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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 (Check one):~~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 ~~10, 2018: 131,148,008~~

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

(in thousands, except per share amounts)

(in thousands, except per share amounts)

Revenues

$
508,418

$
324,079

$
878,239

$
611,391

Cost of goods sold (excluding depreciation, depletion,

and amortization shown separately)

355,311

231,145

615,630

449,416

Operating expenses

Selling, general and administrative expenses

31,377

21,220

56,601

42,045

Depreciation, depletion and amortization expense

36,744

23,896

63,875

47,558

Other operating expense, net

12,944

813

12,944

1,836

Operating income from continuing operations

72,042

47,005

129,189

70,536

Interest expense, net

9,497

5,250

14,688

10,605

Other non-operating expense, net

38,923

-

44,223

-

Income from continuing operations before provision for income taxes

23,622

41,755

70,278

59,931

Provision for income taxes

6,454

11,566

16,324

16,370

Net income from continuing operations

17,168

30,189

53,954

43,561

Less: Net income from continuing operations attributable to the non-controlling interest

106

-

106

-

Net income from continuing operations attributable to Covia Holdings Corporation

17,062

30,189

53,848

43,561

Income from discontinued operations, net of tax

3,830

6,612

12,587

10,080

Net income attributable to Covia Holdings Corporation

$
20,892

$
36,801

$
66,435

$
53,641

Continuing operations earnings per share

Basic

$
0.14

$
0.25

$
0.44

$
0.36

Diluted

0.14

0.25

0.44

0.36

Earnings per share

Basic

0.17

0.31

0.55

0.45

Diluted

$
0.17

$
0.31

$
0.54

$
0.45

Weighted average number of shares outstanding

Basic

123,460

119,645

121,552

119,645

Diluted

124,166

119,645

122,258

119,645

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

June 30, 2018

December 31, 2017

(in thousands)

Assets

Current assets

Cash and cash equivalents

$
136,370

$
308,059

Accounts receivable, net of allowance for doubtful accounts of $5,141 and $3,682

at June 30, 2018 and December 31, 2017, respectively

418,301

219,719

Inventories, net

183,164

79,959

Other receivables

34,780

27,963

Prepaid expenses and other current assets

20,871

16,322

Current assets of discontinued operations

-

66,906

Total current assets

793,486

718,928

Property, plant and equipment, net

2,653,792

1,136,104

Deferred tax assets, net

7,497

7,441

Goodwill

472,347

53,512

Intangibles, net

170,015

25,596

Other non-current assets

23,504

2,416

Non-current assets of discontinued operations

-

96,101

Total assets

$
4,120,641

$
2,040,098

Liabilities and Equity

Current liabilities

Current portion of long-term debt

$
19,920

$
50,045

Accounts payable

185,753

101,983

Accrued expenses

121,403

88,208

Current liabilities of discontinued operations

-

10,027

Total current liabilities

327,076

250,263

Long-term debt

1,615,666

366,967

Employee benefit obligations

99,490

97,798

Deferred tax liabilities, net

230,416

62,614

Other long-term liabilities

84,802

29,057

Non-current liabilities of discontinued operations

-

8,084

Total liabilities

2,357,450

814,783

Commitments and contingent liabilities (Note 16)

Equity

Preferred stock: $0.01 par value, 15,000 authorized shares at June 30, 2018

Shares outstanding: 0 at June 30, 2018

-

-

Common stock: $0.01 par value, 750,000 and 178,000 authorized shares

at June 30, 2018 and December 31, 2017, respectively

Shares issued: 158,195 at June 30, 2018 and December 31, 2017

Shares outstanding: 131,120 and 119,645 at June 30, 2018 and

December 31, 2017, respectively

1,777

1,777

Additional paid-in capital

383,771

43,941

Retained earnings

1,984,892

1,918,457

Accumulated other comprehensive loss

(121,716
)

(128,228
)
Total equity attributable to Covia Holdings Corporation before treasury stock

2,248,724

1,835,947

Less: Treasury stock at cost

Shares in treasury: 27,075 and 38,550 at June 30, 2018

and December 31, 2017, respectively

(486,092
)

