9,234	)
Stock compensation expense		6,082			3,193			8,378			5,847
Net income from non-controlling interest		4			106			156			74
Other, net		6,122			4,653			5,037			11,101
Change in operating assets and liabilities, net of business combination effect:
Accounts receivable		(24,701	)		(44,469	)		13,303			53,533
Inventories		6,320			1,210			19,768			10,511
Prepaid expenses and other assets		4,718			(146	)		6,078			(806	)
Accounts payable		(2,260	)		3,362			(22,950	)		(32,628	)
Accrued expenses		32,580			(31,572	)		8,812			(48,091	)
Net cash provided by operating activities		51,426			85,583			68,795			190,260

Cash flows from investing activities
Capital expenditures		(59,469	)		(115,709	)		(75,063	)		(188,424	)
Cash of HPQ Co. distributed to Sibelco prior to Merger		-			(31,000	)		-			(31,000	)
Payments to Fairmount Santrol Holdings Inc. shareholders, net of cash acquired		-			(64,697	)		-			(64,697	)
Capitalized interest		(3,283	)		-			(6,772	)		-
Proceeds from sale of fixed assets		130			222			2,998			862
Net cash used in investing activities		(62,622	)		(211,184	)
Proceeds from sale of subsidiaries								234,014			-
Net cash provided by (used in) investing activities								155,177			(283,259	)

Cash flows from financing activities
Proceeds from borrowings on Term Loan		-			1,650,000			-			1,650,000
Payments on Term Loan		(8,250	)		-			(12,375	)		(4,125	)
Prepayment on Unimin Term Loans		-			(314,642	)		-			(314,642	)
Prepayment on Senior Notes		-			(100,000	)		-			(100,000	)
Prepayment on Fairmount Santrol Holdings Inc. term loan		-			(695,625	)		-			(695,625	)
Fees for Term Loan and Senior Notes prepayment		-			(36,733	)		-			(36,733	)
Payments on other long-term debt		(76	)		(23,237	)		(1,664	)		(35,574	)
Payments on finance lease liabilities		(2,237	)		(2,143	)		(3,460	)		-
Fees for Revolver		-			(4,500	)		-			(4,500	)
Cash Redemption payment to Sibelco		-			(520,377	)		-			(520,377	)
Proceeds from share-based awards exercised or distributed		14			2			14			1
Tax payments for withholdings on share-based awards exercised or distributed		(486	)		(1	)		(616	)		(289	)
Net cash used in financing activities		(11,035	)		(47,256	)		(18,101	)		(61,864	)

Effect of foreign currency exchange rate changes		244			1,168			125			2,211
Decrease in cash and cash equivalents		(21,987	)		(171,689	)
Increase (decrease) in cash and cash equivalents								205,996			(152,652	)

Cash and cash equivalents [including cash of Discontinued Operations (Note 3)]:
Beginning of period		134,130			308,059			134,130			308,059
End of period	$	112,143		$	136,370		$	340,126		$	155,407

Supplemental disclosure of cash flow information:
Interest paid, net of capitalized interest	$	(24,860	)	$	(8,848	)	$	(49,966	)	$	(41,590	)
Income taxes paid		(8,429	)		(8,168	)		(11,522	)		(10,790	)
Non-cash investing activities:
Decrease in accounts payable and accrued expenses for additions to property, plant, and equipment and capitalized interest		(31,200	)		(593	)
Capital expenditures and capitalized interest in accounts payable and accrued expenses								1,272			7,123
Right-of-use assets obtained in exchange for lease liabilities	$	415,878		$	-		$	419,157		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements.

Covia Holdings Corporation, including its consolidated subsidiaries (collectively, “we,” “us,” “our,” “Covia,” and “Company”), is a leading provider of diversified mineral-based and material solutions for the Industrial and Energy markets. We provide a wide range of specialized silica sand, nepheline syenite, feldspar, calcium carbonate, clay, ~~kaolin, lime,~~ and ~~lime~~kaolin products for use in the glass, ceramics, coatings, foundry, polymers, construction, water filtration, sports and recreation, and oil and gas markets in North America and around the world. Our Industrial segment provides raw, value-added and custom-blended products to the glass, ceramics, metals, coatings, polymers, construction, foundry, filtration, sports and recreation and various other industries, primarily in North America. Our Energy segment offers the oil and gas industry a comprehensive portfolio of raw frac sand, value-added-proppants, well-cementing additives, gravel-packing media and drilling mud ~~additives that meet or exceed standards promulgated by the American Petroleum Institute (“API”).~~additives. Our products serve hydraulic fracturing operations in the U.S., Canada, Argentina, Mexico, China, and northern Europe.

On June 1, 2018 (“Merger Date”), Unimin Corporation (“Unimin”) completed a business combination (“Merger”) whereby Fairmount Santrol Holdings Inc. (“Fairmount Santrol”) merged into a wholly-owned subsidiary of Unimin and ceased to exist as a separate corporate entity. Immediately following the consummation of the Merger, Unimin changed its name to Covia Holdings Corporation and began operating under that name. The common stock of Fairmount Santrol was delisted from the New York Stock Exchange (“NYSE”) prior to the market opening on June 1, 2018, and Covia commenced trading under the ticker symbol “CVIA” on that date. Upon the consummation of the Merger, the former stockholders of Fairmount Santrol (including holders of certain Fairmount Santrol equity awards) received, in the aggregate, $170.0 million in cash consideration and approximately 35% of the common stock of Covia. Approximately 65% of the outstanding shares of Covia common stock is owned by SCR-Sibelco NV (“Sibelco”), previously the parent company of Unimin. See Note 2 for further discussion of the Merger.

In connection with the Merger, we redeemed approximately 18.5 million shares of Unimin common stock from Sibelco in exchange for an amount in cash equal to approximately (i) $660.0 million plus interest accruing at 5.0% per annum for the period from September 30, 2017 through June 1, 2018 less (ii) $170.0 million in cash paid to Fairmount Santrol stockholders.

In connection with the Merger, we also completed a debt refinancing transaction, with Barclays Bank PLC as administrative agent, by entering into a $1.65 billion senior secured term loan (“Term Loan”) and a $200.0 million revolving credit facility (“Revolver”). The proceeds of the Term Loan were used to repay the indebtedness of Unimin and Fairmount Santrol and to pay the cash portion of the Merger consideration and expenses related to the Merger. See Note 8 for further discussion of the refinancing transaction and terms of such indebtedness.

As a condition to the Merger, Unimin contributed certain of its assets comprising its Electronics segment, including $31.0 million of cash, to Sibelco North America, Inc. (“HPQ Co.”), a newly-formed wholly-owned subsidiary of Unimin, in exchange for all of the stock of HPQ Co. and the assumption by HPQ Co. of certain liabilities. Unimin distributed all of the stock of HPQ Co. to Sibelco in exchange for 0.17 million shares (or 15.1 million shares subsequent to the stock split) of Unimin common stock held by Sibelco. See Note 3 for a discussion of HPQ Co., which is presented as discontinued operations in these condensed consolidated financial statements.

Costs and expenses incurred related to the Merger are recorded in Other non-operating expense, net in the accompanying Condensed Consolidated Statements of Income (Loss) and include legal, accounting, valuation and financial advisory services, integration and other costs totaling ~~$0.2~~$0.1 million and ~~$38.9~~$5.6 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$0.9~~$1.0 million and ~~$44.2~~$49.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Unimin was determined to be the acquirer in the Merger for accounting purposes, and the historical financial statements and certain historical amounts included in the Notes to the Condensed Consolidated Financial Statements relate to Unimin. The Condensed Consolidated Balance Sheets at December 31, 2018 ~~and forward~~ reflect Covia results. The presentation of information for periods prior to the Merger Date are not fully comparable to the presentation of information for periods presented after the Merger Date because the results of operations for Fairmount Santrol are not included in such information prior to the Merger Date.

Certain reclassifications of prior period presentations have been made to conform to the current period presentation, including assets ~~and liabilities~~ held for sale and deferred revenue.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal, recurring nature) and disclosures necessary for a fair statement of the financial position, results of operations, comprehensive income, and cash flows of the reported interim periods. The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. Interim results are not necessarily indicative of the results to be expected for the full year or any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto and for each of the three years in the period ended December 31, 2018, which are included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (“SEC”) on March 22, 2019 (“Form 10-K”), and information included elsewhere in this Quarterly Report on Form 10-Q (“Report”).

On June 1, 2018, we effected an 89:1 stock split with respect to our shares of common stock. Unless otherwise noted, impacted amounts and share information included in the consolidated financial statements and notes thereto have been retroactively adjusted for the stock split as if such stock split occurred on the first day of the first period presented. Certain amounts in the notes to the consolidated financial statements may be slightly different than previously reported due to rounding of fractional shares as a result of the stock split.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to: business combination purchase price allocation, and the useful life of definite-lived intangible assets; asset retirement obligations; estimates of allowance for doubtful accounts; estimates of fair value for reporting units and asset impairments (including impairments of goodwill and other long-lived assets); adjustments of inventories to net realizable value; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; and reserves for contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including the use of valuation experts. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02~~ASC Topic 842~~ – Leases (Topic 842) (“~~Topic~~ASC 842”), which requires lessees to recognize a right-of-use asset and lease liability on their consolidated balance sheet related to the rights and obligations created by most leases, while continuing to recognize expense on their consolidated statements of income over the lease term.

We ~~lease railcars, machinery, equipment, land, buildings and office space under operating lease arrangements. Certain mobile equipment leasing arrangements, subject~~transitioned to ~~purchase options are leased under finance lease arrangements.~~

We account for leases in accordance with Topic 842 and have recorded right-of-use assets and lease liabilities at the date of adoption. The right-of-use assets represent our right to use underlying assets for the lease term and the lease liabilities represent our obligation to make lease payments under the leases. ~~We elected to transition to Topic~~ASC 842 using the modified retrospective method to apply to the standard on its effective date, January 1, ~~2019. Prior period amounts are not adjusted~~2019, and ~~continue to be reported in accordance with historic accounting under previous lease guidance,~~ ~~ASC Topic 840 – Leases.~~

~~We determine if an arrangement is or contains a lease at contract inception and exercise judgement and apply certain assumptions when determining the discount rate, lease term and lease payments:~~

~~All right-of-use assets are periodically reviewed for impairment losses and no impairment of the right-of-use assets has been recorded in the six months ended June 30, 2019.~~

We monitor events and modifications of existing lease agreements that would require reassessment of the lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding right-of-use asset.

~~Upon adoption, we~~ elected ~~to use~~ the package of practical expedients permitted under the transition ~~guidance. We~~guidance within the new standard. Utilizing the practical expedients, we did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For lease agreements that include lease and non-lease components, we elected to use the practical expedient to combine lease and non-lease components for all classes of assets and to not record leases with a term of twelve months or less on the balance ~~sheet. Short-term lease payments associated with a lease are recorded on a straight-line basis over the lease term.~~

~~Certain~~sheet for all classes of our lease agreements include rental payments based on a percentage of usage and others include rental payments adjusted periodically based on an index, such as the Consumer Price Index. These payments are recorded as variable costs under operating leases.underlying assets.

The impact of the adoption of ~~Topic~~ASC 842 on the accompanying Condensed Consolidated Balance Sheets resulted in recording additional right-of-use assets and lease liabilities of approximately $442.1 million and $406.8 million, respectively, at January 1, 2019.�� The ~~right-of-use~~right-of-

use assets at the date of adoption included approximately ~~$35.8~~$35.8 million of lease intangible assets related to favorable market terms of certain railcar leases acquired in the Merger. See Note 17 for further ~~detail.~~information related to leasing.

In June 2016, the FASB issued ASU No. 2016-13 – Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that ~~reflects expected credit losses~~applies a forward-looking “expected loss” model to receivables, loans and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Additionally, ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected through the use of an allowance of expected credit losses.other instruments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and requires a modified retrospective approach. We are ~~in the process of~~currently evaluating the impact of this new ~~guidance~~standard on our consolidated financial statements and ~~disclosures.~~disclosures, however, we do not believe that the adoption of ASU 2016-13 will result in a material impact to our current methodology.

~~In August 2018, the FASB issued ASU No. 2018-13 –~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~ (“ASU 2018-13”). ASU 2018-13 removes and modifies existing disclosure requirements on fair value measurement, namely regarding transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. Additionally, ASU 2018-13 adds further disclosure requirements for Level 3 fair value measurements, specifically changes in unrealized gains and losses and other quantitative information. ASU 2018-13 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are in the process of evaluating the impact of this new guidance on our condensed consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14 – Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The amendments in ASU 2018-14 remove various disclosures that no longer are considered cost-beneficial, namely amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost over the next fiscal year. Further, ASU 2018-14 requires disclosure or clarification of the reasons for significant gains or losses related to changes in the benefit obligation for the period, as well as projected and accumulated benefit obligations in excess of plan assets. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and ~~should~~is required to be applied on a retrospective basis, with early adoption permitted. We are ~~in the process of~~currently evaluating the impact of this new ~~guidance~~standard on our condensed consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. ASU 2018-15 requires an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 also requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals.software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. ASU 2018-15 ~~should can~~may be applied either retrospectively or prospectively to all implementation costs incurred after its adoption. We are ~~in the process of~~currently evaluating the impact of this new ~~guidance on our condensed consolidated financial statements and disclosures.~~

~~In November 2018, the FASB issued ASU No. 2018-18 –~~ ~~Collaborative Arrangements (Topic 808) — Clarifying the Interaction between Topic 808 and Topic 606~~ (“ASU 2018-18”). The amendments in ASU 2018-18 provide guidance on whether certain transactions between collaborative arrangement participants should be accounted for as revenues under ASC 606. ASU 2018-18 specifically addresses when the participant is a customer in the context of a unit of account, adds unit-of-account guidance in ASC 808 to align with guidance with ASC 606, and precludes presenting the collaborative arrangement transaction together with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and should be applied retrospectively. We are in the process of evaluating the impact of this new guidancestandard on our condensed consolidated financial statements and disclosures.

The Merger Date fair value of consideration transferred was $1.3 billion, which consisted of share-based awards, cash and Covia common stock. The following table presents the purchase price accounting of the acquired assets and liabilities assumed as of the Merger Date including measurement period adjustments:

The fair values were based on management’s analysis, including work performed by third-party valuation specialists. A number of significant assumptions and estimates were involved in the application of valuation methods, including sales volumes and prices, royalty rates, production costs, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts were generally based on Fairmount Santrol’s pre-Merger forecasts. Valuation methodologies used for the identifiable assets acquired and liabilities assumed utilized Level 1, Level 2, and Level 3 inputs including quoted prices in active markets and discounted cash flows using current interest rates.

The value of the acquired raw material inventory was valued using the cost approach. The fair value of work-in progress inventory and finish goods inventory is a function of the estimated selling price less the sum of any cost to complete, costs of disposal and a reasonable profit. We estimated the value of the acquired property, plant, and equipment using a combination of the market approach, cost approach and income approach. The carrying value of the debt approximated the fair value of the debt at the Merger Date.

Accounts receivable, other current liabilities, other non-current assets and other long-term liabilities, excluding asset retirement obligations and contingent consideration included in other long-term liabilities, were valued at the existing carrying values as they represented the estimated fair value of those items at the Merger Date based on management’s judgment and estimates.

Asset retirement obligations assumed and the related assets acquired were adjusted to reflect revised estimates of the future cost of dismantling, restoring, and reclaiming of certain sites. The contingent consideration arrangement in the form of earn-out payments, is related to the purchase of ~~certain coating technology.~~our Propel SSP^® self-suspending proppant. The fair value of the earn-out was determined using a scenario-based method due to the linear nature of the consideration payments.

The fair value of the acquired intangible assets and the related estimated useful lives at the Merger Date were the following:

The fair value of the customer relationship intangible assets were determined using the With and Without Method which is an income approach and considers the time needed to rebuild the customer base. The fair value of the railcar leasehold interest was determined using the discounted cash flow method. The fair value of the trade name and technology intangible assets was determined using the Relief from Royalty Method, which is based on a search of comparable third party licensing agreements and internal discussions regarding the significance of the trade names and technology and the profitability of the associated revenue streams.

Goodwill of $78.1 million and $217.1 million allocated to the Industrial and Energy reporting units, respectively, is attributable to the earnings potential of Fairmount Santrol’s product and plant portfolio, anticipated synergies, the assembled workforce of Fairmount Santrol, and other benefits that we believe will result from the Merger. During the third quarter of 2018, it was determined that the goodwill allocated to the Energy reporting unit was impaired and was written off in its entirety. Refer to Note 22 for additional information. ~~None~~NaN of the goodwill is deductible for income tax purposes.

We assumed the outstanding stock-based equity awards, ~~(the~~including time-vesting restricted stock units (“RSUs”), performance-vesting restricted stock units (“PSUs”), and nonqualified stock options (“Options” and, together with the RSUs and PSUs, the “Award(s)”), of Fairmount Santrol at the Merger Date. Each outstanding Award of Fairmount Santrol was converted to a Covia award with similar terms and conditions at the exchange ratio of 5:1. We recorded $40.4 million of Merger consideration for the value of Awards earned prior to the Merger Date. The remaining value represents post-Merger compensation expense of $10.4 million, which will be recognized over the remaining vesting period of the Awards. In addition, at June 1, 2018, we recorded $2.4 million of expense for Awards whose vesting was accelerated upon the change in control and certain other terms pursuant to the Merger agreement and, therefore, considered a Merger-related expense and recorded in other non-operating expense, net in the accompanying Condensed Consolidated Statements of Income (Loss). Refer to Note 13 for additional information.

The following unaudited pro forma condensed combined financial information presents our combined results as if the Merger had occurred on January 1, 2017. The unaudited pro forma financial information was prepared to give effect to events that are (i) directly attributable to the Merger; (ii) factually supportable; and (iii) expected to have a continuing impact on our results. All intercompany transactions during the periods presented have been eliminated in consolidation. These pro forma results include adjustments for interest expense that would have been incurred to finance the transaction and reflect purchase accounting adjustments for additional depreciation, depletion and amortization on acquired property, plant and equipment and intangible assets. The pro forma results exclude Merger-related transaction costs and expenses that were incurred in conjunction with the Merger in the three and ~~six~~nine months ended ~~June~~September 30, 2018.

	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,			Nine Months Ended September 30,
	2018		2018		2018			2018
	(in thousands, except per share data)				(in thousands, except per share data)
Revenues	$	712,412	$	1,355,571	$	523,368		$	1,878,939
Net income		61,455		137,320		(276,194	)		(151,474	)
Earnings per share – basic	$	0.50	$	1.13	$	(2.11	)	$	(1.23	)
Earnings per share – diluted	$	0.49	$	1.12	$	(2.11	)	$	(1.23	)

The unaudited pro-forma condensed combined financial information is presented for informational purposes only and is not intended to represent or to be indicative of the combined results of operations or financial position that would have been reported had the Merger been completed as of the date and for the period presented, and should not be taken as representative of our consolidated results of operations or financial condition following the Merger. In addition, the unaudited pro-forma condensed combined financial information is not intended to project the future financial position or results of operations of Covia.

The disposition of HPQ Co. qualified as discontinued operations, as it represented a significant strategic shift of our operations and financial results and the cash flows of HPQ Co. could be distinguished, operationally and for financial reporting purposes, from the rest of Covia.

The statements of operations of the HPQ Co. business have been presented as discontinued operations in the condensed consolidated financial statements for periods prior to the Merger. Discontinued operations include the results of HPQ Co., except for certain allocated corporate overhead costs and certain costs associated with transition services provided by us to HPQ Co. These previously allocated costs remain part of continuing operations.

The operating results of our discontinued operations in the ~~three and six~~nine months ended ~~June~~September 30, 2018 are as follows:

	Three Months Ended June 30,			Six Months Ended June 30,			Nine Months Ended September 30,
	2018			2018			2018
	(in thousands)						(in thousands)
Major line items constituting income from discontinued operations
Revenues	$	29,229		$	74,015		$	74,015
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)		18,196			46,442			46,442
Selling, general and administrative expenses		4,762			8,762			8,762
Depreciation, depletion and amortization expense		1,794			4,072			4,072
Other operating income		(29	)		(69	)		(69	)
Income from discontinued operations before provision for income taxes		4,506			14,808			14,808
Provision for income taxes		676			2,221			2,221
Income from discontinued operations, net of tax	$	3,830		$	12,587		$	12,587

The significant operating and investing cash and noncash items of the discontinued operations included in the Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2018 were as follows:

	Six Months Ended June 30,		Nine Months Ended September 30,
	2018		2018
	(in thousands)		(in thousands)
Depreciation, depletion and amortization expense	$	4,072	$	4,072
Capital expenditures	$	3,549	$	3,549

Prior to the consummation of the Merger, Unimin redeemed 0.17 million shares (or 15.1 million shares subsequent to the stock split) of common stock from Sibelco in connection with the disposition of HPQ Co. Additionally, Unimin redeemed 0.2 million shares (or 18.5 million shares subsequent to the stock split) of common stock from Sibelco in exchange for a payment of $520.4 million to Sibelco (the “Cash Redemption”). The Cash Redemption was financed with the proceeds of the Term Loan (see Note 8) and cash on hand. On June 1, 2018, we effected an 89:1 stock split with respect to our shares of common stock and, in connection therewith, amended and restated our certificate of incorporation to increase our authorized capital stock to 750.0 million shares of common stock and 15.0 million shares of preferred stock and decreased our par value per share from $1.00 to $0.01.