(610,632
)
Total equity attributable to Covia Holdings Corporation

1,762,632

1,225,315

Non-controlling interest

559

-

Total equity

1,763,191

1,225,315

Total liabilities and equity

$
4,120,641

$
2,040,098

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

Equity attributable to Covia Holdings Corporation

Additional

Accumulated Other

Non-

Common

Common

Paid-in

Retained

Comprehensive

Treasury

Treasury

Controlling

Stock

Stock Shares

Capital

Earnings

Loss

Stock

Stock Shares

Subtotal

Interest

Total

(in thousands)

Balances at December 31, 2016

$
1,777

119,645

$
43,941

$
1,753,831

$
(118,499
)

$
(610,632
)

38,550

$
1,070,418

$
-

$
1,070,418

Net income

-

-

-

53,641

-

-

-

53,641

-

53,641

Other comprehensive income

-

-

-

-

16,390

-

-

16,390

-

16,390

Balances at June 30, 2017

$
1,777

119,645

$
43,941

$
1,807,472

$
(102,109
)

$
(610,632
)

38,550

$
1,140,449

$
-

$
1,140,449

Balances at December 31, 2017

$
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

Other comprehensive income

-

-

-

-

6,512

-

-

6,512

-

6,512

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

Re-issuance of treasury stock

-

56

-

-

-

-

(56
)

-

-

-

Share-based awards exercised or distributed

-

-

2

-

-

-

-

2

-

2

Stock compensation expense

-

-

3,193

-

-

-

-

3,193

-

3,193

Transactions with non-controlling interest

-

-

-

-

-

-

-

-

453

453

Balances at June 30, 2018

$
1,777

131,120

$
383,771

$
1,984,892

$
(121,716
)

$
(486,092
)

27,075

$
1,762,632

$
559

$
1,763,191

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
	(in thousands, except per share amounts)					(in thousands, except per share amounts)
Revenues	$	444,936		$	508,418	$	873,182		$	878,239
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)		345,969			355,311		707,529			615,630

Operating expenses
Selling, general and administrative expenses		38,644			31,377		80,604			56,601
Depreciation, depletion and amortization expense		59,204			36,744		117,299			63,875
Asset impairments		-			12,300		-			12,300
Restructuring and other charges		9,535			-		11,537			-
Other operating expense (income), net		1,670			1,150		(4,722	)		1,663
Operating income (loss) from continuing operations		(10,086	)		71,536		(39,065	)		128,170

Interest expense, net		27,866			8,991		53,002			13,669
Other non-operating expense, net		1,571			38,923		3,758			44,223
Income (loss) from continuing operations before provision (benefit) for income taxes		(39,523	)		23,622		(95,825	)		70,278

Provision (benefit) for income taxes		(5,136	)		6,454		(9,190	)		16,324
Net income (loss) from continuing operations		(34,387	)		17,168		(86,635	)		53,954
Less: Net income from continuing operations attributable to the non-controlling interest		7			106		4			106
Net income (loss) from continuing operations attributable to Covia Holdings Corporation		(34,394	)		17,062		(86,639	)		53,848

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

Net income (loss) attributable to Covia Holdings Corporation	$	(34,394	)	$	20,892	$	(86,639	)	$	66,435

Continuing operations earnings (loss) per share
Basic	$	(0.26	)	$	0.14	$	(0.66	)	$	0.44
Diluted		(0.26	)		0.14		(0.66	)		0.44

Earnings (loss) per share
Basic		(0.26	)		0.17		(0.66	)		0.55
Diluted	$	(0.26	)	$	0.17	$	(0.66	)	$	0.54

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

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

Six Months Ended June 30,

2018

2017

(in thousands)

Net income attributable to Covia Holdings Corporation

$
66,435

$
53,641

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion, and amortization

68,396

52,779

Prepayment penalties on Senior Notes

2,213

-

Gain on disposal of fixed assets

(81
)

(107
)
Change in fair value of interest rate swaps

(1,581
)

-

Deferred income taxes and taxes payable

1,564

564

Stock compensation expense

3,193

-

Write-down of assets under construction

12,300

-

Net income from non-controlling interest

106

-

Other, net

4,653

(239
)
Change in operating assets and liabilities, net of business combination effect:

Accounts receivable

(44,469
)

(32,737
)
Inventories

1,210

(491
)
Prepaid expenses and other assets

(146
)

5,874

Accounts payable

3,362

6,477

Accrued expenses

(31,572
)