As a result of the Merger, Fairmount Santrol stockholders received 45.0 million shares of Covia common stock, which were issued out of Covia treasury stock.

At ~~June~~September 30, 2019 and December 31, 2018, inventories consisted of the following:

	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
	(in thousands)				(in thousands)
Raw materials	$	31,059	$	30,410	$	22,290	$	30,410
Work-in-process		13,625		19,886		21,488		19,886
Finished goods		68,916		73,628		58,018		73,628
Spare parts		38,201		39,046		37,265		39,046
Inventories, net	$	151,801	$	162,970	$	139,061	$	162,970

As a result of the Merger, we recorded approximately $38.4 million of fair value adjustments in inventory, which included approximately $7.6 million of spare parts. Of this amount, approximately ~~$0.2 million and $19.2~~$5.5 million was recorded in cost of goods sold, based on inventory turnover, during the three months ended ~~June~~September 30, ~~2019 and~~ 2018, ~~respectively,~~ and $1.1 million and ~~$19.2~~$24.7 million was recorded in cost of goods sold during the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. There were 0 fair value adjustments recorded in cost of goods sold during the three months ended September 30, 2019.

15In the three months ended September 30, 2018, we recorded the write-down of inventories at four idled facilities in the amount of $6.7 million in cost of goods sold in the Condensed Consolidated Statements of Income (Loss). All of the idled facilities are in the Energy segment.

At ~~June~~September 30, 2019 and December 31, 2018, property, plant, and equipment consisted of the following:

	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
	(in thousands)						(in thousands)
Land and improvements	$	226,428		$	224,894		$	228,165		$	224,894
Mineral rights properties		1,332,026			1,323,090			1,334,834			1,323,090
Machinery and equipment		1,537,623			1,607,116			1,533,091			1,607,116
Buildings and improvements		537,151			544,117			542,249			544,117
Railroad equipment		72,841			155,998			102,706			155,998
Furniture, fixtures, and other		4,692			5,260			4,739			5,260
Assets under construction		194,489			184,360			155,820			184,360
		3,905,250			4,044,835			3,901,604			4,044,835
Accumulated depletion and depreciation		(1,222,431	)		(1,210,474	)		(1,271,654	)		(1,210,474	)
Property, plant, and equipment, net	$	2,682,819		$	2,834,361		$	2,629,950		$	2,834,361

Finance right-of-use assets are included within machinery and equipment. Property, plant, and equipment, net of ~~$90.3~~$5.8 million is included in assets held for sale at ~~June~~September 30, 2019. Refer to Note 7 for additional information.

We are required to evaluate the recoverability of the carrying amount of our long-lived asset groups whenever events or changes in circumstances indicate that the carrying amount of the asset groups may not be recoverable. We performed an analysis of impairment indicators of the asset ~~groups and, based on~~groups. As a result of adverse business conditions, the reduction of sales and marketing efforts of our Propel SSP^® self-suspending proppant, and the ~~decline in~~idling of assets within the Energy segment, we evaluated the recoverability of our ~~share price, we determined that the~~ asset ~~groups be tested for recoverability.~~groups. The undiscounted cash flows to be generated from the use and eventual disposition of the asset groups were compared to the carrying values of the asset groups and it was determined the carrying values of our asset groups were recoverable at ~~June~~September 30, 2019.

In June 2018, we wrote down $12.3 million of assets under construction related to a facility expansion that was terminated. ~~The write-down reflects~~In September 2018, due to the ~~cost~~idling of certain facilities in the Energy segment, we ceased to use certain long-lived assets ~~that could not be used or transferred~~and recorded an expense of $37.2 million to ~~other facilities. This~~adjust the carrying amount isof certain long-lived assets at these facilities to their salvage value, if any. These amounts are included in ~~Asset~~goodwill and other asset impairments on the Condensed Consolidated Statements of Income (Loss) for the three and ~~six~~nine months ended ~~June~~September 30, 2018.

In September 2019, we reduced or discontinued sales and marketing efforts related to our Propel SSP^® self-suspending proppant in the Energy segment and recorded an impairment charge of $7.8 million, which includes $7.0 million to adjust the carrying amount of long-lived assets specific to the technology to their salvage value, if any. The expense is recorded in goodwill and other asset impairments in the Condensed Consolidated Statements of Income (Loss) in the three and nine months ended September 30, 2019. Refer to Note 22 for additional information.

We classify assets and liabilities as held for sale when all the following criteria are met: (i) management, having the authority to approve the action, commits to a plan to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year; and (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value. ~~At June 30, 2019 the following were classified as held for sale:~~

~~On July 3, 2019, we~~We entered into ~~a definitive purchase agreement with Mississippi Lime Company~~separate agreements to sell ~~the Calera, Alabama lime processing facility (“Calera”) for $135.0 million~~an office building in ~~cash, subject to certain adjustments set forth~~New Canaan, Connecticut and six acres of vacant land in ~~the purchase agreement. Calera is a non-core asset included within our Industrial segment.~~Tunnel City, Wisconsin. The New Canaan office building transaction ~~closed~~was completed on ~~August 1,~~October 8, 2019 and ~~resulted~~the Tunnel City land sale transaction was completed on October 11, 2019, both resulting in a net gain on sale. ~~The sale does not represent a strategic shift that will have a major effect on operations or financial results~~At September 30, 2019, the carrying value of the office building and ~~therefore, does not qualify for presentation as discontinued operations.~~land were $5.6 million and $0.2 million, respectively.

On July 25, 2019, we entered into a definitive purchase agreement with an affiliate of OmniTRAX, Inc. to sell the Winchester & Western Railroad (“W&W Railroad”) for $105.0 million in cash, subject to certain adjustments set forth in the purchase agreement. The W&W Railroad is a non-core asset that is included in both our Energy and Industrial segments. The transaction will result in a net gain on sale and is expected to close in the third quarter of 2019. The sale does not represent a strategic shift that will have a major effect on operations or financial results and, therefore, does not qualify for presentation as discontinued operations.

~~Other Non-Current Assets~~On August 1, 2019, we completed the sale of the Calera, Alabama lime processing facility (“Calera”), to Mississippi Lime Company. Calera was a non-core asset included within our Industrial segment. On September 10, 2019, we completed the sale of the Winchester & Western Railroad (“W&W Railroad”) to an affiliate of OmniTRAX, Inc. The W&W Railroad was a non-core asset that was included in both our Energy and Industrial segments. Both sales are subject to certain closing adjustments, which will be finalized in the fourth quarter 2019.

~~We entered into separate agreements to sell~~In addition, in July 2019, we completed the sale of 50 acres of vacant land in Kasota, Minnesota, and an office building in New Canaan, Connecticut. The Kasota land sale was completed in July 2019 and the New Canaan office building transaction is expected to close in the third quarter of 2019. The transactions will resultresulted in a ~~net gain~~loss on ~~sale.~~ sale of $0.2 million.

The ~~assets and liabilities classified as held for sale at June 30, 2019 are as follows:~~following is a summary of our significant disposition activity:

June 30, 2019

Calera

W&W Railroad

Other Non-Current Assets

Total

(in thousands)

Assets held for sale

Accounts receivable, net

$
5,864

$
1,637

$
-

$
7,501

Inventories, net

4,808

422

-

5,230

Prepaid expenses and other current assets

-

162

-

162

Total current assets

10,672

2,221

-

12,893

Property, plant and equipment, net

23,634

60,766

5,911

90,311

Operating right-of-use assets, net

7

169

-

176

Goodwill

8,623

3,210

-

11,833

Intangibles, net

18,164

-

-

18,164

Total assets held for sale

$
61,100

$
66,366

$
5,911

$
133,377

Liabilities held for sale

Current portion of long-term debt

$
-

$
133

$
-

$
133

Operating lease liabilities, current

1

60

-

61

Accounts payable

4,458

462

-

4,920

Accrued expenses

2,366

114

-

2,480

Total current liabilities

6,825

769

-

7,594

Long-term debt

-

1,357

-

1,357

Operating lease liabilities, non-current

7

109

-

116

Other non-current liabilities

-

14,239

-

14,239

Total liabilities held for sale

$
6,832

$
16,474

$
-

$
23,306

	September 30, 2019
	Calera		W&W Railroad
	(in thousands)
Carrying value of major assets and liabilities
Current assets	$	10,674	$	1,132
Property, plant and equipment, net		24,006		61,957
Goodwill		8,623		3,210
Intangibles, net		17,953		-
Current liabilities		5,393		848
Non-current liabilities	$	-	$	14,495

	Nine months ended
	September 30, 2019
	Calera		W&W Railroad
	(in thousands)
Net proceeds from dispositions	$	131,905	$	102,109
Gain on sale of subsidiaries	$	76,042	$	51,153

At ~~June~~September 30, 2019 and December 31, 2018, long-term debt consisted of the following:

	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
	(in thousands)						(in thousands)
Term Loan	$	1,633,500		$	1,641,750		$	1,629,375		$	1,641,750
Finance lease liabilities		7,783			6,417			6,838			6,417
Industrial Revenue Bond		10,000			10,000			10,000			10,000
Other borrowings		175			1,809			145			1,809
Term Loan deferred financing costs, net		(29,012	)		(31,607	)		(27,754	)		(31,607	)
		1,622,446			1,628,369			1,618,604			1,628,369
Less: current portion		(15,405	)		(15,482	)		(14,509	)		(15,482	)
Long-term debt including finance leases	$	1,607,041		$	1,612,887		$	1,604,095		$	1,612,887

On the Merger Date, we entered into the $1.65 billion Term Loan to repay the outstanding debt of each of Fairmount Santrol and Unimin and to pay the cash portion of the Merger consideration and transaction costs related to the Merger. The Term Loan was issued at par with a maturity date of June 1, 2025. The Term Loan requires quarterly principal payments of $4.1 million and quarterly interest payments ~~beginning~~from September 30, 2018 through March 31, 2025 with the balance payable at the maturity date. Interest accrues at the rate of the three-month LIBOR plus 325 to 400 basis points depending on Total Net Leverage (as hereinafter defined) with a LIBOR floor of 1.0% or the Base Rate (as hereinafter defined). Total Net Leverage is defined as total debt net of up to $150.0 million of non-restricted cash, divided by EBITDA. The Term Loan is secured by a first priority lien in substantially all of our U.S. assets. We have the option to prepay the Term Loan without premium or penalty other than customary breakage costs with respect to LIBOR borrowings. There are no financial covenants governing the Term Loan.

On the Merger Date, we entered into our five-year revolving credit facility (as amended, the “Revolver”) to replace a previous credit facility. The Revolver was subject to a 50 basis point financing fee paid at closing and has a borrowing capacity of up to $200.0 million. The Revolver requires quarterly interest payments at a rate derived from LIBOR plus 300 to 375 basis points depending on the Total Net Leverage or from a Base Rate (selected at our option). The Base Rate is the highest of (i) Barclays’s prime rate, (ii) the U.S. federal funds effective rate plus one half of 1.0%, and (iii) the LIBOR rate for a one month period plus 1.0%. While interest is payable in quarterly installments, any outstanding principal balance is payable on June 1, 2023. In addition to interest charged on the Revolver, we are also obligated to pay certain fees, quarterly in arrears, including letter of credit fees and unused facility fees.

The Revolver includes financial covenants, which were amended on March 19, 2019 (“First Amendment”), requiring, among other things, that we maintain a Total Net Leverage ratio of no more than 6.60:1.00 for the fiscal quarters ending March 31, 2019 to December 31, 2019, 5.50:1.00 for the fiscal quarters ending March 31, 2020 to December 31, 2020, 4.50:1.00 for the fiscal quarters ending March 31, 2021 to June 30, 2021, 4.25:1.00 for the fiscal quarters ending to September 30, 2021 to December 31, 2021, and 4.00:1.00 for fiscal quarters ending March 31, 2022 and thereafter. Additionally, the financial covenants are subject to certain covenant reset triggers (“Covenant Reset Triggers”) where, upon the occurrence of any Covenant Reset Trigger, the maximum Total Net Leverage ratio will automatically revert to 3.50:1.00. As of ~~June~~September 30, 2019, we were in compliance with all covenants in accordance with the terms of the Revolver.

At ~~June~~September 30, 2019, there was $200.0 million of aggregate capacity on the Revolver with $11.3 million committed to outstanding letters of credit, leaving net availability at $188.7 million. At ~~June~~September 30, 2019, the Revolver had an interest rate of ~~6.1%~~5.8%. There were no0 borrowings under the Revolver at ~~June~~September 30, 2019.

Other borrowings at ~~June~~September 30, 2019 and December 31, 2018 ~~was~~were comprised of a promissory note with three unrelated third parties that Unimin entered into on January 17, 2011. Two of these unrelated parties had interest rates of 1.0% and 4.11%, respectively, at both ~~June~~September 30, 2019 and December 31, 2018. The promissory note’s third unrelated party ~~which is classified as liabilities held for~~was repaid with proceeds from the sale ~~at June 30, 2019, does~~of the W&W Railroad and, prior to the sale of the W&W Railroad, did not require any interest payments. ~~See Note 7 for further detail.~~

One of our subsidiaries has a 2.0 million Canadian dollar overdraft facility with the Bank of Montreal. We have guaranteed the obligations of the subsidiary under the facility. As of ~~June~~September 30, 2019 and December 31, 2018, there were no0 borrowings outstanding under the overdraft facility. The rates of the overdraft facility were 4.95% at ~~June~~September 30, 2019 and December 31, 2018.

At ~~June~~September 30, 2019 and December 31, 2018, we had $1.9 million of outstanding letters of credit not backed by a credit facility.

We hold a $10.0 million Industrial Revenue Bond related to the construction of a mining facility in Wisconsin. The bond bears interest, which is payable monthly at a variable rate. The rate was ~~1.94%~~1.63% at ~~June~~September 30, 2019. The bond matures on September 1, 2027 and is collateralized by a letter of credit of $10.0 million.

At ~~June~~September 30, 2019 and December 31, 2018, accrued expenses consisted of the following:

	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
	(in thousands)				(in thousands)
Accrued bonus & other benefits	$	18,481	$	38,445	$	9,766	$	38,445
Accrued Merger related costs		-		502		-		502
Accrued restructuring and other charges		16,804		15,819		8,528		15,819
Accrued interest		27,572		1,047		26,709		1,047
Accrued insurance		5,755		7,026		9,199		7,026
Accrued property taxes		8,756		9,120		9,004		9,120
Accrual for capital spending		5,562		19,289		-		19,289
Other accrued expenses		47,095		29,176		53,155		29,176
Accrued expenses	$	130,025	$	120,424	$	116,361	$	120,424

The table below shows the computation of basic and diluted earnings per share for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018		2019		2018			2019			2018
	(in thousands, except per share data)										(in thousands, except per share data)
Numerators:
Net income (loss) from continuing operations attributable to Covia Holdings Corporation	$	(34,394	)	$	17,062	$	(86,639	)	$	53,848	$	53,772	$	(288,794	)	$	(32,867	)	$	(234,946	)
Income from discontinued operations, net of tax		-			3,830		-			12,587		-		-			-			12,587
Net income (loss) attributable to Covia Holdings Corporation	$	(34,394	)	$	20,892	$	(86,639	)	$	66,435	$	53,772	$	(288,794	)	$	(32,867	)	$	(222,359	)
Denominator:
Basic weighted average shares outstanding		131,458			123,460		131,373			121,552		131,562		131,154			131,437			123,604
Dilutive effect of employee stock options and RSUs		-			706		-			706		183		-			-			-
Diluted weighted average shares outstanding		131,458			124,166		131,373			122,258		131,745		131,154			131,437			123,604

Continuing operations earnings (loss) per share – basic	$	(0.26	)	$	0.14	$	(0.66	)	$	0.44	$	0.41	$	(2.20	)	$	(0.25	)	$	(1.90	)
Continuing operations earnings (loss) per share – diluted		(0.26	)		0.14		(0.66	)		0.44		0.41		(2.20	)		(0.25	)		(1.90	)

Discontinued operations earnings per share – basic		-			0.03		-			0.11		-		-			-			0.10
Discontinued operations earnings per share – diluted		-			0.03		-			0.10		-		-			-			0.10

Earnings (loss) per share – basic		(0.26	)		0.17		(0.66	)		0.55		0.41		(2.20	)		(0.25	)		(1.80	)
Earnings (loss) per share – diluted	$	(0.26	)	$	0.17	$	(0.66	)	$	0.54	$	0.41	$	(2.20	)	$	(0.25	)	$	(1.80	)

~~Unimin effected an 89:1 stock split in May 2018. The stock split is reflected in the calculations of basic and diluted weighted average shares outstanding for all periods presented.~~

The calculation of diluted weighted average shares outstanding for the three months ended ~~June~~September 30, 2019 and 2018 excludes 5.2 million and ~~1.4~~2.2 million potential shares of common stock, respectively. The calculation of diluted weighted average shares outstanding for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 excludes ~~2.9~~4.3 million and ~~1.4~~1.0 million potential shares of common stock, respectively. These potential shares of common stock are excluded from the calculations of diluted weighted average shares outstanding because the effect of including these potential shares of common stock would be antidilutive.

The dilutive effect of ~~0.2~~0.5 million shares in the three months ended September 30, 2018 and 0.3 million and 0.2 million shares in the nine months ended September 30, 2019 and 2018, respectively, was omitted from the calculation of diluted weighted average shares outstanding and diluted earnings per share ~~in the three and six months ended June 30, 2019, respectively,~~ because we were in a loss ~~position.~~

Due to our variable-rate indebtedness, we are exposed to fluctuations in interest rates. We enter into interest rate swap agreements as a means to partially hedge our variable interest rate risk. ~~The derivative instruments are reported at fair value in other non-current liabilities.~~ Changes in the fair value of derivatives are recorded each period in other comprehensive income (loss). For derivatives not designated as hedges, the gain or loss is recognized in current earnings. No components of our hedging instruments were excluded from the assessment of hedge effectiveness.

Interest rate swaps ~~designated as cash flow hedges~~ involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional value. The gain or loss on the interest rate swap is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. On June 1, 2018, we entered into ~~two~~2 interest rate swap agreements and, on December 20, 2018, we entered into ~~three~~3 additional interest rate swap agreements as a means to partially hedge our variable interest rate risk on the Term Loan. An additional interest rate swap held by Fairmount Santrol was assumed in conjunction with the Merger. The following table summarizes our interest rate swap agreements at ~~June~~September 30, 2019 and December 31, 2018:

Interest Rate Swap Agreements	Maturity Date	Rate	Notional Value (in thousands)		Debt Instrument Hedged	Percentage of Term Loan Outstanding	Maturity Date	Rate	Notional Value (in thousands)		Debt Instrument Hedged	Percentage of Term Loan Outstanding
June 30, 2019
Designated as cash flow hedge	June 1, 2023	2.81%	$	100,000	Term Loan	6%
September 30, 2019
Designated as cash flow hedge	June 1, 2025	2.87%		200,000	Term Loan	12%	June 1, 2023	2.81%	$	100,000	Term Loan	6%
Designated as cash flow hedge	September 5, 2019	2.92%		210,000	Term Loan	13%	June 1, 2025	2.87%		200,000	Term Loan	12%
Designated as cash flow hedge	June 1, 2024	2.81%		50,000	Term Loan	3%	June 1, 2024	2.81%		50,000	Term Loan	3%
Designated as cash flow hedge	June 1, 2025	2.85%		50,000	Term Loan	3%	June 1, 2025	2.85%		50,000	Term Loan	3%
Designated as cash flow hedge	June 1, 2025	2.87%		50,000	Term Loan	3%	June 1, 2025	2.87%		50,000	Term Loan	3%
			$	660,000		40%			$	450,000		28%

December 31, 2018
Designated as cash flow hedge	June 1, 2023	2.81%	$	100,000	Term Loan	6%	June 1, 2023	2.81%	$	100,000	Term Loan	6%
Designated as cash flow hedge	June 1, 2025	2.87%		200,000	Term Loan	12%	June 1, 2025	2.87%		200,000	Term Loan	12%
Designated as cash flow hedge	September 5, 2019	2.92%		210,000	Term Loan	13%	September 5, 2019	2.92%		210,000	Term Loan	13%
Not designated as cash flow hedge	June 1, 2024	2.81%		50,000	Term Loan	3%	June 1, 2024	2.81%		50,000	Term Loan	3%
Not designated as cash flow hedge	June 1, 2025	2.85%		50,000	Term Loan	3%	June 1, 2025	2.85%		50,000	Term Loan	3%
Not designated as cash flow hedge	June 1, 2025	2.87%		50,000	Term Loan	3%	June 1, 2025	2.87%		50,000	Term Loan	3%
			$	660,000		40%			$	660,000		40%

At the Merger Date, our existing interest rate swaps qualified, but were not designated for hedge accounting until August 1, 2018. The interest rate swaps entered into in December 2018 qualified, but were not designated for hedge accounting until January 2019. Changes in the fair value of the undesignated interest rate swaps were included in interest expense in the related period. Amounts reported in accumulated other comprehensive loss related to interest rate swaps will be reclassified to interest expense as interest payments are made on the Term Loan. We expect ~~$4.2~~$5.0 million to be reclassified from accumulated other comprehensive income into interest expense within the next twelve months.

The following table summarizes the fair values and the respective classification in the Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2019 and December 31, 2018. The net amount of derivative liabilities can be reconciled to the tabular disclosure of fair value in Note 12:

		Liabilities							Liabilities
		June 30, 2019			December 31, 2018				September 30, 2019			December 31, 2018
Interest Rate Swap Agreements	Balance Sheet Classification	(in thousands)						Balance Sheet Classification	(in thousands)
Designated as cash flow hedges	Other non-current liabilities	$	(20,832	)	$	(2,846	)	Other non-current liabilities	$	(17,468	)	$	(2,846	)
Designated as cash flow hedges	Accrued expenses		(227	)		-		Accrued expenses		(7,394	)		-
Not designated as cash flow hedges	Other non-current liabilities		-			(1,271	)	Other non-current liabilities		-			(1,271	)
		$	(21,059	)	$	(4,117	)		$	(24,862	)	$	(4,117	)

The tables below presents the effect of cash flow hedge accounting on accumulated other comprehensive income (loss) as of ~~June~~September 30, 2019 and 2018:

	Amount of Loss Recognized in Other Comprehensive Income								Amount of (Gain) Loss Recognized in Other Comprehensive Income
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018			2019		2018
Derivatives in Hedging Relationships	(in thousands)								(in thousands)
Designated as Cash Flow Hedges
Interest rate swap agreements	$	9,833	$	-	$	17,864	$	-	$	4,542	$	(709	)	$	22,406	$	(709	)

		Amount of Loss Reclassified from Accumulated Other Comprehensive Loss									Amount of Loss Reclassified from Accumulated Other Comprehensive Loss
	Location of Loss	Three Months Ended June 30,				Six Months Ended June 30,				Location of Loss	Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in	Recognized on	2019		2018		2019		2018		Recognized on	2019		2018		2019		2018
Hedging Relationships	Derivative	(in thousands)								Derivative	(in thousands)
Designated as Cash Flow Hedges
Interest rate swap agreements	Interest expense, net	$	401	$	-	$	591	$	-	Interest expense, net	$	712	$	470	$	1,303	$	470

The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Statements of Income (Loss) in the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018:

	Location of Loss on Derivative								Location of Loss on Derivative
	Interest expense, net				Interest expense, net				Interest expense, net				Interest expense, net
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(in thousands)								(in thousands)
Total Interest Expense presented in the Statements of
Income (Loss) in which the effects of cash flow hedges are recorded	$	27,866	$	8,991	$	53,002	$	13,669	$	26,894	$	23,530	$	79,896	$	35,325
Effects of cash flow hedging:
Loss on Hedging Relationships
Interest rate swap agreements
Amount of loss reclassified
from accumulated other comprehensive
income to earnings	$	401	$	-	$	591	$	-	$	712	$	470	$	1,303	$	470

All of our derivative financial instruments are designated as hedging instruments in the ~~six~~nine months ended ~~June~~September 30, 2019. The table below presents the effect of our derivative financial instruments that were not designated as hedging instruments in the ~~six~~nine months ended ~~June~~September 30, 2018.


Derivatives Not Designated		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,			Nine Months Ended September 30,
as ASC 815-20 Cash Flow	Location of Loss Recognized	2018		2018		Location of (Gain) Loss Recognized	2018			2018
Hedging Relationships	in Income on Derivative	(in thousands)				in Income on Derivative	(in thousands)
Interest rate swap agreements	Interest expense, net	$	1,199	$	1,199	Interest expense, net	$	(1,141	)	$	58

Financial instruments held by us include cash equivalents, accounts receivable, accounts payable, long-term debt (including the current portion thereof) and interest rate swaps. ~~We are~~Previously, we were also obligated for contingent consideration for ~~certain coating technology~~our Propel SSP^® self-suspending proppant that iswas subject to fair value measurement. The contingent consideration liability was written off in the third quarter of 2019 and was recorded in goodwill and other asset impairments on the Condensed Consolidated Statements of Income (Loss). See Note 22 for further detail.

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, we utilize certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.

Based on the examination of the inputs used in the valuation techniques, we are required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities at fair value will be classified and disclosed in one of the following three categories:

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The carrying value of cash equivalents, accounts receivable and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of our long-term debt (including the current portion thereof) is recognized at amortized cost. The fair value of the Term Loan differs from amortized cost and is valued at prices obtained from a readily-available source for trading non-public debt, which represents quoted prices for identical or similar assets in markets that are not active, and therefore is considered Level 2. See Note 8 for further details on our long-term debt. The following table presents the fair value as of ~~June~~September 30, 2019 and December 31, 2018, respectively, for our long-term debt:

	Quoted Prices		Other						Quoted Prices		Other
	in Active		Observable		Unobservable				in Active		Observable		Unobservable
	Markets		Inputs		Inputs				Markets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Long-Term Debt Fair Value Measurements	(in thousands)								(in thousands)
June 30, 2019
September 30, 2019
Term Loan	$	-	$	1,314,968	$	-	$	1,314,968	$	-	$	1,332,014	$	-	$	1,332,014
Industrial Revenue Bond		-		10,000		-		10,000		-		10,000		-		10,000
	$	-	$	1,324,968	$	-	$	1,324,968	$	-	$	1,342,014	$	-	$	1,342,014

December 31, 2018
Term Loan	$	-	$	1,182,060	$	-	$	1,182,060	$	-	$	1,182,060	$	-	$	1,182,060
Industrial Revenue Bond		-		10,000		-		10,000		-		10,000		-		10,000
	$	-	$	1,192,060	$	-	$	1,192,060	$	-	$	1,192,060	$	-	$	1,192,060

The following table presents the amounts carried at fair value as of ~~June~~September 30, 2019 and December 31, 2018 for our other financial instruments.

	Quoted Prices		Other						Quoted Prices		Other
	in Active		Observable		Unobservable				in Active		Observable		Unobservable
	Markets		Inputs		Inputs				Markets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements	(in thousands)								(in thousands)
June 30, 2019
September 30, 2019
Interest rate swap agreements liability	$	-	$	21,059	$	-	$	21,059	$	-	$	24,862	$	-	$	24,862
Contingent consideration liability		-		-		4,500		4,500
	$	-	$	21,059	$	4,500	$	25,559

December 31, 2018
Interest rate swap agreements liability	$	-	$	4,117	$	-	$	4,117	$	-	$	4,117	$	-	$	4,117
Contingent consideration liability						4,500		4,500						4,500		4,500
	$	-	$	4,117	$	4,500	$	8,617	$	-	$	4,117	$	4,500	$	8,617

Fair value of interest rate swap agreements is based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date. These are determined using Level 2 inputs. Refer to Note 11 for additional information.

The contingent consideration at December 31, 2018 was considered a Level 3 ~~liabilities consisted of a~~ liability ~~related to contingent consideration, which is a pre-acquisition contingent arrangement~~ in the form of ~~earnout~~earn-out payments related to ~~the coating technology~~our Propel SSP^® self-suspending proppant that we acquired ~~as part of~~in the Merger. ~~The fair value on the Merger Date of the earnout was $9.5 million and determined using the scenario-based method due to the linear nature of the payments.~~

Stock-based compensation includes ~~time-restricted stock units (“RSUs”), performance-restricted stock units (“PSUs”),~~RSUs, PSUs, and ~~nonqualified stock options (“Options” and, together with the RSUs and PSUs, the “Awards”).~~Options. These Awards are governed by various plans: the FMSA Holdings Inc. Long Term Incentive Compensation Plan (“2006 Plan”), the FMSA Holdings, Inc. Stock Option Plan (“2010 Plan”), the FMSA Holdings Inc. Amended and Restated 2014 Long Term Incentive Plan (“2014 Plan”), and the 2018 Omnibus Plan (“2018 Plan”). Options may be exercised, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires, which is typically ten years from the original grant date. All Options granted under the 2006 Plan and 2010 Plan became fully vested as part of the Merger agreement. PSUs granted under the 2014 Plan were converted to RSUs as part of the Merger agreement. In addition, the Merger agreement provides for the accelerated vesting of all Awards if the holder is terminated without Cause or if the holder terminates employment for Good Reason during the Award Protection Period (as such terms are defined in the related agreements), which is 12 months following the Merger Date.

The fair values of the RSUs and Options were estimated at the Merger Date. The fair value of the RSUs was determined to be the opening share price of Covia stock at the Merger Date. The fair value of Options was estimated at the Merger date using the Black Scholes-Merton option pricing model.

~~We did not issue any Awards in the six months ended June 30, 2018.~~ We have not issued any Options subsequent to the Merger Date. ~~All~~ Awards activity during the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 is as follows:

	Options			Weighted Average Exercise Price, Options		RSUs			Weighted Average Price at RSU Issue Date		PSUs			Weighted Average Price at PSU Issue Date		Options			Weighted Average Exercise Price, Options		RSUs			Weighted Average Price at RSU Issue Date		PSUs			Weighted Average Price at PSU Issue Date
																(in thousands, except per share data)
Outstanding at December 31, 2017																	-		$	-		-		$	-		-		$	-
Assumed through acquisition																	2,537			33.85		665			28.09		-			-
Granted																	-			-		168			18.56		-			-
Exercised or distributed																	(1	)		10.20		(58	)		25.97		-			-
Forfeited																	(8	)		44.69		(5	)		28.00		-			-
Expired																	(9	)		56.83		-			-		-			-
Outstanding at September 30, 2018																	2,519		$	33.75		770		$	26.17		-		$	-
	(in thousands, except per share data)
Outstanding at December 31, 2018		2,503		$	33.49		746		$	26.12		-		$	-		2,503		$	33.49		746		$	26.12		-		$	-
Granted		-			-		1,738			4.69		1,448			4.74		-			-		2,444			3.82		1,491			4.74
Exercised or distributed		-			-		(315	)		27.89		-			-		-			-		(659	)		16.90		-			-
Forfeited		(7	)		38.61		(176	)		7.98		(203	)		4.74		(26	)		41.80		(374	)		9.04		(383	)		4.74
Expired		(11	)		48.48		-			-		-			-		(270	)		36.44		-			-		-			-
Outstanding at June 30, 2019		2,485		$	33.41		1,993		$	8.61		1,245		$	4.74
Outstanding at September 30, 2019																	2,207		$	33.03		2,157		$	6.50		1,108		$	4.74

We recorded stock compensation expense of ~~$3.3~~$2.3 million and ~~$0.8~~$2.7 million in the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$6.1~~$8.4 million and ~~$0.8~~$3.4 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. Prior to the Merger, we did not compensate employees with stock-based payments and, accordingly, we did not record any stock compensation expense in the five months ended May 31, 2018. Stock compensation expense is included in selling, general, and administrative expenses on the Condensed Consolidated Statements of Income (Loss) and in additional paid-in capital on the Condensed Consolidated Balance Sheets.

We compute and apply ~~to ordinary income~~ an estimated annual effective tax rate to ordinary income on a quarterly basis, based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income refers to income from continuing operations before income tax expense, excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax.

For the three months ended ~~June~~September 30, 2019, we recorded tax expense of $22.5 million on income before income taxes of $76.4 million, resulting in an effective tax rate of 29.4%, compared to a tax benefit of ~~$5.1~~$16.8 million on a loss before income taxes of ~~$39.5~~$305.7 million, resulting in an effective tax rate of ~~13.0%, compared to tax expense of $6.5 million on income before income taxes of $23.6 million resulting in an effective tax rate of 27.3%~~5.5% for the same period of 2018. The ~~decrease~~increase in the effective tax rate for the three months ended September 30, 2019 is primarily attributable to gains from the sales of Calera and the W&W Railroad and a valuation allowance set up for interest expense disallowed under IRC Section 163(j) offset by the benefit from depletion. ~~The~~Additionally, the effective tax rate ~~differs~~for the three months ended September 30, 2018 rate differed from the ~~U.S. federal~~ statutory rate primarily due to ~~depletion,~~ the ~~impact~~non-deductibility of ~~foreign~~a goodwill impairment.

For the nine months ended September 30, 2019, we recorded tax expense of $13.3 million on a loss before income taxes of $19.4 million, resulting in an effective tax ~~provisions requiring U.S.~~rate of negative 68.4%, compared to a tax benefit of $0.5 million on a loss before income ~~inclusion~~taxes of ~~foreign income,~~$235.4 million, resulting in an effective tax rate of 0.2% for the same period of 2018. The negative effective tax rate for the nine months ended September 30, 2019 is primarily attributable to gains from the sales of Calera and the W&W Railroad and a valuation allowance set up for interest expense disallowed under IRC Section 163(j). in excess of the benefits from depletion. Additionally, the

~~For the six months ended June 30, 2019, we recorded a tax benefit of $9.2 million on a loss before income taxes of $95.8 million resulting in an~~ effective tax rate ~~of 9.6%, compared to tax expense of $16.3 million on income before income taxes of $70.3 million resulting in an effective tax rate of 23.2%~~ for the ~~same period~~nine months ended September 30, 2018 differed from the statutory rate primarily due to the non-deductibility of ~~2018. The decrease in the effective tax rate is primarily attributable to~~ a ~~valuation allowance set up for interest expense disallowed under IRC Section 163(j) offset by the benefit from depletion.~~ goodwill impairment.

The effective tax rate differs from the U.S. federal statutory rate primarily due to depletion, the impact of foreign taxes, tax provisions requiring U.S. income inclusion of foreign income, and a valuation allowance set up for interest expense disallowed under IRC Section 163(j).

~~We maintain retirement, post-retirement medical and long-term benefit plans in several countries.~~

In the U.S., we sponsor the Covia Holdings Corporation Pension Plan (formerly, the Unimin Corporation Pension ~~Plan,~~Plan), a defined benefit plan for hourly and salaried employees (“Pension Plan”) and the Unimin Corporation Pension Restoration Plan (a non-qualified supplemental benefit plan) (“Restoration Plan”). The Pension Plan is a funded plan. Minimum funding and maximum tax-deductible contribution limits for the Pension Plan are defined by the Internal Revenue Service. The Restoration Plan is unfunded. Salaried participants had accrued benefits based on service and final average pay. Hourly participants' benefits are based on service and a benefit formula. The Pension Plan was closed to new entrants effective January 1, 2008, and union employee participation in the Pension Plan ~~at the last three unionized locations participating in the Pension Plan~~ was closed to all new entrants effective November 1, 2017. The Pension Plan was frozen as of December 31, 2018 for all non-union employees. ~~Until the~~The Restoration Plan was ~~amended~~closed to ~~exclude~~ new entrants oneffective August 15, 2017 ~~all salaried participants eligible for the Pension Plan were also eligible for the Restoration Plan. The Restoration Plan was~~and frozen for all participants as of December 31, 2018. An independent trustee has been appointed for the Pension Plan whose responsibilities include custody of plan assets as well as recordkeeping. A pension committee consisting of members of senior management provides oversight through quarterly meetings. In addition, an independent advisor has been engaged to provide advice on the management of the plan assets. The primary risk of the Pension Plan is the volatility of the funded status. Liabilities are exposed to interest rate risk and demographic risk (e.g., mortality, turnover, etc.). Assets are exposed to interest rate risk, market risk, and credit risk. In addition to these retirement plans, ~~in the U.S.,~~ we ~~offer~~sponsor a union retiree medical plan in the U.S. that, ~~is exposed to risk of increases in health care costs. The retiree medical plan covers certain salaried employees and certain groups of hourly employees. Effective~~effective December 31, 2018, ~~the retiree medical plan~~ was terminated for salaried employees but remains open to certain groups of hourly employees. As part of the Merger, we assumed the 2 defined benefit pension plans of Fairmount Santrol, the Wedron Silica Company Hourly Employees’ Pension Plan (the “Wedron Plan”) and the Pension Plan for Hourly Bargaining Unit Employees of Technisand, Inc. – Troy Grove (the “Troy Grove Plan”, and, together with the Wedron Plan, the “Fairmount Pension Plans”). Benefits under the Wedron Plan were frozen effective December 31, 2012. Benefits under the Troy Grove Plan were frozen effective December 31, 2016.

In Canada, we sponsor ~~three~~3 defined benefit retirement plans. ~~Two~~NaN of the retirement plans are for hourly employees and ~~one~~1 is for salaried employees. Salaried employees were eligible to participate in a plan consisting of a defined benefit portion ~~that~~and a defined contribution portion. The defined benefit portion has been closed to new entrants since January 1, 2008 and athe defined contribution portion ~~for~~is limited to employees hired after January 1, ~~2018.~~2008. In addition, there are ~~two~~2 post-retirement medical plans in Canada. In the case of the Canadian pension plans, minimum funding is required under the provincial Pension Benefits Act (Ontario) and regulations and maximum funding is set in the Federal Income Tax Act of Canada and regulations. The pension plan is administered by Unimin Canada. A pension committee exists to ensure proper administration, management and investment review with respect to the benefits of the pension plan through implementation of governance procedures. The medical plan is administered by an insurance company with Unimin Canada having the ultimate responsibility for all decisions.

In Mexico, we sponsor ~~four~~4 retirement plans, ~~two~~2 of which are seniority premium plans as defined by Mexican labor law. The remaining plans are defined benefit plans with a minimum benefit equal to severance payment by unjustified dismissal according to Mexican labor law. Minimum funding is not required, and maximum funding is defined according to the actuarial cost method registered with the Mexican Tax Authority. Investment decisions are made by an administrative committee of Grupo de Materias Primas pension plans. All plans in Mexico pay lump sums on retirement and pension plans pay benefits through five annual payments conditioned on compliance with non-compete clauses.

As part of the Merger, we assumed the two defined benefit pension plans of Fairmount Santrol, the Wedron pension plan and the Troy Grove pension plan. These plans cover union employees at certain facilities and provide benefits based upon years of service or a combination of employee earnings and length of service. Benefits under the Wedron plan were frozen effective December 31, 2012. Benefits under the Troy Grove plan were frozen effective December 31, 2016.

The Pension Plan, Restoration Plan, and the pension plans in Canada and Mexico are collectively referred to as the “Unimin Pension Plans.” The ~~Wedron and Troy Grove pension plans are collectively referred to as the “Fairmount Pension Plans.” The~~ Unimin

Pension Plans and the Fairmount Pension Plans are collectively referred to as the “Covia Pension Plans.” The post-retirement medical plans in the United States and Canada are collectively referred to as the “Postretirement Medical Plans.”

We have applied settlement accounting in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 due to distributions exceeding the current period service and interest costs. These amounts are included in other non-operating expense, net on the Condensed Consolidated Statements of Income (Loss). As a result of the distributions, we re-measured our obligations under the Unimin Pension Plans and the discount rate was decreased from 4.15% at January 1, 2019 to 3.05% at September 30, 2019. There were no other changes to the assumptions used to calculate the obligation at January 1, 2019.