194

Net cash provided by operating activities

85,583

85,955

Cash flows from investing activities

Proceeds from sale of fixed assets

222

413

Capital expenditures

(115,709
)

(29,230
)
Cash of HPQ Co. distributed

(31,000
)

-

Payments to Fairmount Santrol Holdings Inc. shareholders, net of cash acquired

(64,697
)

-

Other investing activities

-

33

Net cash used in investing activities

(211,184
)

(28,784
)

Cash flows from financing activities

Proceeds from borrowings on Term Loan

1,650,000

49,815

Prepayment on Unimin Term Loans

(314,642
)

(205
)
Prepayment on Senior Notes

(100,000
)

-

Prepayment on Fairmount Santrol Holdings Inc. term loan

(695,625
)

-

Fees for Term Loan and Senior Notes prepayment

(36,733
)

-

Payments on capital leases and other long-term debt

(25,380
)

-

Fees for Revolver

(4,500
)

-

Cash Redemption payment

(520,377
)

-

Proceeds from share-based awards exercised or distributed

2

-

Tax payments for withholdings on share-based awards exercised or distributed

(1
)

-

Dividends paid

-

(50,000
)
Net cash used in financing activities

(47,256
)

(390
)

Effect of foreign currency exchange rate changes

1,168

2,735

Increase (decrease) in cash and cash equivalents

(171,689
)

59,516

Cash and cash equivalents:

Beginning of period

308,059

183,361

End of period

$
136,370

$
242,877

Supplemental disclosure of cash flow information:

Interest paid, net of capitalized interest

$
(8,848
)

$
(7,611
)
Income taxes paid

(8,168
)

(10,799
)
Non-cash investing activities:

Decrease in accounts payable for additions to property, plant, and equipment

$
(6,249
)

$
(3,167
)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in thousands)						(in thousands)
Net income (loss) from continuing operations	$	(34,387	)	$	17,168		$	(86,635	)	$	53,954
Income from discontinued operations, net of tax		-			3,830			-			12,587
Net income (loss) before other comprehensive income (loss)		(34,387	)		20,998			(86,635	)		66,541
Other comprehensive income (loss), before tax
Foreign currency translation adjustments		906			(8,509	)		3,207			334
Employee benefit obligations		115			6,757			5,017			8,321
Amortization and change in fair value of derivative instruments		(9,431	)		-			(17,272	)		-
Total other comprehensive income (loss), before tax		(8,410	)		(1,752	)		(9,048	)		8,655
Provision (benefit) for income taxes related to items of other comprehensive income		(3,465	)		1,673			(3,986	)		2,143
Comprehensive income (loss), net of tax		(39,332	)		17,573			(91,697	)		73,053
Comprehensive income attributable to the non-controlling interest		7			106			4			106
Comprehensive income (loss) attributable to Covia Holdings Corporation	$	(39,339	)	$	17,467		$	(91,701	)	$	72,947

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

	June 30, 2019			December 31, 2018
	(in thousands, except par value)
Assets
Current assets
Cash and cash equivalents	$	112,143		$	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
Inventories, net		151,801			162,970
Other receivables		32,535			40,306
Prepaid expenses and other current assets		16,400			20,941
Assets held for sale		133,377			-
Total current assets		731,120			625,615

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

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

Long-term debt		1,607,041			1,612,887
Operating lease liabilities, non-current		296,678			-
Employee benefit obligations		54,209			54,789
Deferred tax liabilities, net		249,001			267,350
Other non-current liabilities		87,516			75,425
Total liabilities		2,667,461			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		-			-
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
and December 31, 2018, respectively		1,777			1,777
Additional paid-in capital		389,000			388,027
Retained earnings		1,561,320			1,647,959
Accumulated other comprehensive loss		(100,287	)		(95,225	)
Total equity attributable to Covia Holdings Corporation before treasury stock		1,851,810			1,942,538
Less: Treasury stock at cost
Shares in treasury: 26,723 and 27,007 at June 30, 2019
and December 31, 2018, respectively		(483,018	)		(488,141	)
Total equity attributable to Covia Holdings Corporation		1,368,792			1,454,397
Non-controlling interest		561			556
Total equity		1,369,353			1,454,953
Total liabilities and equity	$	4,036,814		$	3,756,117

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

	Equity attributable to Covia Holdings Corporation
			Shares of			Additional						Accumulated Other						Shares of						Non-
	Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling
	Stock		Stock			Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest		Total
	(in thousands)
Three Months Ended June 30, 2018
Beginning balance	$	1,777		119,645		$	43,941		$	1,964,000		$	(118,291	)	$	(610,632	)		38,550		$	1,280,795		$	-	$	1,280,795
Net income		-		-			-			20,892			-			-			-			20,892			106		20,998
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
Share-based awards exercised or distributed		-		56			2			-			-			-			(56	)		2			-		2
Stock compensation expense		-		-			3,193			-			-			-			-			3,193			-		3,193
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			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

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
			Shares of			Additional						Accumulated Other						Shares of						Non-
	Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling
	Stock		Stock			Capital			Earnings			Loss			Stock			Stock			Subtotal			Interest		Total
	(in thousands)
Six Months Ended June 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
Net income		-		-			-			66,435			-			-			-			66,435			106		66,541
Other comprehensive income		-		-			-			-			6,512			-			-			6,512			-		6,512
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
Share-based awards exercised or distributed		-		56			2			-			-			-			(56	)		2			-		2
Stock compensation expense		-		-			3,193			-			-			-			-			3,193			-		3,193
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			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

Six Months Ended June 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
Net loss		-		-			-			(86,639	)		-			-			-			(86,639	)		4		(86,635	)
Other comprehensive loss		-		-			-			-			(5,062	)		-			-			(5,062	)		-		(5,062	)
Share-based awards exercised or distributed		-		284			(5,109	)		-			-			5,123			(284	)		14			-		14
Stock compensation expense		-		-			6,082			-			-			-			-			6,082			-		6,082
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

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

	Six Months Ended June 30,
	2019			2018
	(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:
Depreciation, depletion, and amortization		117,299			68,396
Amortization of deferred financing costs		2,977			-
Prepayment penalties on Senior Notes		-			2,213
Asset impairments		-			12,300
(Gain) loss on disposal of fixed assets		1,959			(81	)
Change in fair value of interest rate swaps, net		-			(1,581	)
Deferred income tax provision (benefit)		(13,035	)		1,564
Stock compensation expense		6,082			3,193
Net income from non-controlling interest		4			106
Other, net		6,122			4,653
Change in operating assets and liabilities, net of business combination effect:
Accounts receivable		(24,701	)		(44,469	)
Inventories		6,320			1,210
Prepaid expenses and other assets		4,718			(146	)
Accounts payable		(2,260	)		3,362
Accrued expenses		32,580			(31,572	)
Net cash provided by operating activities		51,426			85,583

Cash flows from investing activities
Capital expenditures		(59,469	)		(115,709	)
Cash of HPQ Co. distributed to Sibelco prior to Merger		-			(31,000	)
Payments to Fairmount Santrol Holdings Inc. shareholders, net of cash acquired		-			(64,697	)
Capitalized interest		(3,283	)		-
Proceeds from sale of fixed assets		130			222
Net cash used in investing activities		(62,622	)		(211,184	)

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

Effect of foreign currency exchange rate changes		244			1,168
Decrease in cash and cash equivalents		(21,987	)		(171,689	)

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

Supplemental disclosure of cash flow information:
Interest paid, net of capitalized interest	$	(24,860	)	$	(8,848	)
Income taxes paid		(8,429	)		(8,168	)
Non-cash investing activities:
Decrease in accounts payable and accrued expenses for additions to property, plant, and equipment and capitalized interest		(31,200	)		(593	)
Right-of-use assets obtained in exchange for lease liabilities	$	415,878		$	-