The following tables summarize the components of net periodic benefit costs. Service costs incurred for plant personnel are included in cost of goods sold. Service costs incurred for corporate personnel and retirees are included in selling, general, and administrative expenses. All other components of net period benefit cost are included in other non-operating expense, net on the Condensed Consolidated Statements of Income (Loss), for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 as follows:

	Covia Pension Plans												Covia Pension Plans
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(in thousands)												(in thousands)
Components of net periodic benefit cost
Service cost	$	551		$	2,190		$	1,102		$	4,392		$	551		$	1,355		$	1,653		$	5,747
Interest cost		2,084			2,340			4,168			4,673			2,084			2,487			6,252			7,188
Expected return on plan assets		(2,308	)		(2,709	)		(4,616	)		(5,389	)		(2,308	)		(2,712	)		(6,924	)		(8,147	)
Amortization of prior service cost		82			136			164			274			82			136			246			410
Amortization of net actuarial loss		522			1,301			1,044			2,605			522			1,053			1,566			3,658
Settlement loss		1,065			439			2,744			439			1,417			3,005			4,161			3,005
Net periodic benefit cost	$	1,996		$	3,697		$	4,606		$	6,994		$	2,348		$	5,324		$	6,954		$	11,861

	Postretirement Medical Plans								Postretirement Medical Plans
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(in thousands)								(in thousands)
Components of net periodic benefit cost
Service cost	$	73	$	267	$	146	$	533	$	73	$	266	$	219	$	798
Interest cost		120		209		240		420		120		209		360		627
Amortization of net actuarial loss		40		122		80		244		40		122		120		366
Net periodic benefit cost	$	233	$	598	$	466	$	1,197	$	233	$	597	$	699	$	1,791

We contributed ~~$0.7~~$1.0 million and ~~$5.9~~$6.6 million to the Covia Pension Plans for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. Contributions into the Covia Pension Plans for the year ended December 31, 2019 are expected to be $3.0 million.

Accumulated other comprehensive loss is a separate line within the Condensed Consolidated Statements of Equity that reports our cumulative income (loss) that has not been reported as part of net income (loss). The components of accumulated other comprehensive loss attributable to Covia Holdings Corporation at ~~June~~September 30, 2019 and December 31, 2018 were as follows:

	June 30, 2019								September 30, 2019
	Gross			Tax Effect		Net Amount			Gross			Tax Effect		Net Amount
	(in thousands)								(in thousands)
Foreign currency translation adjustments	$	(50,182	)	$	-	$	(50,182	)	$	(53,237	)	$	-	$	(53,237	)
Amounts related to employee benefit obligations		(47,479	)		14,587		(32,892	)		(44,423	)		12,721		(31,702	)
Unrealized gain (loss) on interest rate hedges		(22,355	)		5,142		(17,213	)		(26,186	)		6,023		(20,163	)
	$	(120,016	)	$	19,729	$	(100,287	)	$	(123,846	)	$	18,744	$	(105,102	)

The following table presents the changes in accumulated other comprehensive loss by component for the ~~six~~nine months ended ~~June~~September 30, 2019:

	Six Months Ended June 30, 2019												Nine Months Ended September 30, 2019
	Foreign			Amounts related			Unrealized						Foreign			Amounts related			Unrealized
	currency			to employee			gain (loss)						currency			to employee			gain (loss)
	translation			benefit			on interest						translation			benefit			on interest
	adjustments			obligations			rate hedges			Total			adjustments			obligations			rate hedges			Total
	(in thousands)												(in thousands)
Beginning balance	$	(53,389	)	$	(37,922	)	$	(3,914	)	$	(95,225	)	$	(53,389	)	$	(37,922	)	$	(3,914	)	$	(95,225	)
Other comprehensive income
before reclassifications		3,207			2,917			(13,755	)		(7,631	)		152			3,016			(17,253	)		(14,085	)
Amounts reclassified from
accumulated other comprehensive loss		-			2,113			456			2,569			-			3,204			1,004			4,208
Ending balance	$	(50,182	)	$	(32,892	)	$	(17,213	)	$	(100,287	)	$	(53,237	)	$	(31,702	)	$	(20,163	)	$	(105,102	)

Operating leases and finance leases are included in the Condensed Consolidated Balance Sheets as follows:

		June 30, 2019			September 30, 2019
	Classification	(in thousands)		Classification	(in thousands)
Lease assets
Operating right-of-use assets, net	Assets	$	396,680	Assets	$	379,569
Finance right-of-use assets, net	Property, plant, and equipment, net		11,556	Property, plant, and equipment, net		11,170
Total lease assets		$	408,236		$	390,739
Lease liabilities
Operating lease liabilities, current	Current liabilities	$	67,720	Current liabilities	$	65,880
Operating lease liabilities, non-current	Liabilities		296,678	Liabilities		282,843
Finance lease liabilities, current	Current portion of long-term debt		3,841	Current portion of long-term debt		2,936
Finance lease liabilities, non-current	Long-term debt		3,942	Long-term debt		3,902
Total lease liabilities		$	372,181		$	355,561

Operating lease rental expense for the three and ~~six~~nine months ended ~~June~~September 30, 2018 was ~~$18.1~~$29.7 million and ~~$33.2~~$63.0 million. Operating lease costs are recorded on a straight-line basis over the lease term. Finance lease costs include amortization of the right-of-use assets and interest on lease liabilities. The components of lease costs, which were included in income (loss) from operations in our Condensed Consolidated Statements of Income (Loss), were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2019		2019		2019
	(in thousands)				(in thousands)
Operating leases
Operating lease costs	$	25,767	$	52,959	$	25,482	$	78,441
Variable lease costs		655		806		195		1,001
Short-term lease costs		4,347		9,205		4,891		14,096
Total operating lease costs	$	30,769	$	62,970	$	30,568	$	93,538
Financing leases
Amortization of right-of-use asset	$	644	$	1,263	$	666	$	1,929
Interest on finance lease liabilities		73		110		90		200
Total finance lease costs	$	717	$	1,373	$	756	$	2,129

Maturities of lease liabilities as of ~~June~~September 30, 2019 are as follows:

	Operating			Finance			Total			Operating			Finance			Total
	(in thousands)									(in thousands)
2019	$	86,666		$	4,434		$	91,100		$	21,600		$	1,337		$	22,937
2020		76,528			2,071			78,599			81,484			3,682			85,166
2021		64,989			948			65,937			70,873			1,525			72,398
2022		58,692			578			59,270			61,211			525			61,736
2023		44,834			212			45,046			53,526			204			53,730
2024 and Thereafter		104,643			-			104,643			127,246			38			127,284
Total lease payments		436,352			8,243			444,595			415,940			7,311			423,251
Less imputed lease interest		(71,954	)		(460	)		(72,414	)		(67,217	)		(473	)		(67,690	)
Total lease liabilities	$	364,398		$	7,783		$	372,181		$	348,723		$	6,838		$	355,561

	Six Months Ended June 30,		Nine Months Ended September 30,
	2019		2019
	(in thousands)		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	50,351	$	73,899
Operating cash flows from financing leases		178		261
Financing cash flows from finance leases		2,274		3,471
Total cash paid	$	52,803	$	77,631

We are involved in various legal proceedings, including as a defendant in a number of lawsuits. Although the outcomes of these proceedings and lawsuits cannot be predicted with certainty, we do not believe that any of the pending legal proceedings and lawsuits are reasonably likely to have a material adverse effect on our financial position, results of operations or cash flows. In addition, we believe that our insurance coverage will mitigate many of these claims.

On March 18, 2019, in connection with a non-public SEC investigation, we received a subpoena ~~from the SEC~~ seeking information relating to certain value-added proppants marketed and sold by Fairmount Santrol or Covia within the Energy segment since January 1, 2014. Since the issuance of that subpoena, the SEC has requested additional information and subpoenaed certain current and former employees to testify. We ~~are~~have been cooperating with the SEC’s investigation. ~~Given that the~~The investigation is ongoing, and ~~that no civil or criminal claims have been threatened or brought to date,~~ we ~~cannot predict what, if any, further action the SEC may take regarding its investigation, and~~ cannot provide an estimate of the potential range of loss, if any, that may result. Accordingly, no accrual has been made with respect to this matter.

Included in other long-term liabilities at June 30, 2019 and December 31, 2018, is $4.5 million for a pre-acquisition contingent consideration arrangement in the form of earnout payments, related to the purchase of certain coating technology. We entered into an amendment to the coating technology purchase agreement on June 1, 2018. The earnout payments are based on a fixed percentage of sales of products that incorporate the coating technology for thirty years commencing on June 1, 2018. The amendment eliminated the threshold payments of $195.0 million, which were previously required in order for us to retain 100% ownership of the technology. It also provides for the non-exclusive right to license the technology at a negotiated rate.

We have entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred. Certain agreements require annual or quarterly payments based upon annual tons mined or the average selling price of tons sold. Total royalty expense associated with these agreements was ~~$3.1~~$2.9 million and ~~$1.3~~$1.5 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$5.6~~$8.5 million and ~~$2.2~~$3.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

We sell minerals to Sibelco and certain of its subsidiaries (“related parties”). Sales to related parties amounted to ~~$2.3~~$1.9 million and ~~$1.1~~$2.1 million in the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$4.5~~$6.4 million and ~~$2.7~~$4.8 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. At ~~June~~September 30, 2019 and December 31, 2018, we had accounts receivable from related parties of ~~$2.1~~$1.9 million and $0.8 million, respectively. These amounts are included in Accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets.

We purchase minerals from certain related parties. Purchases from related parties amounted to ~~$2.0~~$0.6 million and ~~$3.0~~$0.2 million in the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$2.0~~$2.6 million and ~~$5.2~~$5.4 million in the ~~six~~nine months ended ~~June~~September 30, 2019

and 2018, respectively. At ~~June~~September 30, 2019 and December 31, 2018, we had accounts payable to related parties of ~~$4.0~~$2.8 million and $0.5 million, respectively. These amounts are included in Accounts payable in the accompanying Condensed Consolidated Balance Sheets.

Prior to the Merger, Sibelco provided certain services on behalf of Unimin, such as finance, treasury, legal, marketing, information technology, and other infrastructure support. The cost for information technology was allocated to Unimin on a direct usage basis. The costs for the remainder of the services were allocated to Unimin based on tons sold, revenues, gross margin, and other financial measures for Unimin compared to the same financial measures of Sibelco. The financial information presented in these condensed consolidated financial statements may not reflect the combined financial position, operating results and cash flows of Unimin had it not been a consolidated subsidiary of Sibelco. Actual costs that would have been incurred if Unimin had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. Effective on the Merger Date, Sibelco no longer provides such services to us. Prior to the Merger, during the ~~two and~~ five months ended May 31, 2018, Unimin incurred $2.4 million ~~and $2.4 million, respectively,~~ for management and administrative services from Sibelco. These costs are reflected in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income (Loss).

Additionally, we are compensated for providing transitional services, such as accounting, human resources, information technology, mine planning, and geological services, to HPQ Co. and such compensation is recorded as a reduction of cost in selling, general, and administrative expenses. Compensation for these transitional services was $0.01 million and ~~$0.1~~$0.3 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and $0.1 million and ~~$0.1~~$0.4 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. Amounts are included in Selling, general, and administrative expenses on the Condensed Consolidated Statements of Income (Loss) and in Other receivables in the Condensed Consolidated Balance Sheets at ~~June~~September 30, 2019 and December 31, 2018.

On June 1, 2018, we entered into an agreement with Sibelco whereby Sibelco provides sales and marketing support for certain products supporting the performance coatings and polymer solutions markets in North America and Mexico, for which we pay a 5%

commission of revenue, and in the rest of the world, for which we pay a 10% commission of revenue. Sibelco also assists with sales and marketing efforts for certain products in the ceramics and sanitary ware industries outside of North America and Mexico for which we pay a 5% commission of revenue. In addition, we provide sales and marketing support to Sibelco for certain products used in ceramics in North America and Mexico for which we earn a 10% commission of revenue. We recorded net commission expense of $1.1 million and ~~$0.4~~$1.1 million in the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$2.1~~$3.2 million and ~~$0.4~~$1.5 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. These amounts are recorded in Selling, general and administration expenses.

Prior to the Merger Date, we had term loans outstanding with a wholly-owned subsidiary of Sibelco. During the ~~three and six~~nine months ended ~~June~~September 30, 2018, we incurred ~~$1.2 million and~~ $3.1 million ~~respectively,~~ of interest expense for such term loans. These costs are reflected in Interest expense, net in the accompanying Condensed Consolidated Statements of Income (Loss). Upon closing of the Merger, these term loans were repaid with the proceeds of the Term Loan.

Revenues are primarily derived from contracts with customers with terms typically ranging from one to eight years in length and are measured by the amount of consideration we expect to receive in exchange for transferring our products. Revenues are recognized as each performance obligation within the contract is satisfied; this occurs with the transfer of control of our product in accordance with delivery methods as defined in the underlying contract. Performance obligations do not extend beyond one year. Transfer of control to customers generally occurs when products leave our facilities or at other predetermined control transfer point. We account for shipping and handling activities that occur after control of the related good transfers as a cost of fulfillment instead of a separate performance obligation.

We disaggregate revenues by major source consistent with our segment reporting. See Note 21 for further ~~detail.~~disaggregation of revenue.

Accounts receivable as presented in the consolidated balance sheets are related to our contracts and are recorded when the right to consideration becomes likely at the amount management expects to collect. Accounts receivable do not bear interest if paid when contractually due, and payments are generally due within thirty to forty-five days of invoicing. We typically do not record contract assets, as the transfer of control of our products results in an unconditional right to receive consideration.

We enter into certain supply agreements with customers that include provisions requiring payment at the inception of the supply agreement. Deferred revenue is recorded when payment is received in advance of the performance obligation. Changes in deferred

	Six Months Ended June 30,			Nine Months Ended September 30,
	2019			2019
	(in thousands)			(in thousands)
Beginning balance	$	10,826		$	10,826
Deferral of revenue		23,370			23,370
Recognition of unearned revenue		(9,784	)		(15,370	)
Ending balance	$	24,412		$	18,826

At ~~June~~September 30, 2019 and December 31, 2018, respectively, deferred revenue balances of ~~$18.4~~$13.1 million and $9.7 million were recorded as current liabilities. At ~~June~~September 30, 2019 and December 31, 2018, respectively, deferred revenue balance of ~~$6.1~~$5.7 million and $1.1 million were recorded in other non-current liabilities.

At ~~June~~September 30, 2019, we had ~~one~~1 customer whose accounts receivable balance exceeded 10% of total accounts receivable. This customer comprised approximately ~~15%~~11% of the accounts receivable balance at ~~June~~September 30, 2019. At December 31, 2018, we had ~~two~~2 customers whose accounts receivable balance exceeded 10% of total accounts receivable. These two customers each comprised approximately 10% of our accounts receivable balance at December 31, 2018.

In the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, ~~one~~1 customer exceeded 10% of revenues. This customer accounted for ~~11%~~10% and ~~13%~~14% of revenues in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. This customer is part of our Energy segment.

We organize our business into ~~two~~2 reportable segments, Energy and Industrial. Our Energy segment offers the oil and gas industry a comprehensive portfolio of raw frac sand, value-added-proppants, well-cementing additives, gravel-packing media and drilling mud ~~additives that meet or exceed standards of the API.~~additives. Our products serve hydraulic fracturing operations in the U.S., Canada, Argentina, Mexico, China, and northern Europe. The Industrial segment provides raw, value-added and custom-blended products to the glass, ceramics, metals, coatings, polymers, construction, foundry, filtration, sports and recreation and various other industries.

Prior to the second quarter of 2019, the Company’s chief operating decision maker (“CODM”) primarily evaluated an operating segment’s performance based on segment gross profit, which does not include any selling, general, and administrative costs or corporate costs. Beginning with the second quarter of 2019, the CODM changed the method to evaluate the Company’s operating segments’ performance based on segment contribution margin. Segment contribution margin excludes selling, general, and administrative costs, corporate costs, operating costs of idled facilities, and operating costs of excess railcar capacity. This change was made to better measure the operating performance of the reportable segments and to monitor performance without these non-operational costs.

The reportable segments are consistent with how management views the markets served by us and the financial information reviewed by the CODM in deciding how to allocate resources and assess performance.

Segment information for all periods presented in the table below has been revised accordingly to reflect the new measure of profit and loss.

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018		2019			2018		2019			2018			2019			2018
	(in thousands)										(in thousands)
Revenues
Energy	$	251,547		$	326,746	$	487,622		$	534,207	$	223,318		$	324,606		$	710,940		$	858,813
Industrial		193,389			181,672		385,560			344,032		185,639			198,762			571,199			542,794
Total revenues		444,936			508,418		873,182			878,239		408,957			523,368			1,282,139			1,401,607

Segment contribution margin
Energy		40,912			103,390		62,931			168,885		24,576			67,913			87,507			236,798
Industrial		65,109			51,819		116,731			95,826		59,061			56,805			175,792			152,631
Total segment contribution margin		106,021			155,209		179,662			264,711		83,637			124,718			263,299			389,429

Operating costs of idled facilities and excess railcar capacity		7,054			2,102		14,009			2,102		6,914			6,952			20,923			9,054
Selling, general, and administrative		38,644			31,377		80,604			56,601		35,628			43,164			116,232			99,765
Depreciation, depletion, and amortization		59,204			36,744		117,299			63,875		51,920			68,584			169,219			132,459
Asset impairments		-			12,300		-			12,300
Goodwill and other asset impairments												7,761			265,343			7,761			277,643
Restructuring and other charges		9,535			-		11,537			-		3,378			14,750			14,915			14,750
Gain on sale of subsidiaries												(127,195	)		-			(127,195	)		-
Other operating expense (income), net		1,670			1,150		(4,722	)		1,663		18			(974	)		(4,704	)		(330	)
Operating income (loss) from continuing operations		(10,086	)		71,536		(39,065	)		128,170		105,213			(273,101	)		66,148			(143,912	)
Interest expense, net		27,866			8,991		53,002			13,669		26,894			23,530			79,896			35,325
Other non-operating expense, net		1,571			38,923		3,758			44,223		1,924			9,043			5,682			56,159
Income (loss) from continuing operations before provision (benefit) for income taxes	$	(39,523	)	$	23,622	$	(95,825	)	$	70,278	$	76,395		$	(305,674	)	$	(19,430	)	$	(235,396	)

Asset information, including capital expenditures and depreciation, depletion, and amortization, by segment is not included in reports used by management in its monitoring of performance and, therefore, is not reported by segment.

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Goodwill was $119.8 million and $131.7 million at ~~June~~September 30, 2019 and December 31, 2018, respectively, and is entirely attributable to the Industrial segment. The following goodwill activity ~~in goodwill in~~for the ~~six~~nine months ended ~~June~~September 30, 2019 ~~is as follows:~~includes the disposition of goodwill allocated to Calera and the W&W Railroad. See Note 7 for further information.

	June 30, 2019			September 30, 2019
	Industrial			Industrial
	(in thousands)			(in thousands)
Beginning balance	$	131,655		$	131,655
Assets held for sale		(11,833	)
Dispositions					(11,833	)
Goodwill	$	119,822		$	119,822

We evaluate goodwill at the reporting unit level on an annual basis on October 31 and also on an interim basis when indicators of impairment exist. Market conditions within the Energy reporting unit combined with a decline in our share price triggered a test for goodwill impairment as of September 30, 2018. Additionally, the dispositions of Calera and the W&W Railroad, ~~included~~as well as the continued decline in ~~assets~~our share price triggered an additional test for goodwill impairment as of August 31, 2019. The tests were performed at the reporting unit level using a combination of the discounted cash flow methodology using a peer-based, risk-adjusted weighted average cost of capital, and ~~liabilities held for sale were~~the market multiples approach.

Upon completion of the September 30, 2018 test, the entire amount of goodwill of the Energy reporting unit was determined to be ~~businesses~~impaired and ~~therefore,~~an impairment charge in the amount of $228.1 million was recorded at September 30, 2018. The goodwill ~~of $8.6 million and $3.2 million, respectively, was allocated~~attributed to the ~~assets held~~Industrial reporting unit was determined to not be impaired. Upon completion of the August 31, 2019 test, the goodwill attributed to the Industrial reporting unit was again determined to not be impaired. The impairment charge related to the Energy reporting unit is included in goodwill and other asset impairments for ~~sale at June~~the three and nine months ended September 30, ~~2019. There were no events or changes in circumstances that would more likely than not result in an impairment~~2018 in the ~~carrying value of goodwill at June 30, 2019.~~

	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
	(in thousands)						(in thousands)
Beginning balance	$	188,418		$	52,196		$	188,418		$	52,196
Less: Reclassification to operating right-of-use assets		(40,902	)		-			(40,902	)		-
Less: Reclassification to assets held for sale		(48,026	)		-
Less: Dispositions and impairment								(53,026	)		-
Assets acquired		-			136,222			-			136,222
Ending balance		99,490			188,418			94,490			188,418
Accumulated amortization, beginning balance		(51,305	)		(26,600	)		(51,305	)		(26,600	)
Less: Reclassification to operating right-of-use assets accumulated amortization		5,115			-			5,115			-
Less: Reclassification to assets held for sale		29,862			-
Less: Dispositions and impairment								30,593			-
Amortization for the period		(14,950	)		(24,705	)		(18,255	)		(24,705	)
Accumulated amortization, ending balance		(31,278	)		(51,305	)		(33,852	)		(51,305	)
Intangible assets, net	$	68,212		$	137,113		$	60,638		$	137,113

Intangible assets, net includes ~~acquired supply agreements which are classified as held for sale at June 30, 2019,~~ acquired stream mitigation rights, customer relationships and trade ~~names~~names. Acquired supply agreements, net of accumulated amortization, in the amount of $18.0 million were disposed of with the sale of Calera. Acquired technology related to our Propel SSP^® self-suspending proppant within the Energy segment, net of accumulated amortization, of $4.5 million was abandoned and ~~acquired technology.~~impaired in its entirety. The impairment charge is recorded in goodwill and other asset impairments in the three and nine months ended September 30, 2019 in the Condensed Consolidated Statements of Income (Loss). Refer also to Note 2, which includes a discussion of the intangible assets acquired in the ~~Merger, which are included in the balance of Intangibles, net at December 31, 2018.~~ Merger.