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

Covia Holdings Corporation, ~~and~~including its consolidated subsidiaries (collectively, ~~the~~“we,” “us,” “our,” “Covia,” and “Company” ~~or “Covia”~~), is a leading provider of ~~minerals~~diversified mineral-based and material solutions for the Industrial and Energy markets. ~~The Company provides diversified mineral solutions to~~We provide a wide range of specialized silica sand, nepheline syenite, feldspar, calcium carbonate, clay, kaolin, lime, and lime products for use in the glass, ceramics, coatings, foundry, polymers, construction, water filtration, sports and recreation, ~~markets. The Company offers its Energy customers a selection of proppant solutions, additives,~~ and ~~coated~~oil and gas markets in North America and around the world. Our Industrial segment provides raw, value-added and custom-blended products to ~~enhance well productivity~~the glass, ceramics, metals, coatings, polymers, construction, foundry, filtration, sports and ~~to address both surface~~recreation and ~~down-hole challenges~~various other industries, primarily in ~~all well environments. Covia~~North America. Our Energy segment offers the oil and gas industry a ~~broad array~~comprehensive portfolio of ~~high-quality~~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”). Our products ~~including high-purity silica sand, nepheline syenite, feldspar, clay, kaolin, lime, resin systems~~serve hydraulic fracturing operations in the U.S., Canada, Argentina, Mexico, China, and ~~coated materials, delivered through its comprehensive distribution network.~~northern Europe.

On June 1, 2018 ~~(the “Merger~~(“Merger Date”), Unimin Corporation (“Unimin”) completed ~~its previously announced merger transaction (the “Merger”~~a business combination (“Merger”) ~~with~~whereby Fairmount Santrol Holdings Inc. (“Fairmount Santrol”)~~. Upon closing of the Merger, Fairmount Santrol was~~ merged into a ~~wholly owned~~wholly-owned subsidiary of Unimin and ceased to exist as a separate corporate entity. ~~The combined entities~~Immediately following the consummation of the Merger, Unimin changed its name to Covia Holdings Corporation and began operating ~~as Covia.~~under that name. The common stock of Fairmount Santrol ~~common stock~~ 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” ~~as of~~on that date. Upon the consummation of the Merger, the former stockholders of Fairmount Santrol ~~stockholders in the aggregate~~ (including holders of certain Fairmount Santrol equity awards) received, ~~$170,000~~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 ~~Company~~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 ~~$1,650,000~~$1.65 billion senior secured term loan (“Term Loan”) and a ~~$200,000~~$200.0 million revolving credit ~~facility.~~facility (“Revolver”). The proceeds of the ~~term loan~~Term Loan were used to repay the indebtedness of Unimin and Fairmount Santrol and to ~~fund~~pay the cash portion of the Merger consideration and expenses related to the Merger. See Note 78 for further discussion of the refinancing transaction and terms of such indebtedness.

As a condition to the Merger, Unimin contributed ~~assets~~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~~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 ~~100%~~all of the stock of HPQ Co. to Sibelco in exchange for ~~170~~0.17 million shares (or ~~15,097~~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 and include legal, accounting, valuation ~~services,~~and financial advisory services, ~~severance,~~ integration ~~costs~~ and other costs totaling ~~$38,923~~$0.2 million and ~~$44,223~~$38.9 million for the three months ended June 30, 2019 and 2018, respectively, and $0.9 million and $44.2 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2018, accrued Merger related costs and expenses of $7,254 are included in accrued expenses in the accompanying Condensed Consolidated Balance Sheets. The Company did not incur Merger-related expenses in the three and six months ended June 30, 2017.

Unimin was determined to be the acquirer in the Merger for accounting purposes, and the historical financial statements and ~~the~~certain historical amounts included in the ~~notes~~Notes to ~~those financial statements~~the Condensed Consolidated Financial Statements relate to Unimin. The Condensed Consolidated ~~Statements of Income for the three and six months ended June 30, 2018 include the results of Fairmount Santrol from the Merger Date. The Condensed Consolidated~~ Balance ~~Sheet at June 30, 2018 reflects Covia; however, the Condensed Consolidated Balance Sheet~~Sheets at December 31, ~~2017 reflects Unimin only.~~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 year presentations have been made to conform to the current period presentation.~~

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.

~~The~~Our unaudited condensed consolidated financial statements ~~of the Company~~ 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 ~~Sheets~~Sheet as of December 31, ~~2017 were~~2018 was derived from audited consolidated financial statements, but dodoes 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 ~~the Company’s~~our consolidated financial statements and notes thereto as and for each of the three years in the period ended December 31, ~~2017,~~2018, which are included in ~~Unimin’s Registration Statement~~our Annual Report on Form ~~S-4 (file No. 333-224228)~~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.~~10-Q (“Report”).

On June 1, 2018, ~~the Company~~we effected an 89:1 stock split with respect to ~~its~~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. ~~The Company based its~~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.

Cash and cash equivalents are comprised of liquid investments with original maturities of three months or less. The Company’s cash and cash equivalents are held on deposit and are available to the Company on demand without restriction, prior notice, or penalty.

The Company derives its revenues by mining, manufacturing, and processing minerals that its customers purchase for various uses. Revenues are measured by the amount of consideration the Company expects to receive in exchange for transferring its product. The consideration the Company expects to receive is based on the volumes and price of the product per ton as defined in the underlying contract. The price per ton is based on the market value for similar products plus costs associated with transportation and transloading, as applicable. Depending on the contract, this may also be net of discounts and rebates. The transaction price is not adjusted for the effects of a significant financing component, as the time period between transfer of control of the goods and expected payment is one year or less. Sales, value-added, and other similar taxes collected are excluded from revenue.

~~On January 1, 2018, the Company adopted~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606). The adoption did not require a cumulative adjustment to opening retained earnings and did not have a material impact on revenues for~~

the six months ended June 30, 2018. Revenues are recognized as each performance obligation within the contract is satisfied; this occurs with the transfer of control of the Company’s product in accordance with delivery methods as defined in the underlying contract. Transfer of control to customers generally occurs when products leave the Company’s facilities or at other predetermined control transfer points. The Company has elected to continue to 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. Transportation costs to move product from the Company’s production facilities to its distribution terminals are borne by the Company and capitalized into inventory. These costs are included in cost of goods sold as the products are sold. The Company’s contracts may include one or multiple distinct performance obligations. Revenues are assigned to each performance obligation based on its relative standalone selling price, which is generally the contractually-stated price.

~~The Company disaggregates revenues by major source consistent with its segment reporting. See Note 18 for further detail.~~

~~Accounts receivable are stated at the amount management expects to collect and do not bear interest.~~

The collectability of all outstanding receivables is reviewed and evaluated by management. This review includes consideration for the risk profile of the receivables, customer credit quality and certain indicators such as the aging of past-due amounts and general economic conditions. If it is determined that a receivable balance will not likely be recovered, an allowance for such outstanding receivable balance is established.

At June 30, 2018 and December 31, 2017, the Company had one customer whose accounts receivable balance exceeded 10% of total accounts receivable. Approximately 15% and 13% of the accounts receivable balance at June 30, 2018 and December 31, 2017, respectively, was from this customer.

The Company estimates the future cost of dismantling, restoring, and reclaiming operating excavation sites and related facilities in accordance with federal, state, and local regulatory requirements. The Company records the initial estimated present value of these costs as an asset retirement obligation and increases the carrying amount of the related asset by a corresponding amount. The related asset is classified as long-lived assets and amortized over their useful life. The Company adjusts the related asset and liability for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. Cost estimates are escalated for inflation, then discounted at the credit adjusted risk free rate. If the asset retirement obligation is settled for more or less than the carrying amount of the liability, a loss or gain will be recognized in the period the obligation is settled. As of June 30, 2018 and December 31, 2017, the Company had asset retirement obligations of $17,001 and $12,472, respectively. The Company recognized accretion expense of $513 and $191 in the three months ended June 30, 2018 and 2017, respectively, and $1,019 and $376 in the six months ended June 30, 2018 and 2017, respectively. These amounts are included in included in Other operating expense, net in the Condensed Consolidated Statements of Income. Other than those assumed in the Merger, there were no other changes in the liability during these interim periods. However, the Company is still evaluating the fair value of the asset retirement obligation acquired in the Merger.

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 –~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in~~ ~~Topic 605 – Revenue Recognition~~ ~~and clarifies the principles for recognizing revenue and creates common revenue recognition guidance between GAAP and International Financial Reporting~~

Standards. Revenues are recognized when customers obtain control of promised goods or services and at an amount that reflects the consideration expected to be received in exchange for such goods or services. In addition, ASU 2014-09 requires disclosure of the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers.Leases

On January 1, ~~2018, the Company~~2019 we adopted ASU 2014-09 for all contracts which were not completed as of January 1, 2018 using the modified retrospective transition method. The adoption did not require a cumulative adjustment to opening retained earnings and did not have a material impact on revenues for the six months ended June 30, 2018.