Amortization expense is recognized in ~~Depreciation,~~depreciation, depletion and amortization expense in the Condensed Consolidated Statements of Income (Loss). The intangible assets had a weighted average amortization period of six years at September 30, 2019 and seven years at ~~June 30, 2019 and~~ December 31, 2018. Amortization expense was ~~$6.6~~$3.3 million and ~~$3.7~~$10.5 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$15.0~~$18.3 million and ~~$4.4~~$14.9 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

The estimated amortization expense related to intangible assets for the five succeeding years is as follows:

	Amortization		Amortization
	(in thousands)		(in thousands)
2019	$	6,390	$	3,091
2020		12,779		12,363
2021		12,779		12,363
2022		12,779		12,363
2023		12,779		12,363
Thereafter		10,706		8,095
Total	$	68,212	$	60,638

In ~~September 2018 and November 2018,~~response to changing market demands, we idled operations and reduced capacities at facilities serving the Energy segment in response to reduced customer demand. Our activities to idle those facilities have largely been completed at June 30, 2019, and all significant associated restructuring charges have been recorded.segment. We did not allocate restructuring charges to our Energy segment.

Additionally, in connection with the Merger, we initiated restructuring activities to achieve cost synergies from our combined operations. We did not allocate these Merger-related restructuring charges to either of our business segments.

32The following table presents a summary of restructuring charges for the nine months ended September 30, 2019 and 2018:

The following table presents our restructuring reserve activity during 2019 and 2018:

~~The following table presents a summary of restructuring charges for the six months ended June 30, 2019. There were no restructuring charges in the six months ended June 30, 2018.~~

~~The following table presents our restructuring reserve activity during 2019:~~

The current portion of our restructuring reserve is included in accrued expenses and long-term portion of our restructuring reserve is included in other non-current liabilities.

Restructuring and other charges on the Condensed Consolidated Statements of Income (Loss) for the ~~six~~nine months ended ~~June~~September 30, 2019 includes other charges related to executive severance and benefits of $5.5 million and consulting and strategic costs of $3.8 million. These other charges ~~are included~~were recorded in Accrued expenses on the Condensed Consolidated Balance Sheet ~~and are~~but not included in the above tables.

On July 3, 2019, we entered into an agreement with Mississippi Lime Company to sell Calera and, on July 25, 2019, we entered into an agreement with OmniTRAX, Inc. to sell the W&W Railroad. The Calera transaction closed on August 1, 2019, and resulted in a net gain on sale. The W&W Railroad transaction is anticipated to close in the third quarter of 2019. See Note 7 for further details.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Concerning Forward-Looking Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 (“Act”) provides a safe harbor for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. We wish to take advantage of the “safe harbor” provisions of the Act.

Certain statements in this Report are forward-looking statements within the meaning of the Act, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. All statements other than statements of historical fact included in this Report are forward-looking statements, and such statements are subject to risks and uncertainties. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements give our current expectations and projections as to future performance, occurrences and trends, including statements expressing optimism or pessimism about future results or events. The words “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “assume,” “will,” “should,” “may,” “can have,” “likely,” “target,” “forecast,” “guide,” “guidance,” “outlook,” “seek,” “strategy,” “future,” and similar words or expressions identify forward-looking statements. Similarly, all statements we make relating to our strategies, plans, goals, objectives and targets as well as our estimates and projections of results, sales, earnings, costs, expenditures, cash flows, growth rates, initiatives, and the outcomes or impacts of pending or threatened litigation or regulatory actions are also forward-looking statements.

Forward-looking statements are based upon a number of assumptions and factors concerning future conditions that may ultimately prove to be inaccurate and could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements, whether made herein, disclosed previously or in our other releases, reports or filings made with the SEC, are subject to risks and uncertainties and they are not guarantees of future performance. Actual results may differ materially from those discussed in forward-looking statements, thus negatively affecting our business, financial condition, results of operations or liquidity.

Forward-looking statements are and will be based upon our views and assumptions regarding future events and operating performance at the time the statements are made, and are applicable only as of the dates of such statements. We believe the expectations expressed in the forward-looking statements we make are based on reasonable assumptions within the bounds of our knowledge. However, forward-looking statements, by their nature, involve assumptions, risks, uncertainties and other factors, many of these factors are beyond our control, and any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

Additional important assumptions, risks, uncertainties and other factors concerning future conditions that could cause actual results and financial condition to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report and in the Form 10-K, and may be discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Report in the context of these risks and uncertainties.

We caution you not to place undue reliance on forward-looking statements. The important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. ~~Forward-looking statements speak only as of the date they are made.~~ We expressly disclaim any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

The financial information, discussion and analysis that follow should be read in conjunction with our condensed consolidated financial statements and the related notes included in this Report as well as the financial and other information included in the Form 10-K.

We are a leading provider of diversified mineral-based and material solutions for the Industrial and Energy markets. We produce a wide range of specialized silica sand, nepheline syenite, feldspar, calcium carbonate, clay, ~~kaolin, lime,~~ and ~~lime~~kaolin products for use in the glass, ceramics, coatings, metals, foundry, polymers, construction, water filtration, sports and recreation, and oil and gas markets in North America and around the world. We currently have 41 active mining facilities with over 4540 million tons of annual mineral processing capacity and ~~four~~five active coating facilities with ~~1.6~~1.4 million tons of annual coating capacity. Our mining and coating facilities span North America and also include operations in China and Denmark. Our U.S., Mexico, and Canada operations have many sites in close proximity to our customer base.

Our operations are organized into two segments based on the primary end markets we serve – Energy and Industrial. Our Energy segment offers the oil and gas industry a comprehensive portfolio of raw frac sand, value-added proppants, well-cementing additives, gravel-packing media and drilling mud additives. Our Energy segment products serve hydraulic fracturing operations in the U.S., Canada, Argentina, Mexico, China, and northern Europe. Our Industrial segment provides raw, value-added, and custom-blended products to the glass, construction, ceramics, metals, foundry, coatings, polymers, sports and recreation, filtration and various other industries, primarily in North America.

We believe our segments are complementary. Our ability to sell products to a wide range of customers across multiple end markets allows us to maximize the recovery of our reserve base within our mining operations and to mitigate the cyclicality of our earnings.

As disclosed in Notes 1 and 2 of the unaudited condensed consolidated financial statements included in this Report, on June 1, 2018, Unimin completed the Merger, whereby Fairmount Santrol merged into a wholly-owned subsidiary of Unimin and ceased to exist as a separate corporate entity. Immediately following the consummation of the Merger, Unimin changed its name to Covia Holdings Corporation and began operating under that name. The common stock of Fairmount Santrol was delisted from the NYSE prior to the market opening on June 1, 2018, and Covia commenced trading under the ticker symbol “CVIA” on that date. Upon the consummation of the Merger, the former stockholders of Fairmount Santrol (including holders of certain Fairmount Santrol equity awards) received, in the aggregate, $170 million in cash consideration and approximately 35% of the common stock of Covia. Approximately 65% of the outstanding shares of Covia common stock was owned by Sibelco as of December 31, 2018.

In connection with the Merger, we redeemed approximately 18.5 million shares of Unimin common stock from Sibelco in exchange for an amount in cash equal to approximately (i) $660 million plus interest accruing at 5.0% per annum for the period from September 30, 2017 through June 1, 2018 less (ii) $170 million in cash paid to Fairmount Santrol stockholders.

In connection with the Merger, we also completed a debt refinancing transaction, with Barclays Bank PLC as administrative agent, by entering into a $1.65 billion Term Loan and a $200 million Revolver. The proceeds of the Term Loan were used to repay the indebtedness of Unimin and Fairmount Santrol and to pay the cash portion of the Merger consideration and expenses related to the Merger. The Revolver was amended in March 2019. See Note 8 for further detail.

As a condition to the Merger, Unimin contributed certain of its assets comprising its Electronics segment, which served the global high purity quartz market, including $31.0 million of cash, to HPQ Co., a newly-formed wholly-owned subsidiary of Unimin, in exchange for all of the stock of HPQ Co. and the assumption by HPQ Co. of certain liabilities. Unimin distributed all of the stock of HPQ Co. to Sibelco in exchange for 0.17 million shares (or 15.1 million shares subsequent to the stock split) of Unimin common stock held by Sibelco.

Costs and expenses incurred related to the Merger are recorded in Other non-operating expense, net in the accompanying Consolidated Statements of Income (Loss) and include legal, accounting, valuation and financial advisory services, integration and other costs totaling ~~$0.2~~$0.1 million and ~~$38.9~~$5.6 million in the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$0.9~~$1.0 million and ~~$44.2~~$49.8 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Unimin was determined to be the acquirer in the Merger for accounting purposes, and the historical financial statements and certain historical amounts included in the notes to our consolidated financial statements relate to Unimin. The Condensed Consolidated Statements of Income (Loss) for the ~~six~~nine months ended ~~June~~September 30, 2019 includes the results of Fairmount Santrol. The Condensed Consolidated Statements of Income (Loss) for the ~~six~~nine months ended ~~June~~September 30, 2018 only includes the results of Fairmount Santrol from June 2018. The Condensed Consolidated Balance Sheet at December 31, 2018 ~~and forward~~ reflect the results of Covia. ~~The~~

The presentation of information for periods prior to the Merger Date are not fully comparable to the presentation of information for periods presented after the Merger Date because the results of operations for Fairmount Santrol are not included in such information prior to the Merger Date.

As previously disclosed in this Report, on May 31, 2018, prior to, and as a condition to the closing of the Merger, Unimin contributed certain of its assets comprising its Electronics segment in exchange for all of the stock of HPQ Co. and the assumption by HPQ Co. of certain liabilities. Unimin distributed 100% of the stock of HPQ Co. to Sibelco in exchange for 0.17 million shares (or 15.1 million shares subsequent to the stock split) of Unimin common stock held by Sibelco. HPQ Co. is presented as discontinued operations in the unaudited condensed consolidated financial statements.

As part of the disposition of HPQ Co., Covia and HPQ Co. entered into an agreement that governs their respective rights, responsibilities, and obligations relating to tax liabilities, the filing of tax returns, the control of tax contests, and other tax matters (the “Tax Matters Agreement”). Under the Tax Matters Agreement, Covia and HPQ Co. (and their affiliates) are responsible for income taxes required to be reported on their respective separate and group tax returns. HPQ Co., however, is responsible for any unpaid income taxes attributable to the HPQ Co. business prior to May 31, 2018, as well as any unpaid non-income taxes as of May 31, 2018 attributable to the HPQ Co. business (whether arising prior to May 31, 2018 or not). Covia is responsible for all other non-income taxes. Covia and HPQ Co. will equally bear any transfer taxes imposed in the transaction. Rights to refunds in respect of taxes will be allocated in the same manner as the responsibility for tax liabilities.

Demand for proppant is significantly influenced by the level of well completions by exploration and production (“E&P”) and oil field services (“OFS”) companies, which depends largely on the current and anticipated profitability of developing oil and natural gas reserves. Completions ~~declined in the second half of 2018 as a result of operator budgetary constraints and lower oil prices. Completions~~ activity in the first half of 2019 remained relatively consistent with the second half of ~~2018. West~~2018, but began to decline toward the end of the third quarter of 2019, due primarily to budget exhaustion of E&P companies, as well as low natural gas prices. We expect completions activity to decline through the end of 2019. As of early October 2019, Wext Texas Intermediate ~~(“WTI”)~~ crude oil prices ~~averaged nearly $65 per barrel in 2018, but fell to approximately $45 per barrel at the end of 2018. As of late July 2019, WTI prices~~ were approximately ~~$56~~$53 per ~~barrel and proppant demand has rebounded from the lower levels of late 2018.~~barrel.

Proppant supply grew throughout 2018 and in early 2019, particularly as a result of the opening of new “local” plants in the Permian, Eagle Ford, and Mid-Con basins. The quality of local proppant supply differs from Northern White Sand in that local proppant generally possesses lower crush strength and less sphericity. Local proppant products appear, however, to be fit for purpose in certain well applications, and given their lower costs, demand for local proppant products has strengthened considerably. Most local plants were developed to supply local basins in which they are located and lack the logistical infrastructure to economically ship product to other basins. We commissioned new local facilities in Crane and Kermit, Texas in the Permian basin in the third quarter 2018, each with three million tons of annual production capacity, and a new local facility in Seiling, Oklahoma in the Mid-Con basin in the fourth quarter 2018 with two million tons of annual production capacity.

As a result of these new sources of supply and sequentially slower proppant demand, supply for proppants exceeded demand inthroughout the ~~second half of 2018 and~~ first ~~half~~three quarters of 2019, resulting in significantly lower proppant pricing and some facilities idling or reducing production. We expect this supply imbalance to continue through at least the ~~second half~~end of 2019.

In response to changing market demands, we idled operations at mines in Kasota, Minnesota; Shakopee, Minnesota; Brewer, Missouri; Voca, Texas; Maiden Rock, Wisconsin; and Wexford, Michigan and at our resin coating facilities in Cutler, Missouri; Guion, Arkansas; and Roff, Oklahoma. Additionally, we reduced production capacity and total production at certain of our Northern White sand plants. In total, we have reduced our Energy segment annual production capacity by ~~nearly 9.0~~over 14.0 million tons since September 2018 through these capacity reduction measures, allowing us to lower fixed plant costs and consolidate volumes into lower cost operations.

As E&P companies’ budgets have contracted over the last year, the demand for proppant and the average selling price of proppant have both decreased. In efforts to keep well completion costs low, E&P companies have significantly reduced their consumption of certain value-added proppants, leading to a decline in the sales of such value-added proppants. In response to this trend, we reduced or discontinued sales and marketing efforts related to our Propel SSP^® self-suspending proppant. Accordingly, in the third quarter of

2019, we recorded an impairment charge of $7.8 million related to property, plant, and equipment used in the production of our Propel SSP^® self-suspending proppant, as well as the associated intangible asset and earn-out contingent consideration liability. The discontinued sale of our Propel SSP^® self-suspending proppant is not expected to have a material impact on our financial results in the future.

Our Industrial segment’s products are sold to customers in the glass, construction, ceramics, metals, foundry, coatings, polymers, sports and recreation, filtration and various other industries. The sales in our Industrial segment correlate strongly with overall economic activity levels as reflected in the gross domestic product, unemployment levels, vehicle production and growth in the

housing market. Overall sales within our Industrial segment ~~remains~~remain solid with certain sectors ~~including~~(including containerized glass in Mexico and coatings and polymers) providing above-average growth due to consumer, regulatory and/or manufacturing trends, ~~while~~although we expect our ceramics end markets ~~are expected~~ to contract, due in part from increased import competition. Overall, we expect Industrial markets to grow at rates similar to U.S. gross domestic product (“GDP”) growth.

Our management uses a variety of financial and operational metrics to analyze our performance across our Energy and Industrial segments. We determine our reportable segments based on the primary industries we serve, our management structure and the financial information reviewed by our chief operating decision maker in deciding how to allocate resources and assess performance. We evaluate the performance of our segments based on their volumes sold, average selling price, and segment contribution margin and associated per ton metrics. We evaluate the performance of our business based on company-wide operating cash flows, earnings before interest, taxes, depreciation and amortization (“EBITDA”), costs incurred that are considered non-operating, and Adjusted EBITDA. Segment contribution margin, EBITDA, and Adjusted EBITDA are defined in the Non-GAAP Financial Measures section below. We view these metrics as important factors in evaluating profitability and review these measurements frequently to analyze trends and make ~~decisions.~~decisions, and believe these metrics provide beneficial information for investors for similar reasons.

Segment gross profit is defined as segment revenue less segment cost of sales, excluding depreciation, depletion and amortization expenses, selling, general, and administrative costs, and corporate costs.

Segment contribution margin, EBITDA, Adjusted EBITDA are supplemental non-GAAP financial measures used by management and certain external users of our financial statements in evaluating our operating performance.

Segment contribution margin is a key metric we use to evaluate our operating performance and to determine resource allocation between segments. We define segment contribution margin as segment revenue less segment cost of sales, excluding any depreciation, depletion and amortization expenses, selling, general, and administrative costs, and operating costs of idled facilities and excess railcar capacity. Segment contribution margin per ton is ~~a key metric we use to evaluate our operating performance and to determine resource allocation between segments.~~defined as segment contribution margin divided by tons sold. Segment contribution margin is not a measure of our financial performance under GAAP and should not be considered an alternative or superior to measures derived in accordance with GAAP. Refer to Note 21 for further detail, including a reconciliation of operating income (loss) from continuing operations, the most directly comparable GAAP financial measure, to segment contribution margin.

We define EBITDA as net income before interest expense, income tax expense (benefit), depreciation, depletion and amortization. Adjusted EBITDA is defined as EBITDA before non-cash stock-based compensation and certain other income or expenses, including restructuring and other charges, impairments, and Merger-related expenses. Beginning in the first quarter of 2019, we also include ~~operating~~non-cash lease expense of intangible assets in our calculation of Adjusted EBITDA as a result of the adoption of ~~Topic~~ASC 842.

We believe EBITDA and Adjusted EBITDA are useful because they allow management to more effectively evaluate our normalized operations from period to period as well as provide an indication of cash flow generation from operations before investing or financing activities. Accordingly, EBITDA and Adjusted EBITDA do not take into consideration our financing methods, capital structure or capital expenditure needs. As previously noted, Adjusted EBITDA excludes certain non-operational income and/or costs, the removal of which improves comparability of operating results across reporting periods. However, EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered as alternatives to, or more meaningful than, net income as determined in

accordance with GAAP as indicators of our operating performance. Certain items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDA or Adjusted EBITDA.

Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized, and excludes certain non-operational charges. We compensate for

these limitations by relying primarily on our GAAP results and by using Adjusted EBITDA only as a supplement. Non-GAAP financial information should not be considered in isolation or viewed as a substitute for measures of performance as defined by GAAP.

Although we attempt to determine EBITDA and Adjusted EBITDA in a manner that is consistent with other companies in our industry, our computation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. We believe that EBITDA and Adjusted EBITDA are widely followed measures of operating performance.

The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA:

	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018		2019			2018			2019			2018			2019			2018
	(in thousands)					(in thousands)						(in thousands)						(in thousands)
Reconciliation of EBITDA and Adjusted EBITDA

Net income (loss) from continuing operations attributable to Covia	$	(34,394	)	$	17,062	$	(86,639	)	$	53,848		$	53,772		$	(288,794	)	$	(32,867	)	$	(234,946	)
Interest expense, net		27,866			8,991		53,002			13,669			26,894			23,530			79,896			35,325
Provision (benefit) for income taxes		(5,136	)		6,454		(9,190	)		16,324			22,471			(16,848	)		13,281			(524	)
Depreciation, depletion, and amortization expense		59,204			36,744		117,299			63,875			51,920			68,584			169,219			132,459
EBITDA		47,540			69,251		74,472			147,716			155,057			(213,528	)		229,529			(67,686	)

Non-cash stock compensation expense⁽¹⁾		3,316			793		6,082			793			2,296			2,654			8,378			3,447
Asset impairments⁽²⁾		-			12,300		-			12,300
Goodwill and asset impairments⁽²⁾													7,761			265,343			7,761			277,643
Restructuring and other charges⁽³⁾		12,124			-		14,126			-			3,378			24,061			17,504			24,061
Costs and expenses related to the Merger and integration⁽⁴⁾		245			38,923		896			44,223
Non-cash charges relating to operating leases⁽⁵⁾		2,100			-		4,200			-
Gain on sale of subsidiaries⁽⁴⁾													(127,195	)		-			(127,195	)		-
Costs and expenses related to the Merger and integration⁽⁵⁾													-			5,600			896			49,823
Non-cash charges relating to operating leases⁽⁶⁾													1,856			-			6,056			-
Adjusted EBITDA	$	65,325		$	121,267	$	99,776		$	205,032		$	43,153		$	84,130		$	142,929		$	287,288
_____________

(1) Represents the non-cash expense for stock-based awards issued to our employees and outside directors. Stock compensation expense related to the accelerated awards as a result of the Merger is included in Costs and expenses related to the Merger and integration for the 2018 periods presented. Stock compensation expenses are reported in Selling, general and administrative expenses.
(2) Represents expenses from a terminated project in 2018 as a result of post-Merger synergies and capital optimization efforts.
(3) Represents expenses associated with restructuring activities as a result of the Merger and idled facilities, other charges related to executive severance and benefits, as well as restructuring-related SG&A expenses.
(4) Costs and expenses related to the Merger include legal, accounting, financial advisory services, severance, debt extinguishment, integration and other expenses.
(5) Represents amount of operating lease expense incurred for the three and six months ended June 30, 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).
(1) Represents the non-cash expense for stock-based awards issued to our employees and outside directors. Stock compensation expense related to the accelerated awards as a result of the Merger is included above in costs and expenses related to the Merger and integration for the 2018 periods presented. Stock compensation expenses are reported in Selling, general and administrative expenses.											(1) Represents the non-cash expense for stock-based awards issued to our employees and outside directors. Stock compensation expense related to the accelerated awards as a result of the Merger is included above in costs and expenses related to the Merger and integration for the 2018 periods presented. Stock compensation expenses are reported in Selling, general and administrative expenses.
(2) Represents expenses associated with the impairment of our Propel SSP^® self-suspending proppant in the Energy segment in the three and nine months ended September 30, 2019. Represents expenses associated with the impairment of goodwill in the Energy reporting unit and the impairment of assets from idled facilities in the three and nine months ended September 30, 2018. Also includes charges from a terminated project in the nine months ended September 30, 2018 as a result of post-Merger synergies and capital optimization efforts.											(2) Represents expenses associated with the impairment of our Propel SSP^® self-suspending proppant in the Energy segment in the three and nine months ended September 30, 2019. Represents expenses associated with the impairment of goodwill in the Energy reporting unit and the impairment of assets from idled facilities in the three and nine months ended September 30, 2018. Also includes charges from a terminated project in the nine months ended September 30, 2018 as a result of post-Merger synergies and capital optimization efforts.
(3) Represents expenses associated with restructuring activities as a result of the Merger and idled facilities, strategic costs, other charges related to executive severance and benefits, as well as restructuring-related SG&A expenses.											(3) Represents expenses associated with restructuring activities as a result of the Merger and idled facilities, strategic costs, other charges related to executive severance and benefits, as well as restructuring-related SG&A expenses.
(4) Represents the gains associated with the sale of Calera and the W&W Railroad.											(4) Represents the gains associated with the sale of Calera and the W&W Railroad.
(5) Costs and expenses related to the Merger and integration include legal, accounting, financial advisory services, severance, debt extinguishment, integration and other expenses.											(5) Costs and expenses related to the Merger and integration include legal, accounting, financial advisory services, severance, debt extinguishment, integration and other expenses.
(6) Represents the amount of operating lease expense incurred for the three and nine months ended September 30, 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 ASC 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).											(6) Represents the amount of operating lease expense incurred for the three and nine months ended September 30, 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 ASC 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).

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(in thousands)				(in thousands)				(in thousands)				(in thousands)
Operating Data
Energy
Tons sold		4,582		4,274		9,014		7,250		4,177		4,497		13,191		11,747
Revenues	$	251,547	$	326,746	$	487,622	$	534,207	$	223,318	$	324,606	$	710,940	$	858,813
Segment gross profit	$	33,858	$	101,288	$	48,922	$	166,783	$	17,662	$	60,961	$	66,584	$	227,744
Industrial
Tons sold		3,596		3,346		7,161		6,317		3,583		3,680		10,744		9,997
Revenues	$	193,389	$	181,672	$	385,560	$	344,032	$	185,639	$	198,762	$	571,199	$	542,794
Segment gross profit	$	65,109	$	51,819	$	116,731	$	95,826	$	59,061	$	56,805	$	175,792	$	152,631

Financial results for the ~~two and~~ five months ended May 31, 2018 only include legacy Unimin. Our financial results, and the table above, exclude HPQ Co. (legacy Unimin’s Electronics segment), which was distributed to Sibelco at the close of the Merger and is reported as discontinued operations in our condensed consolidated financial statements for 2018.

Three Months Ended ~~June~~September 30, 2019 Compared to Three Months Ended ~~June~~September 30, 2018

Revenues were ~~$444.9~~$409.0 million for the three months ended ~~June~~September 30, 2019 compared to ~~revenues of $508.4~~$523.4 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$63.5~~$114.4 million, or ~~12%~~22%. ~~With the inclusion of legacy Fairmount Santrol revenues for the two months ended May 31, 2018 of $203.9~~Volumes were 7.8 million ~~total revenues~~tons for the three months ended ~~June 30, 2018 were $712.3 million. Total revenues for the three months ended June~~September 30, 2019 ~~decreased $267.4 million, or 38%, from the three months ended June 30, 2018, including legacy Fairmount Santrol revenues for the two months ended May 31, 2018. Volumes were~~compared to 8.2 million tons for the three months ended ~~June 30, 2019 compared to volumes of 7.6 million tons for the three months ended June~~September 30, 2018, ~~an increase~~a decrease of ~~0.6~~0.4 million, or 8%5%. With the inclusion of legacy Fairmount Santrol volumes for the two months ended May 31, 2018 of 2.5 million tons, total volumes for the three months ended June 30, 2018 were 10.1 million tons. Total volumes for the three months ended June 30, 2019 decreased 1.9 million tons, or 19%, from the three months ended June 30, 2018, including legacy Fairmount Santrol volumes for the two months ended May 31, 2018. Our revenues decreased largely due to pricing and ~~volumes~~volume declines in the Energy ~~business.~~business with unfavorable mix toward sales at the mine.

Revenues in the Energy segment were ~~$251.5~~$223.3 million for the three months ended ~~June~~September 30, 2019 compared to ~~$326.7~~$324.6 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$75.2~~$101.3 million, or ~~23%~~31%. ~~With the inclusion of legacy Fairmount Santrol~~The decrease in Energy revenues for the two months ended May 31, 2018 of $179.3 million, total Energy revenues were $506.0 million. Total Energy revenues for the three months ended June 30, 2019 decreased $254.5 million, or 50%, from the three months ended June 30, 2018, including legacy Fairmount Santrol revenues for the two months ended May 31, 2018. Energy revenues decreasedwas primarily ~~due~~attributable to continued pricing and volume ~~declines coupled with~~declines. The decline in pricing was primarily due to a more unfavorable product mix ~~toward~~in the Energy segment during the three months ended September 30, 2019 as a result of a larger percentage of our total sales consisting of local sand sales and sales at the mine, ~~each of~~ which carry a lower average selling ~~prices.~~price than other Energy segment products. Additionally, E&P companies are approaching budget exhaustion for the year and began reducing operations in the latter half of the third quarter of 2019, further impacting the proppant market and reducing demand. Volumes sold into the Energy segment were ~~4.6~~4.2 million tons in the three months ended ~~June~~September 30, 2019, compared to ~~4.3~~4.5 million tons in the three months ended ~~June~~September 30, 2018, ~~an increase~~a decrease of 0.3 million, or 7%. With the inclusion of legacy Fairmount Santrol Energy volumes for the two months ended May 31, 2018 of 2.0 million tons, total Energy volumes for the three months ended June 30, 2018 were 6.3 million tons. Total Energy volumes for the three months ended June 30, 2019 decreased 1.7 million tons, or 27%, from the three months ended June 30, 2018, including legacy Fairmount Santrol volumes for the two months ended May 31, 2018. On a sequential basis, which is a more comparable period for Energy, revenues in the Energy segment for the three months ended ~~June~~September 30, 2019 ~~increased $15.4~~decreased $28.2 million, or 7%11%, compared to ~~$236.1~~$251.5 million in the three months ended ~~March 31,~~June 30, 2019. This sequential change was primarily driven by ~~increases~~decreases in ~~volume in Northern White and local sands,~~proppant demand by E&P companies as ~~well as increases in Northern White sand pricing.~~they began to wind down operations for the year. Volumes in the Energy segment for the three months ended ~~June~~September 30, 2019 ~~increased 0.2~~decreased 0.4 million tons, or 5%9%, compared to ~~4.4~~4.6 million tons in the three months ended ~~March 31,~~June 30, 2019. ~~Energy volumes increased sequentially across both raw sand and value-added product lines.~~

Revenues in the Industrial segment were ~~$193.4~~$185.6 million for the three months ended ~~June~~September 30, 2019 compared to ~~$181.7~~$198.8 million for the three months ended ~~June~~September 30, 2018, ~~an increase~~a decrease of ~~$11.7~~$13.2 million, or 6%7%. With the inclusion of legacy Fairmount Santrol Industrial revenues for the two months ended May 31, 2018 of $24.6 million, total Industrial revenues for the three months ended June 30, 2018 were $206.3 million. Total Industrial revenues for the three months ended June 30, 2019 decreased $12.9 million, or 6%, from the three months ended June 30, 2018, including legacy Fairmount Santrol revenues for the two months ended May 31, 2018. Volumes sold into the Industrial segment were 3.6 million tons in the three months ended ~~June~~September 30, 2019, compared to ~~3.3~~3.7 million tons for the three months ended ~~June~~September 30, 2018, ~~an increase~~a decrease of ~~0.3~~0.1 million tons, or 9%3%. With the inclusion of legacy Fairmount Santrol Industrial volumes for the two months ended May 31, 2018 of 0.5 million tons, total Industrial volumes for the three months ended June 30, 2018 were 3.8 million tons. Total Industrial volumes for the three months ended June 30, 2019 decreased 0.2 million tons, or 5%, from the three months ended June 30, 2018, including legacy Fairmount Santrol volumes for the two months ended May 31, 2018. VolumeRevenue and volume decreases were primarily attributed to ~~weather-related declines~~the sale of Calera, lower transportation-related revenues, and union worker strikes in the ~~building~~automobile industry, which negatively impacted our metals and ~~construction end-markets.~~ foundry businesses. These decreases were partially offset by strength in coatings and polymers and solid, mid-single-digit growth in Mexican containerized glass.

Segment gross profit was ~~$99.0~~$76.7 million for the three months ended ~~June~~September 30, 2019 compared to segment gross profit of ~~$153.1~~$117.8 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$54.1~~$41.1 million, or 35%. With the inclusion of legacy Fairmount Santrol segment gross profit for the two months ended May 31, 2018 of $70.9 million, total segment gross profit for the three months ended June 30, 2018 was $224.0 million. Total segment gross profit for the three months ended June 30, 2019 decreased $125.0 million, or 56%, from the three months ended June 30, 2018, including legacy Fairmount Santrol segment gross profit for the two months ended

~~May 31, 2018.~~ The segment gross profit decrease was primarily due to lower volumes as a result of the proppant market downturn ~~coupled with~~and reductions in E&P operations. Segment gross profit was also negatively affected by downward pricing pressure ~~related reduction in profitability,~~ and higher railcar maintenance ~~costs, partially offset by reductions in terminal operating costs. Hybrid facilities, which produce for both the Industrial~~ and ~~Energy segments, were negatively impacted by lower utilization as a result of the proppant markets which resulted in higher~~storage costs. Additionally, for the

three months ended ~~June~~September 30, 2019 gross profit was negatively impacted by ~~$2.1~~$1.9 million in costs associated with operating lease expense related to the adoption of ~~Topic~~ASC 842.

Segment contribution margin was ~~$106.0~~$83.6 million in the three months ended ~~June~~September 30, 2019 and further excludes ~~$1.1~~$1.0 million of operating costs of idled facilities and ~~$6.0~~$5.9 million of excess railcar capacity costs. Segment contribution margin was ~~$155.2~~$124.7 million in the three months ended ~~June~~September 30, 2018 and excludes ~~$0.1~~$1.0 million and ~~$2.0~~$6.0 million of operating costs of idled facilities and excess railcar capacity costs, respectively. These excluded costs are entirely attributable to the Energy segment.

Energy segment gross profit was ~~$33.9~~$17.7 million for the three months ended ~~June~~September 30, 2019 compared to ~~$101.3~~$61.0 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$67.4~~$43.3 million, or ~~67%~~71%. With the inclusion of legacy Fairmount Santrol Energy segment gross profit for the two months ended May 31, 2018 of $60.6 million, total Energy segment gross profit was $161.9 million. Total Energy segment gross profit for the three months ended June 30, 2019 decreased $128.0 million, or 79%, from the three months ended June 30, 2018, including legacy Fairmount Santrol gross profit for the two months ended May 31, 2018. For the three months ended ~~June~~September 30, 2019, the Energy segment gross profit included ~~$2.1~~$1.9 million of operating lease expense related to the adoption of ~~Topic~~ASC 842. The remaining Energy segment gross profit decrease was primarily due to lower volumes, downward pricing pressure, reductions in E&P operations and ~~related reduction in profitability, as a result of the proppant market softness.~~higher railcar maintenance and storage costs. On a sequential basis, Energy segment gross profit for the three months ended ~~June~~September 30, 2019 ~~increased $18.8~~decreased $16.2 million compared to ~~$15.1~~$33.9 million in the three months ended ~~March 31,~~June 30, 2019. This sequential change was primarily driven by ~~increases~~decreases in ~~volumes of Northern White and local sands,~~proppant demand by E&P companies as ~~well as Northern White sand pricing increases.~~they began to wind down operations for the year.

Industrial segment gross profit was ~~$65.1~~$59.1 million for the three months ended ~~June~~September 30, 2019 compared to ~~$51.8~~$56.8 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$13.3~~$2.3 million, or ~~26%~~4%. With the inclusion of legacy Fairmount Santrol Industrial segment gross profit for the two months ended May 31, 2018 of $10.3 million, total Industrial segment gross profit was $62.1 million. Total Industrial segment gross profit increased $3.0 million, or 5%, from the three months ended June 30, 2018, including legacy Fairmount Santrol gross profit for the two months ended May 31, 2018. The increase in Industrial segment gross profit ~~were~~was primarily due to reductions in manufacturing costs as a result of cost reduction initiatives as well as the effect of pricing increases instituted at the beginning of 2019.

Selling, general and administrative expenses (“SG&A”) ~~increased $7.2~~decreased $7.6 million, or ~~23%~~18%, to ~~$38.6~~$35.6 million for the three months ended ~~June~~September 30, 2019 compared to ~~$31.4~~$43.2 million for the three months ended ~~June~~September 30, 2018. With the inclusion of legacy Fairmount Santrol SG&A for the two months ended May 31, 2018 of $20.1 million, total SG&A was $51.5 million. Total SG&A decreased $12.9 million, or 25%, from the three months ended June 30, 2018, including legacy Fairmount Santrol SG&A for the two months ended May 31, 2018. SG&A for the three months ended ~~June~~September 30, 2019 included ~~$3.3~~$2.3 million of stock compensation ~~expense. SG&A~~expense compared to $2.7 million of stock compensation expense in the three months ended ~~June~~September 30, ~~2018 included $0.8 million of stock compensation expense incurred post-Merger in the month of June~~ 2018. The decrease is primarily due to expense reduction initiatives, headcount rationalization, and synergy realization. ~~Additionally, we experienced favorable healthcare claims activity, which resulted in reduced healthcare costs.~~

Depreciation, depletion and amortization (“DD&A”) ~~increased $22.5~~decreased $16.7 million, or ~~61%~~24%, to ~~$59.2~~$51.9 million for the three months ended ~~June~~September 30, 2019 compared to ~~$36.7~~$68.6 million in the three months ended ~~June~~September 30, 2018. ~~The increase~~Amortization expense in the third quarter of 2019 decreased by approximately $14.7 million compared to the ~~comparable period was~~third quarter of 2018 due to the ~~inclusion~~full amortization, disposal, or impairment of ~~mineral reserves depletion for production facilities acquired~~certain intangible assets. Additionally, depreciation of property, plant, and equipment decreased in ~~connection with~~ the ~~Merger.~~third quarter of 2019 compared to the third quarter of 2018 due to lower capital expenditures and a lower depreciable base of existing property, plant, and equipment.

~~We did not incur asset impairments in~~In the three months ended ~~June~~September 30, 2019, ~~however, we incurred~~goodwill and other asset impairments was $7.8 million, a decrease of $257.5 million, or 97%, compared to goodwill and other asset impairments of ~~$12.3~~$265.3 million in the three months ended ~~June~~September 30, 2018. We recorded a $7.8 million charge to adjust the carrying amount of long-lived assets specific to our Propel SSP^® self-suspending proppant within the Energy segment, to their salvage value, if any. We incurred goodwill and other asset impairments of $265.3 million in the third quarter of 2018 ~~for a facility expansion that was terminated~~related to the impairment of goodwill in the Energy reporting unit and the impairment of assets at idled facilities as a result of the ~~Merger. We impaired~~downturn in the ~~cost of assets that could not be used or transferred to other facilities.~~proppant market.

~~We incurred restructuring and other charges of $9.5 million in~~In the three months ended ~~June~~September 30, 2019, we incurred $3.8 million of strategic-related charges. In the three months ended September 30, 2018, we recorded $14.8 million in restructuring charges, primarily related to separation and relocation costs as a result of the Merger and ~~minimum quantity penalties incurred in connection with reduced production at~~ idled facilities. ~~Included~~

In the three months ended September 30, 2019, we recorded a gain of $127.2 million on the sale of Calera and the W&W Railroad. There were no such sales in the three months ended ~~June~~September 30, ~~2019 is $5.5 million of other charges related to executive severance and benefits. There were no restructuring charges in the three months ended June 30,~~ 2018.

Other operating expense (income), net increased ~~$0.5~~$1.0 million to ~~$1.7~~$0.02 million for the three months ended ~~June~~September 30, 2019 compared to ~~$1.2~~income of $1.0 million for the three months ended ~~June~~September 30, 2018. Other operating expense ~~(income), net~~in the third quarter of 2019 primarily included foreign currency fluctuations. In the third quarter of 2018, other operating income included government incentives for the three months ended June 30, 2019 included $1.9 million in loss on disposal of fixed assets, offset by $0.2 million in income related to an easement granted for consideration on one of our Virginia properties.facility relocations.

Operating income ~~(loss)~~ from continuing operations ~~decreased~~increased approximately ~~$81.6~~$378.3 million to ~~a loss of $10.1~~$105.2 million for the three months ended ~~June~~September 30, 2019 compared to ~~income~~a loss of ~~$71.5~~$273.1 million for the three months ended ~~June~~September 30, 2018. The change in operating income from continuing operations for the three months ended ~~June~~September 30, 2019 was ~~largely~~primarily due to the gain on the sales of Calera and the W&W Railroad, as well as reductions in SG&A, DD&A, and goodwill and other asset impairments, partially offset by lower profitability in the Energy segment ~~and restructuring and other charges of $9.5 million.~~in the three months ended September 30, 2019.

Interest expense increased ~~$18.9~~$3.4 million to ~~$27.9~~$26.9 million for the three months ended ~~June~~September 30, 2019 compared to ~~$9.0~~$23.5 million for the three months ended ~~June~~September 30, 2018. The increase in interest expense is primarily due to a reduction in capitalized interest in the ~~interest on our Term Loan, which was incurred for the entirety of the second~~third quarter of 2019 ~~but only for~~compared to the ~~month~~third quarter of ~~June~~2018, as well as an increase in interest rates in the ~~second~~third quarter of ~~2018. The Term Loan was used~~2019 compared to ~~finance~~ the ~~Merger.~~third quarter of 2018.

Other non-operating expense, net decreased ~~$37.3~~$7.1 million to ~~$1.6~~$1.9 million in the three months ended ~~June~~September 30, 2019 compared to ~~$38.9~~$9.0 million in the three months ended ~~June~~September 30, 2018. The decrease is primarily due to ~~lower~~a $5.5 million reduction in legal, accounting, and other expenses incurred in connection with the Merger, ~~partially offset by the acceleration of previously deferred pension-related expenses due to~~as well a $1.6 million decrease in settlement accounting ~~application~~charges in the ~~second~~third quarter of 2019 ~~as distributions exceeded~~compared to the ~~current period service and interest cost recognized.~~third quarter of 2018.