~~In March 2016, the FASB issued ASU No. 2016-09~~ASC Topic 842 – ~~Compensation – Stock Compensation (Topic 718)~~Leases (“ASU 2016-09”), which simplifies the accounting treatment for excess tax benefits and deficiencies, forfeitures, and cash flow considerations related to share-based payment transactions. ASU 2016-09 requires all tax effects of share-based payments to be recorded through the income statement, windfall tax benefits to be recorded when the benefit arises, and all share-based payment tax-related cash flows to be reported as operating activities in the statement of cash flows. Regarding withholding requirements, the ASU allows entities to withhold an amount up to the employees’ maximum individual tax rates without classifying the award as a liability. ASU 2016-09 also permits entities to make an accounting policy election for the impact of forfeitures on expense recognition, either recognized when forfeitures are estimated or when forfeitures occur. On January 1, 2018, the Company adopted ASU 2016-09, and elected to recognize forfeiture expense when forfeitures occur. The adoption did not have a material impact on the Company’s consolidated financial statements and disclosures.

~~In October 2016, the FASB issued ASU No. 2016-16 –~~ ~~Income Taxes (Topic 740) – Intra-Entity Transfers of Assets other than Inventory~~ (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. ASU 2016-16 also eliminates the exception for an intra-entity transfer of an asset other than inventory. On January 1, 2018, the Company adopted ASU 2016-16 using the modified retrospective transition method. However, the adoption did not require a cumulative adjustment to opening retained earnings and did not have a material impact on the consolidated financial statements.

~~In March 2017, the FASB issued ASU No. 2017-07 –~~ ~~Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ (“ASU 2017-07”). ASU 2017-07 requires that an employer report the service cost component in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period as well as appropriately described relevant line items. ASU 2017-07 also disallows capitalization of the other components of net periodic benefit costs and requires those costs to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. Companies are required to retrospectively apply the requirement for a separate presentation in the income statement of service costs and other components of net benefit cost and prospectively adopt the requirement to limit the capitalization of benefit costs to the service component. Application of a practical expedient is allowed permitting an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company adopted ASU 2017-07 as of January 1, 2018 and utilized the practical expedient to estimate the impact on the prior comparative period information presented in the interim and annual financial statements. Previously, the Company capitalized all net periodic benefit costs incurred for plant personnel in inventory and recorded the majority of net periodic benefit costs incurred by corporate personnel and retirees into selling, general, and administrative expenses. After the adoption, the Company records all components of net periodic benefit costs, aside from service costs, as a component of Interest expense, net in the Condensed Consolidated Statements of Income. The following is a reconciliation of the effect of the reclassification of the net benefit cost in the Company’s condensed consolidated statements of income for the three and six months ended June 30, 2017:

~~In February 2018, the FASB issued ASU No. 2018-02 –~~ ~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~ (“ASU 2018-02”). The FASB is providing ongoing guidance on certain accounting and tax effects of the legislation in the U.S. Tax Cuts and Jobs Act (the “Tax Act”), which was enacted in December 2017. Specifically, ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from this legislation. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company has elected to early adopt this ASU.

~~In February 2016, the FASB issued ASU No. 2016-02 –~~ ~~Leases (Topic 842)~~ ~~(“ASU 2016-02”~~Topic 842”), which requires lessees to recognize ~~assets~~a right-of-use asset and ~~liabilities~~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 ~~statements~~ over the lease term.

We lease railcars, machinery, equipment, land, buildings and office space under operating lease arrangements. Certain mobile equipment leasing arrangements, subject 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 842 using the modified retrospective method to apply the standard on its effective date, January 1, 2019. Prior period amounts are not adjusted 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 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 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.

The impact of the adoption of Topic 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 assets at the date of adoption included approximately $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.

In June 2016, the FASB issued ASU ~~also~~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 and requires ~~disclosures designed~~consideration of a broader range of reasonable and supportable information to ~~give~~inform credit loss estimates. Additionally, ASU 2016-13 requires a financial ~~statement users information~~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. 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 evaluating the impact of this new guidance on our consolidated financial statements and disclosures.