The provision for income taxes ~~decreased $11.6~~increased $39.3 million to ~~a benefit of $5.1~~$22.5 million for the three months ended ~~June~~September 30, 2019 compared to ~~expense~~a benefit of ~~$6.5~~$16.8 million for the three months ended ~~June~~September 30, 2018. Income before income taxes ~~decreased $63.1~~increased $382.1 million to ~~a loss of $39.5~~$76.4 million for the three months ended ~~June~~September 30, 2019 compared to ~~income~~a loss of ~~$23.6~~$305.7 million for the three months ended ~~June~~September 30, 2018. The ~~decrease~~increase in tax expense was primarily related to gains from the ~~decrease in income before taxes, offset by~~sales of Calera and the W&W Railroad and a valuation allowance set up for interest expense disallowed under IRC Section 163(j). The effective tax rate was 13.0% and 27.3% for the three months ended June 30, 2019 and 2018, respectively. The decrease in the effective tax rate is primarily attributable to a valuation allowance set upestablished for interest expense disallowed under IRC Section 163(j) offset by the benefit from depletion.

The effective tax rate was 29.4% and 5.5% for the three months ended September 30, 2019 and 2018, respectively. The increase in the effective tax rate for the three months ended September 30, 2019 is primarily attributable to gains from the sales of Calera and the W&W Railroad and a valuation allowance established for interest expense disallowed under IRC Section 163(j) offset by the benefit from depletion. Additionally, the effective tax rate for the three months ended September 30, 2018 rate differed from the statutory rate primarily due to the non-deductibility of a goodwill impairment.

The effective rate differs from the U.S. federal statutory rate primarily due to depletion, the impact of foreign taxes, tax provisions requiring U.S. income inclusion of foreign income, and a valuation allowance set up for interest expense disallowed under IRC Section 163(j).

The provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate. If our estimated effective tax rate changes, we make a cumulative adjustment.

Net income attributable to Covia ~~decreased $55.3~~increased $342.6 million to ~~a loss of $34.4~~$53.8 million for the three months ended ~~June~~September 30, 2019 compared to ~~income~~a loss of ~~$20.9~~$288.8 million for the three months ended ~~June~~September 30, 2018 ~~which includes $3.8 million from discontinued~~primarily due to the gain on the sales of Calera and the

~~operations. The remaining change in net income attributable to Covia is primarily due to decreases in revenues and gross profit and increases~~W&W Railroad, as well as reductions in SG&A, DD&A, and ~~restructuring~~goodwill and other ~~charges~~asset impairments, partially offset by lower profitability in the Energy segment in the three months ended September 30, 2019 discussed above.

Adjusted EBITDA decreased ~~$56.0~~$40.9 million to ~~$65.3~~$43.2 million for the three months ended ~~June~~September 30, 2019 compared to ~~$121.3~~$84.1 million for the three months ended ~~June~~September 30, 2018. Adjusted EBITDA for the three months ended ~~June~~September 30, 2019 excludes the impact of ~~$3.3~~$2.3 million of non-cash stock compensation expense, ~~$12.1~~$7.8 million of impairment, $3.4 million in restructuring and other charges, ~~and restructuring-related charges, $0.2~~$127.2 million in ~~Merger-related~~gain on sale of subsidiaries, and ~~integration expenses and $2.1~~$1.9 million in costs associated with operating lease expense related to the adoption of ~~Topic~~ASC 842. The change in Adjusted EBITDA is largely due to the ~~revenues, gross profit,~~profitability, SG&A, DD&A and ~~SG&A~~other factors discussed above.

~~Six~~Nine Months Ended ~~June~~September 30, 2019 Compared to ~~Six~~Nine Months Ended ~~June~~September 30, 2018

Revenues were ~~$873.2~~$1,282.1 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~revenues of $878.2~~$1,401.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$5.0~~$119.5 million, or 1%9%. With the inclusion of legacy Fairmount Santrol revenues for the ~~six~~nine months ended ~~June~~September 30, 2018 of $477.3 million, total revenues for the ~~six~~nine months ended ~~June~~September 30, 2018 were ~~$1,355.5~~$1,878.9 million. Total revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$482.3~~$596.8 million, or ~~36%~~32%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol revenues for the five months ended May 31, 2018. ~~Volumes~~Total volumes were ~~16.2~~23.9 million tons for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~total volumes of 13.6~~21.7 million tons for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~2.6~~2.2 million tons, or ~~19%~~10%. With the inclusion of legacy Fairmount Santrol volumes for the five months ended May 31, 2018 of 5.6 million tons, total volumes for the ~~six~~nine months ended ~~June~~September 30, 2018 were ~~19.2~~27.3 million tons. Total volumes for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~3.0~~3.4 million tons, or ~~16%~~12%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol volumes for the five months ended May 31, 2018. Our revenues decreased largely due to pricing and volumes declines in the Energy business.

Revenues in the Energy segment were ~~$487.6~~$710.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$534.2~~$858.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018. With the inclusion of legacy Fairmount Santrol Energy revenues for the five months ended May 31, 2018 of $421.5 million, total Energy revenues were ~~$955.7 million.~~$1,280.3 million for the nine months ended September 30, 2018. Total Energy revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$468.1~~$569.4 million, or ~~49%~~44%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol revenues for the five months ended May 31, 2018. ~~Energy revenues decreased primarily due to pricing declines coupled with unfavorable product mix toward local sand sales and sales at the mine, each of which carry lower average selling prices.~~ Volumes sold into the Energy segment were ~~9.0~~13.2 million tons in the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~7.3~~11.7 million tons in the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~1.7~~1.5 million tons, or ~~23%~~13%. With the inclusion of legacy Fairmount Santrol Energy volumes for the five months ended May 31, 2018 of 4.6 million tons, total Energy volumes for the ~~six~~nine months ended ~~June~~September 30, 2018 were ~~11.9~~16.3 million tons. Total volumes for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~2.9~~3.1 million tons, or ~~24%~~19%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol volumes for the five months ended May 31, 2018. ~~Revenues~~Energy revenues decreased primarily due to pricing and volume declines ~~in the Energy segment were driven by lower volumes, a greater~~coupled with unfavorable product mix oftoward local sand sales and ~~overall~~sales at the mine, each of which carry lower average selling prices. Additionally, E&P companies are approaching budget exhaustion for the year and began to reduce operations starting in the latter half of the third quarter of 2019, further impacting the proppant ~~pricing.~~market and reducing demand.

Revenues in the Industrial segment were ~~$385.6~~$571.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$344.0~~$542.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$41.6~~$28.4 million, or ~~12%~~5%. With the inclusion of legacy Fairmount Santrol Industrial revenues for the five months ended May 31, 2018 of $55.8 million, total Industrial revenues for the ~~six~~nine months ended ~~June~~September 30, 2018 were ~~$399.8~~$598.6 million. Total Industrial revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$14.2~~$27.4 million, or 4%5%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol revenues for the five months ended May 31, 2018. Volumes sold into the Industrial segment were ~~7.2~~10.7 million tons in the ~~six~~nine months ended ~~June~~September 30, 2019, compared to ~~6.3~~10.0 million tons for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~0.9~~0.7 million tons, or ~~14%~~7%. With the inclusion of legacy Fairmount Santrol Industrial volumes for the five months ended May 31, 2018 of 1.0 million tons, total Industrial volumes for the ~~six~~nine months ended ~~June~~September 30, 2018 were ~~7.3~~11.0 million tons, a ~~slight~~ decrease of ~~0.1~~0.3 million tons, or 1%3%. Total Industrial revenue decreases are primarily attributable to lower transportation-related ~~revenues. Revenues also decreased due to~~revenues, the sale of our Calera, Alabama facility, and lower volumes in the ceramics markets, ~~as well as weather-related declines~~offset somewhat by increased volumes in the ~~building~~coatings and ~~construction end-markets.~~polymers markets.

Segment gross profit was ~~$165.6~~$242.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to segment gross profit of ~~$262.6~~$380.3 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$97.0~~$137.9 million, or ~~37%~~36%. With the inclusion of legacy Fairmount Santrol segment gross profit for the five months ended May 31, 2018 of $158.1 million, total segment gross profit for the ~~six~~nine months ended ~~June~~September 30,

2018 was ~~$420.7~~$538.4 million. Total segment gross profit for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$255.1~~$296.0 million, or ~~61%~~55%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol gross profit for the five months ended May 31, 2018. The segment gross profit decrease was primarily due to lower volumes as a result of the proppant market downturn ~~coupled with~~and reductions in E&P operations. Segment gross profit was also negatively affected by downward pricing pressure ~~related reduction in profitability,~~ and higher railcar maintenance ~~costs, partially offset by reductions in terminal operating costs. Hybrid facilities, which produce for both the Industrial~~ and ~~Energy segments, were negatively impacted by lower utilization as a result of the proppant markets which resulted in higher~~storage costs. Additionally, for the ~~six~~nine months ended ~~June~~September 30, 2019 gross profit was negatively impacted by ~~$4.2~~$6.1 million in costs associated with operating lease expense related to the adoption of ~~Topic~~ASC 842.

Segment contribution margin was ~~$179.7~~$263.3 million in the ~~six~~nine months ended ~~June~~September 30, 2019 and further excludes ~~$2.0~~$3.0 million of operating costs of idled facilities and ~~$12.0~~$17.9 million of excess railcar capacity costs. Segment contribution margin was ~~$264.7~~$389.4 million in the ~~six~~nine months ended ~~June~~September 30, 2018 and further excludes ~~$0.1~~$1.1 million of operating costs of idled facilities and ~~$2.0~~$8.0 million of excess railcar capacity costs. These excluded costs are entirely attributable to the Energy segment.

Energy segment gross profit was ~~$48.9~~$66.6 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$166.8~~$227.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$117.9~~$161.1 million, or 71%. With the inclusion of legacy Fairmount Santrol Energy segment gross profit for the five months ended May 31, 2018 of $136.7 million, total Energy segment gross profit was ~~$303.5~~$364.4 million. Total Energy segment gross profit for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$254.6~~$297.8 million, or ~~84%~~82%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol gross profit for the five months ended May 31, 2018. For the ~~six~~nine months ended ~~June~~September 30, 2019, the Energy segment gross profit included ~~$4.2~~$6.1 million of operating lease expense related to the adoption of ~~Topic~~ASC 842, $0.4 million of expense related to the write-up of legacy Fairmount Santrol’s inventories to fair value as a result of the Merger under ~~GAAP and $2.1 million in losses at our Voca facilities, which were fully idled in the first quarter.~~GAAP. The remaining Energy segment gross profit decrease was primarily due to lower volumes, downward pricing pressure, reductions in E&P operations and ~~related reduction in profitability as a result of the proppant market softness, driven by lower Northern White sand~~higher railcar maintenance and ~~local sand pricing, as well as higher unit production costs due to lower Northern white sand volumes.~~storage costs.

Industrial segment gross profit was ~~$116.7~~$175.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$95.8~~$152.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$20.9~~$23.2 million, or ~~22%~~15%. With the inclusion of legacy Fairmount Santrol Industrial segment gross profit for the five months ended May 31, 2018 of $21.4 million, total Industrial segment gross profit was ~~$117.2~~$174.0 million and relatively flat year over year. For the ~~six~~nine months ended ~~June~~September 30, 2019, the Industrial segment gross profit included $0.6 million of expense related to the write-up of legacy Fairmount Santrol’s inventories to fair value as a result of the Merger under GAAP.

SG&A increased ~~$24.0~~$16.4 million, or ~~42%~~16%, to ~~$80.6~~$116.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$56.6~~$99.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018. SG&A for the ~~six~~nine months ended ~~June~~September 30, 2019 includes stock compensation expense of ~~$6.1 million.~~$8.4 million compared to $3.4 million of stock compensation expense in the nine months ended September 30, 2018. With the inclusion of legacy Fairmount Santrol SG&A for the five months ended May 31, 2018 of $44.2 million, total SG&A was ~~$100.8~~$144.0 million. Total SG&A decreased ~~$20.2~~$27.8 million, or ~~20%~~19%, from the ~~six~~nine months ended ~~June~~September 30, 2018, including legacy Fairmount Santrol SG&A for the five months ended May 31, 2018. ~~SG&A for the six months ended June 30, 2018 included $0.8 million of stock compensation expense incurred post-Merger in the month of June 2018.~~ The ~~remainder of the~~ decrease is primarily due to expense reduction initiatives, headcount rationalization, and synergy realization. ~~Additionally, we experienced favorable healthcare claims activity, which resulted in reduced healthcare costs.~~

Depreciation, depletion and amortization increased ~~$53.4~~$36.7 million to ~~$117.3~~$169.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared to ~~$63.9~~$132.5 million in the ~~six~~nine months ended ~~June~~September 30, 2018. The increase compared to the prior year comparable period was due to the inclusion of mineral reserves depletion for production facilities acquired in connection with the ~~Merger.~~Merger, partially offset by the full amortization, disposal, or impairment of certain intangible assets.

~~We did not incur~~In the nine months ended September 30, 2019, goodwill and other asset impairments was $7.8 million, a decrease of $269.8 million, or 97%, compared to goodwill and other asset impairments of $277.6 million in the ~~six~~nine months ended ~~June~~September 30, ~~2019, however,~~2018. We recorded $7.8 million of impairment related to the abandonment of our Propel SSP^® self-suspending proppant in the third quarter of 2019. In the third quarter of 2018, we incurred goodwill and other asset impairments $265.3 million related to the impairment of goodwill in the Energy reporting unit and the impairment of assets at idled facilities as a result of the downturn in the proppant market.

Also, in the nine months ended September 30, 2018, we incurred asset impairments of $12.3 million ~~in the six months ended June 30, 2018~~ for a facility expansion that was terminated as a result of the Merger. We impaired the cost of assets that could not be used or transferred to other facilities.

We incurred restructuring and other charges of ~~$11.5~~$14.9 million in the ~~six~~nine months ended ~~June~~September 30, 2019 compared to $14.8 million in the nine months ended September 30, 2018, an increase of $0.1 million, or 1%. Restructuring charges are primarily related to separation ~~costs~~ and relocation costs as a result of the Merger and idled facilities. Current period restructuring charges also include minimum quantity penalties incurred in connection with ~~reduction~~reduced production at idled facilities. Included in the ~~six~~nine months ended ~~June~~September 30, 2019 is $5.5 million of other charges related to executive severance and ~~benefits.~~benefits and $3.8 million of strategic-related charges.

In the nine months ended September 30, 2019, we recorded a gain of $127.2 million on the sale of Calera and the W&W Railroad. There were no ~~restructuring charges~~such sales in the ~~six~~nine months ended ~~June~~September 30, 2018.

Other operating ~~expense (income),~~income, net ~~decreased $6.4~~increased $4.4 million to ~~income of~~ $4.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~expense of $1.7~~$0.3 million in the ~~six~~nine months ended ~~June~~September 30, 2018. Other operating ~~expense (income),~~income, net for the ~~six~~nine months ended ~~June~~September 30, 2019 included the income related to realization of customary take-or-pay provisions of certain customer supply agreements. Additionally, for the ~~six~~nine months ended ~~June~~September 30, 2019, we recorded $1.9 million on loss on disposal of fixed assets and recognized income related to easements granted for consideration on certain of our properties in Mexico and Virginia.

Operating income ~~(loss)~~ from continuing operations ~~decreased $167.3~~increased $210.0 million to $66.1 million for the nine months ended September 30, 2019 compared to a loss of ~~$39.1~~$143.9 million for the ~~six~~nine months ended ~~June 30, 2019 compared to income of income of $128.2 million for the six months ended June~~September 30, 2018. The change in operating income from continuing operations for the ~~six~~nine months ended ~~June~~September 30, 2019 was ~~largely~~primarily due to the gain on the sales of Calera and the W&W Railroad, as well as reductions in goodwill and other asset impairments, partially offset by lower profitability in the Energy ~~segment and restructuring and other charges of $11.5 million, offset by other operating income as noted above.~~segment.

Interest expense increased ~~$39.3~~$44.6 million, or ~~287%~~126%, to ~~$53.0~~$79.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$13.7~~$35.3 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The increase in expense is primarily due to the interest on our Term Loan, which was incurred for the entirety of 2019, but only for ~~the month~~four months of ~~June in~~ the second ~~quarter~~and third quarters of 2018. The Term Loan was used to finance the Merger.

Other non-operating expense, net decreased ~~$40.4~~$50.5 million to ~~$3.8~~$5.7 million in the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$44.2~~$56.2 million in the ~~six~~nine months ended ~~June~~September 30, 2018. The decrease is primarily due to ~~lower~~a $48.8 million reduction in legal, accounting, and other expenses incurred in connection with the Merger, partially offset by ~~the~~$1.2 million in acceleration of previously deferred pension-related expenses due to settlement accounting application in ~~the first half of~~ 2019 as distributions exceed the current period service and interest cost recognized.

The provision for income taxes ~~decreased $25.5~~increased $13.8 million to $13.3 million for the nine months ended September 30, 2019 compared to a benefit of ~~$9.2~~$0.5 million for the ~~six~~nine months ended ~~June 30, 2019 compared to expense of $16.3 million for the six months ended June~~September 30, 2018. ~~Income~~Loss before income taxes decreased ~~$166.1~~$216.0 million to a loss of ~~$95.8~~$19.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~income~~a loss of ~~$70.3~~$235.4 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The ~~decrease~~increase in tax expense was primarily related to gains from the ~~decrease in income before taxes, offset by~~sales of Calera and the W&W Railroad and a valuation allowance set up for interest expense disallowed under IRC Section 163(j). The effective tax rate was 9.6% and 23.2% for the six months ended June 30, 2019 and 2018, respectively. The decrease in the effective tax rate is primarily attributable to a valuation allowance set upestablished for interest expense disallowed under IRC Section 163(j) offset by the benefit from depletion.

The effective tax rate was negative 68.4% and positive 0.2% for the nine months ended September 30, 2019 and 2018, respectively. The negative effective tax rate for the nine months ended September 30, 2019 is primarily attributable to gains from the sales of Calera and the W&W Railroad and a valuation allowance established for interest expense disallowed under IRC Section 163(j) in

excess of the benefits from depletion. Additionally, the effective tax rate for the nine months ended September 30, 2018 rate differed from the statutory rate primarily due to the non-deductibility of a goodwill impairment.

Net ~~income~~loss attributable to Covia decreased ~~$153.0~~$189.5 million, or ~~230%~~85%, to a loss of ~~$86.6~~$32.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$66.4~~a loss of $222.4 million for the ~~six~~nine months ended ~~June~~September 30, 2018, which includes income of $12.6 million from discontinued operations. The

remaining change in net ~~income~~loss attributable to Covia is primarily due to ~~decreases~~the gain on the sales of Calera and the W&W Railroad, as well as reductions in ~~revenues and gross profit and increases in SG&A, DD&A, and restructuring~~goodwill and other ~~charges~~asset impairments, partially offset by lower profitability in the Energy segment in the nine months ended September 30, 2019 discussed above.

Adjusted EBITDA decreased ~~$105.2~~$144.4 million to ~~$99.8~~$142.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$205.0~~$287.3 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Adjusted EBITDA for the ~~six~~nine months ended ~~June~~September 30, 2019 excludes the impact of ~~$6.1~~$8.4 million of non-cash stock compensation expense, ~~$14.1~~$7.8 million of impairment, $17.5 million in restructuring and other charges, ~~and restructuring-related charges,~~$127.2 million in gain on sale of assets, $0.9 million in Merger-related and integration expenses and ~~$4.2~~$6.1 million in costs associated with operating lease expense related to the adoption of ~~Topic~~ASC 842. The change in Adjusted EBITDA is largely due to ~~the revenues, gross profit,~~profitability, SG&A, DD&A, and ~~SG&A~~other factors discussed above.

Our liquidity is principally used to service our debt, meet our working capital needs, and invest in both maintenance and organic growth capital expenditures. Historically, we have met our liquidity and capital investment needs with funds generated from operations and the issuance of debt, if necessary.

On the Merger Date, we entered into a credit and guarantee agreement with a group of banks, financial institutions, and other entities, with Barclays Bank PLC serving as administrative agent, and Barclays Bank PLC and BNP Paribas Securities Corp. serving as joint lead arrangers and joint bookrunners, for the $1.65 billion Term Loan and the $200 million Revolver. The Term Loan matures on June 1, 2025 and amortizes in equal quarterly installments in an amount equal to 1% per year, with the balance due at maturity. Loans under the Term Loan must be prepaid with (a) 100% of the net cash proceeds of all non-ordinary course asset sales or dispositions and insurance proceeds, (b) 100% of the net cash proceeds of issuances of indebtedness and (c) 75% of annual excess cash flow (with stepdowns to 25% and 0% based on total net leverage ratio levels), subject to various exceptions. Voluntary prepayments of the Term Loan will be permitted at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR borrowings.

The Revolver matures on June 1, 2023. Voluntary reductions of the unused portion of the Revolver will be allowed at any time. The Revolver, as amended by the First Amendment on March 19, 2019, includes a total net leverage ratio covenant, tested on a quarterly basis, of no more than 6.60:1.00 through December 31, 2019, 5.50:1.00 for the fiscal quarters ending March 31, 2020 to December 31, 2020, 4.50:1.00 for the fiscal quarters ending March 31, 2021 to June 30, 2021, 4.25:1.00 for the fiscal quarters ending to September 30, 2021 to December 31, 2021, and 4.00:1.00 for fiscal quarters ending March 31, 2022 and thereafter.

Due to the continued challenging market conditions impacting our Energy segment, we may exceed the financial ratio covenant contained in the Revolver as early as the end of 2019. Our principal sources of liquidity are cash on-hand and cash flow from operations, both now and in the near future. We are exploring the replacement of the Revolver with other instruments that provide additional flexibility. As of September 30, 2019, we had unrestricted net availability of $188.7 million under our Revolver, with the only use being limited to standby letters of credit. We are not currently in violation of any covenants contained in the Revolver or Term Loan. We have the ability to cancel the Revolver at any time, and expect to do so if we arrange for alternative liquidity sources or if we anticipate covenant violations.

Interest on the Term Loan and Revolver accrues at a per annum rate of either (at our option) (a) LIBOR plus a spread or (b) the alternate base rate plus a spread. The spread will vary depending on our total net leverage ratio, defined as the ratio of debt (less up to $150 million of cash) to EBITDA for the most recent four fiscal quarter period, as follows:

The Term Loan and Revolver are guaranteed by all of our wholly-owned material restricted subsidiaries (including Bison Merger Sub, LLC, as successor to Fairmount Santrol, and all of the wholly-owned material restricted subsidiaries of Fairmount Santrol), subject to certain exceptions. In addition, subject to various exceptions, the Term Loan and Revolver are secured by substantially all of our assets and those of each guarantor, including, but not limited to (a) a perfected first-priority pledge of all of the capital stock held by us or any guarantor of each existing or subsequently acquired or organized wholly-owned restricted subsidiary (no more than 65% of the voting stock of any foreign subsidiary) and (b) perfected first-priority security interests in substantially all of our tangible and intangible assets and those of each guarantor.

The Term Loan and Revolver contain customary representations and warranties, affirmative covenants, negative covenants and events of default. Negative covenants include, among others, limitations on debt, liens, asset sales, mergers, consolidations and fundamental changes, dividends and repurchases of equity securities, repayments or redemptions of subordinated debt, investments, transactions with affiliates, restrictions on granting liens to secure obligations, restrictions on subsidiary distributions, changes in the conduct of the business, amendments and waivers in organizational documents and junior debt instruments and changes in the fiscal year. As of ~~June~~September 30, 2019, we were in compliance with all covenants in accordance with the terms of the Revolver.

The proceeds of the Term Loan were primarily used to repay certain debt of legacy Fairmount Santrol and legacy Unimin, which included additional debt incurred to fund the Cash Redemption and to pay $170 million to Fairmount Santrol stockholders as part of the Merger.

See Note 8 in the condensed consolidated financial statements included in this Report for further detail.

As of ~~June~~September 30, 2019, we had outstanding term loan borrowings of $1.63 billion and cash on hand of ~~$112.1~~$340.1 million. As of ~~June~~September 30, 2019, under our Revolver, we had $11.3 million committed to letters of credit, leaving net availability at $188.7 million. ~~As noted in Note 7 and Note 24, in July~~In the third quarter of 2019, we ~~entered into agreements to sell~~sold Calera and the W&W Railroad for a combined $240 million in cash. ~~These~~The proceeds from these transactions ~~are expected to close in the third quarter of 2019 and the proceeds~~ may be used to pay down the Term Loan and fund operations.

Our operations are capital intensive and short-term capital expenditures related to certain strategic projects can be substantial. As of the date of this Report, we believe that our liquidity will be sufficient to meet cash obligations, including working capital requirements, anticipated capital expenditures, and scheduled debt service over the next 12 months.

Working capital is the amount by which current assets (excluding cash and cash equivalents and assets held for sale) exceed current liabilities (excluding current portion of long-term debt) and represents a measure of liquidity. Covia’s working capital was ~~$151.3~~$148.1 million at ~~June~~September 30, 2019 and $216.3 million at December 31, 2018. The decrease in working capital is primarily due to improvements in cash collections and days sales outstanding ratios of our accounts receivable portfolio, ~~offset by~~ increases in days payables outstanding, and decreases from the dispositions of Calera and the W&W Railroad. The decrease in working capital is primarily offset by increases in deferred ~~revenue.~~revenue and the current portion of operating lease liabilities as a result of the adoption of ASC 842.

Operating activities consist primarily of net income adjusted for non-cash items, including depreciation, depletion, and amortization, the gain on the sale of subsidiaries, impairment charges, and the effect of changes in working capital.

Net cash provided by operating activities was ~~$51.4~~$68.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared with ~~$85.6~~$190.3 million in the ~~six~~nine months ended ~~June~~September 30, 2018. This ~~$34.2~~$121.5 million variance was primarily due to lower earnings and the changes in working capital, noted ~~previously, and the effect of the acquisition of the assets of Fairmount Santrol.~~ previously.

Investing activities consist primarily of capital expenditures for growth and maintenance. Capital expenditures generally are for expansions of production or terminal facilities, land and reserve acquisition or maintenance related expenditures for asset replacement and health, safety, and quality improvements.

Net cash ~~used in~~provided by investing activities was ~~$62.6~~$155.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$211.2~~$283.3 million used for the ~~six~~nine months ended ~~June~~September 30, 2018. The ~~$148.6~~$438.5 million variance was primarily related to the net proceeds of $234.0 million from the sale of Calera and the W&W Railroad, the decrease in capital expenditures, and payments made in connection with the ~~Merger.~~Merger in 2018.

Capital expenditures of ~~$59.5~~$75.1 million in the ~~six~~nine months ended ~~June~~September 30, 2019 were primarily focused on growth expenditures at our Canoitas, Mexico facility and the completion of in-basin sand plants. Capital expenditures were ~~$115.7~~$188.4 million in the ~~six~~nine months ended ~~June~~September 30, 2018 and were primarily focused on completing our West Texas facilities, completion of expansion projects at our Illinois and Oregon facilities, and expanding capacity at our Canoitas, Mexico facility.

For the full year 2019, we expect capital expenditures to be in the range of $80 million to $100 million. We expect these expenditures will primarily include maintenance and growth capital expenditures at existing locations.

Financing activities consist primarily of borrowings under our Term Loan, repayments of Unimin and Fairmount Santrol debt, and the Cash Redemption payment made in connection with the Merger.

Net cash used in financing activities was ~~$11.0~~$18.1 million in the ~~six~~nine months ended ~~June~~September 30, 2019 compared to ~~$47.3~~$61.9 million used in the ~~six~~nine months ended ~~June~~September 30, 2018. The ~~$36.3~~$43.8 million variance is the largely due to the various debt transactions that occurred as part of the Merger in 2018, including borrowing the $1.65 billion Term Loan, ~~$1.13~~$1.11 billion in payments on Unimin and Fairmount Santrol debts, a $520.4 million Cash Redemption payment, and $41.2 million in Merger-related debt refinancing fees. In the ~~six~~nine months ended ~~June~~September 30, 2019, we paid ~~$8.3~~$12.4 million in principal payments on our Term Loan.

Our business is affected by seasonal fluctuations in weather that impact our production levels and our customers’ business needs. For example, our Energy segment sales levels are lower in the first and fourth quarters due to lower market demand as adverse weather tends to slow oil and gas operations to varying degrees depending on the severity of the weather. In addition, our inability to mine and process sand year-round at certain of our surface mines results in a seasonal build-up of inventory as we mine sand to build a stockpile that will feed our drying facilities during the winter months. Additionally, in the second and third quarters, we sell more sand to our customers in our Industrial segment’s end markets due to the seasonal rise in demand driven by more favorable weather conditions.

We conduct the majority of our business operations in the U.S., Canada, and Mexico and are subject to certain inflationary pressures in these countries, should they arise.

We have no undisclosed off-balance sheet arrangements that have or are likely to have a current or future material impact on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. Such arrangements are disclosed in our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K.

As of ~~June~~September 30, 2019, we have contractual obligations for long-term debt, finance leases, operating leases, terminal operating costs, capital commitments, purchase obligations, and other long-term liabilities. Substantially all of the operating lease obligations are for railcars. ~~Additionally, we are obligated through 2048 for contingent consideration on certain coating technology.~~

There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K. Included in ~~this~~that table are operating lease obligations, which are now recorded on our balance sheet as a result of the adoption of ~~Topic~~ASC 842, effective January 1, 2019. See Note 17 for further detail.

We are subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, air and water emissions, environmental contamination and reclamation and the protection of the environment and natural resources. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. We may also incur fines and penalties from time to time associated with noncompliance with such laws and regulations.

As of ~~June~~September 30, 2019 and December 31, 2018, we had $32.1 million and $31.2 million, respectively, accrued for Asset Retirement Obligations, which include future reclamation costs. There were no significant changes with respect to environmental liabilities or future reclamation costs.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in our Form 10-K.

Refer to Note 1 of our unaudited condensed consolidated financial statements included in this Report.

Due to our variable-rate indebtedness, we are exposed to fluctuations in interest rates. We use fixed interest rate swaps to manage this exposure. These derivative instruments are reported at fair value in ~~other non-current assets~~accrued expenses and other non-current liabilities. Changes in the fair value of derivatives are recorded each period in other comprehensive income. For derivatives not designated as hedges, the gain or loss is recognized in current earnings. No components of our hedging instruments were excluded from the assessment of hedge effectiveness. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional value. The gain or loss on the interest rate swap is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

We do not use derivative financial instruments for trading or speculative purposes. By their nature, all such instruments involve risk, including the possibility that a loss may occur from the failure of another party to perform according to the terms of a contract (credit risk) or the possibility that future changes in market price may make a financial instrument less valuable or more onerous (market risk). As is customary for these types of instruments, we do not require collateral or other security from other parties to these

instruments. We believe that there is no significant risk of loss in the event of nonperformance of the counterparties to these financial instruments.

We formally designate and document instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP. We assess, both at inception and for each reporting period, whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.

As of ~~June~~September 30, 2019, the fair value of the interest rate swaps was a liability of ~~$21.1~~$24.9 million.

A hypothetical increase or decrease in interest rates by 1.0% on variable rate debt would have had an approximate ~~$8.2~~$12.3 million impact on our interest expense in the ~~six~~nine months ended ~~June~~September 30, 2019.

We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. In the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, one customer exceeded 10% of our revenues. This customer accounted for ~~11%~~10% and ~~13%~~14% of our revenues in the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. At ~~June~~September 30, 2019, we had one customer whose accounts receivable balance exceeded 10% of total receivables. Approximately ~~15%~~11% of our accounts receivable balance at ~~June~~September 30, 2019 was from this customer. At December 31, 2018, we had two customers whose accounts receivable balances each exceeded 10% of total receivables. Approximately 10% of our accounts receivable balance at December 31, 2018 was from each of these two customers. We examine

the creditworthiness of third-party customers to whom we extend credit and manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, we may request letters of credit, prepayments or guarantees, although collateral is generally not required.

We are subject to market risk related to foreign currency exchange rate fluctuations. Revenues from international operations represented 10% and ~~13%~~11% of our revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. A portion of our business is transacted in currencies other than the functional currency, including the Canadian dollar and Mexican peso. Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non-U.S. dollar-denominated revenues with operating expenses that are paid in the same currencies. To date, foreign currency fluctuations have not had a material impact on results from operations.

We maintain disclosure controls and procedures, as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objectives of such controls and procedures. Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”) (our principal executive officer) and Chief Financial Officer (“CFO”) (our principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO have each concluded that such disclosure controls and procedures were effective as of the end of the period covered by this report.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. There have been no changes in our internal control over financial reporting during the quarter ended ~~June~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are currently in the process of integrating internal controls and procedures of the predecessor entities into internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC, we will assess the effectiveness of our internal control over financial reporting for the fiscal year ended December 31, 2019.

We and/or our predecessors have been named as a defendant, usually among many defendants, in numerous product liability lawsuits brought by or on behalf of current or former employees of our customers alleging damages caused by silica exposure. As of ~~June~~September 30, 2019, we were subject to approximately 6347 active silica exposure cases. Many of the claims pending against us arise out of the alleged use of our silica products in foundries or as an abrasive blast media and have been filed in ~~the states of Ohio and Mississippi, although cases have been brought in many other~~various jurisdictions over the years. In accordance with the terms of our insurance coverage, these claims are being defended by our subsidiaries’ insurance carriers, subject to our payment of a percentage of the defense costs. Based on information currently available, management cannot reasonably estimate a loss at this time. Although the outcomes of these lawsuits cannot be predicted with certainty, management does not believe that the pending lawsuits, individually or in the aggregate, are reasonably likely to have a material adverse effect on our financial position, results of operations or cash flows.

We are involved in other legal actions and claims arising in the ordinary course of business. We currently believe that each such action and claim will be resolved without a material effect on our financial condition, results of operations, or liquidity. However, litigation

involves an element of uncertainty. Future developments could cause these actions or claims to have a material effect on our financial condition, results of operations, and liquidity.

In addition to other information set forth in this Report, you should carefully consider the risk factors discussed under the caption “Risk Factors” in the Form 10-K. ~~There~~Other than those noted above, there have been no material changes to the risk factors previously disclosed in the Form 10-K.

Our safety program establishes a system for promoting a safety culture that encourages incident prevention and continually strives to improve our safety and health performance. Our safety program includes as its domain all established safety and health specific programs and initiatives for our material compliance with all local, state and federal legislation, standards, and regulations as they apply to a safe and healthy employee, stakeholder, and work environment.

Our safety program has the ultimate goal of the identification, elimination or control of all risks to personnel, stakeholders, and facilities, that can be controlled and directly managed, and those it does not control or directly manage, but can expect to have an influence upon.

The operation of our U.S. based mines is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued have also increased in recent years.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Report and is incorporated by reference.

The following documents are filed or furnished as exhibits to this Quarterly Report on Form 10-Q. For convenient reference, each exhibit is listed in the following Exhibit Index according to the number assigned to it in the Exhibit Table of Item 601 of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		13-2656671
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

	Page
Part I – Financial Information	3

Item 1 – Financial Statements (Unaudited)	3

Condensed Consolidated Statements of Income (Loss)	3

Condensed Consolidated Statements of Comprehensive Income (Loss)	4

Condensed Consolidated Balance Sheets	5

Condensed Consolidated Statements of Equity	6

Condensed Consolidated Statements of Cash Flows	8

Notes to Condensed Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	3433

Item 3 – Quantitative and Qualitative Disclosures about Market Risk	4847

Item 4 – Controls and Procedures	4948

Part II – Other Information	49

Item 1 – Legal Proceedings	49

Item 1A – Risk Factors	5049

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	5049

Item 3 – Defaults upon Senior Securities	5049

Item 4 – Mine Safety Disclosures	5049

Item 5 – Other Information	50

Item 6 – Exhibits	50

Exhibit Index	51

Signatures	5253

	June 1, 2018
	(in thousands)
Cash and cash equivalents	$	105,303
Inventories, net		108,005
Accounts receivable		159,373
Property, plant, and equipment, net		1,649,876
Intangible assets, net		136,222
Prepaid expenses and other assets		9,563
Other non-current assets		4,182
Total identifiable assets acquired		2,172,524
Debt		748,722
Other current liabilities		160,117
Deferred tax liability		199,627
Other long-term liabilities		45,169
Total liabilities assumed		1,153,635
Net identifiable assets acquired		1,018,889
Non-controlling interest		453
Goodwill		295,224
Total consideration transferred	$	1,313,660

	Approximate
	Fair Value		Estimated
	(in thousands)		Useful Life
Customer relationships	$	73,000	6 years
Railcar leasehold interests		40,914	1-15 years
Trade name		17,000	1 year
Technology		5,000	12 years
Other		308	95 years
Total approximate fair value	$	136,222

		~~Six~~Nine Months Ended ~~June~~September 30,
		2019
Operating leases
Weighted average remaining lease term		~~6.4~~6.2 years
Weighted average discount rate		5.8%
Financing leases
Weighted average remaining lease term		2.4 years
Weighted average discount rate		~~4.4%~~4.6%


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CVIA	New York Stock Exchange

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐


Level 1	Quoted market prices in active markets for identical assets or liabilities


Level 2	Observable market based inputs or unobservable inputs that are corroborated by market data
Level 3	Unobservable inputs that are not corroborated by market data

	(in thousands)
2019	$	104,602
2020		81,365
2021		69,358
2022		59,044
2023		52,121
Thereafter		121,014
Total	$	487,504

	Merger-related		Idled facilities			Total
	(in thousands)
One month ended September 30, 2018
Severance and relocation costs	$	11,762	$	893		$	12,655
Contract termination costs		-		2,095			2,095
Total restructuring charges	$	11,762	$	2,988		$	14,750

Three months ended September 30, 2019
Severance and relocation costs	$	-	$	(434	)	$	(434	)
Total restructuring charges	$	-	$	(434	)	$	(434	)

Nine months ended September 30, 2019
Severance and relocation costs	$	1,921	$	2,434		$	4,355
Contract termination costs		-		1,293			1,293
Total restructuring charges	$	1,921	$	3,727		$	5,648

	Term Loan		Revolver
Leverage Ratio	Applicable Margin for Eurodollar Loans	Applicable Margin for ABR Loans	Applicable Margin for Eurodollar Loans	Applicable Margin for ABR Loans
Greater than or equal to 2.50x	4.00%	3.00%	3.75%	2.75%
Greater than or equal to 2.0x and less than 2.50x	3.75%	2.75%	3.50%	2.50%
Greater than or equal to 1.50x and less than 2.0x	3.50%	2.50%	3.25%	2.25%
Less than 1.50x	3.25%	2.25%	3.00%	2.00%

Exhibit No.		Description

2.1		Membership Interest Purchase Agreement, dated as of July 3, 2019, by and among Covia Holdings Corporation, Covia Lime, LLC and Mississippi Lime Company (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of the Company, filed with the SEC on July 10, 2019) (File No. 001-38510).

2.2		Stock Purchase Agreement, dated as of July 25, 2019, by and among Covia Holdings Corporation, WWRR Acquisition, LLC, and OmniTRAX, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of the Company, filed with the SEC on July 30, 2019) (File No. 001-38510).

3.1		Amended and Restated Certificate of Incorporation of Covia Holdings Corporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of the Company, filed with the SEC on June 6, 2018) (File No. 001-38510).

3.2		Amended and Restated Bylaws of Covia Holdings Corporation incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of the Company, filed with the SEC on June 6, 2018) (File No. 001-38510).

4.1		Amended and Restated Stockholders Agreement, dated as of ~~June~~September 1, ~~2018,~~2019, by and among Covia Holdings Corporation, SCR-Sibelco NV and the other parties named therein (incorporated by reference to Exhibit ~~4.1~~10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on ~~June 6, 2018)~~August 22, 2019) (File No. 001-38510).

4.2		Registration Rights Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of the Company, filed with the SEC on June 6, 2018) (File No. 001-38510).

10.1		Letter ~~Agreement~~agreement with Richard A. Navarre dated ~~May 8,~~August 19, 2019 ~~(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on May 9, 2019) (File No. 001-38510)~~.

~~10.2~~		and Form of Restricted Stock Unit Agreement for ~~Interim~~ President and CEO for 2018 Omnibus Incentive Plan of Covia Holdings Corporation (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company, filed with the SEC on ~~May 9,~~August 22, 2019) (File No. 001-38510).

~~10.3~~		Covia Executive Severance Plan effective May 23, 2019 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on May 29, 2019) (File No. 001-38510).

~~10.4(x)(*)~~		~~Form of Restricted Stock Unit Agreement for Independent Directors Pursuant to the Covia Holdings Corporation 2018 Omnibus Incentive Plan~~.

31.1(x)		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2(x)		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1(x)		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2(x)		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95.1(x)		Mine Safety Disclosure Exhibit

101.INS(x)		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH(x)		Inline XBRL Taxonomy Extension Schema Document.

101.CAL(x)		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF(x)		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB(x)		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE(x)		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit No.		Description

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


By:	/s/ Andrew D. Eich
	Andrew D. Eich
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer and Duly Authorized Officer)

Date:	~~August 8,~~November 6, 2019