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 ~~amount, timing,~~fair value hierarchy and ~~uncertainty of cash flows arising from leases. The~~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 ~~related~~ interim periods within those fiscal years, beginning after December 15, ~~2018,~~2019, with early adoption permitted, and mandates a modified retrospective transition method. The Company believes the adoption of this ASU will likely have a material impact on its consolidated balance sheets for the recognition of certain operating leases as right-of-use assets and lease liabilities and ispermitted. We are in the process of ~~analyzing its lease portfolio~~evaluating the impact of this new guidance on our condensed consolidated financial statements and ~~evaluating systems~~disclosures.

In August ~~2017,~~2018, the FASB issued ASU No. ~~2017-12~~2018-14 – ~~Derivatives~~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 ~~Hedging (Topic 815)~~ accumulated benefit obligations in excess of plan assets. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and should be applied on a retrospective basis, 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. 2018-15 – ~~Targeted Improvements to~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for ~~Hedging Activities~~Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU ~~2017-12”~~2018-15”). The amendments in ASU ~~expands~~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 ~~refines hedge accounting for both nonfinancial~~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 ~~financial risk components and aligns~~which costs to expense. ASU 2018-15 also requires the ~~recognition and presentation~~entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the ~~effects~~hosting arrangement, which includes reasonably certain renewals. 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 be applied either retrospectively or prospectively to all implementation costs incurred after its adoption. We are in the process of 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 guidance 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 ~~hedging instrument~~acquired assets and the hedged item in the financial statements. Subject matters addressed include risk component hedging, accounting for the hedged item in fair value hedges of interest rate risk, recognition and presentationliabilities assumed as of the ~~effects of hedging instruments, amounts excluded from the assessment of hedge effectiveness, and effectiveness testing. The~~Merger Date including measurement period adjustments:

ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. All transition requirements and elections should be applied to existing hedging relationships as of the date of adoption and reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures and expects to adopt this ASU in the third quarter of 2018.

~~In March 2018, the FASB issued ASU No. 2018-05~~ – ~~Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118~~ ~~(“ASU 2018-05”)~~. This ASU provides guidance regarding the recording of tax impacts where uncertainty exists, in the period of adoption of the Tax Act, which allowed companies to reflect provisional amounts for those specific income tax effects of the Tax Act for which the accounting under ASC Topic 740 is incomplete but for which a reasonable estimate could be determined. During the six months ended June 30, 2018, the Company has not recognized any material changes to the provisional amounts recorded in the 2017 Consolidated Financial Statements included in the Company’s registration statement on Form S-4, in connection with the Tax Act. The accounting for the tax effect of the Tax Act will be finalized in the second half of 2018 as the Company completes its federal and state tax returns and incorporates any additional guidance that may be issued by the U.S. tax authorities.

~~In June 2018, the FASB issued ASU No. 2018-07 –~~ ~~Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting~~ ~~(“ASU 2018-07”)~~. The ASU expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Additionally, ASU 2018-07 specifies that ASC 718 applies to all share-based payments in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations by issuing share-based payment awards. Further, the ASU clarifies that ASC 718 does not apply to share-based payments used to provide financing to the issuer or awards granted in conjunction with a contract accounted for under ASC 606. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 and interim periods within that fiscal year, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

~~In June 2018, the FASB issued ASU No. 2018-09 –~~ ~~Codification Improvements~~ which affects a wide variety of Topics including amendments to various Topics. The transition and effective date of the guidance is based on the facts and circumstances of each amendment. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

As previously noted, on June 1, 2018, Fairmount Santrol was merged into a subsidiary of Unimin, after which Fairmount Santrol ceased to exist as a separate corporate entity. Refer to Note 1 for additional information related to the Merger.

~~The Merger Date fair value of consideration transferred was $1,313,660, which consisted of share-based awards, cash, and Covia common stock.~~

~~The cash consideration for the Merger was funded through borrowings on a senior-secured term loan, as well as cash on Unimin’s balance sheet. See Note 7 for further detail.~~

Fairmount Santrol operating results are included in the consolidated financial statements since the Merger Date. The Merger qualifies as a business combination and is accounted for using the acquisition method of accounting.

The preliminary estimates of fair values of the assets acquired and liabilities assumed was based on information available as of the Merger Date. The Company is continuing to evaluate the underlying inputs and assumptions used in its valuations. Accordingly, these preliminary estimates are subject to change during the measurement period,

~~which is up to one year from the Merger Date. The following table summarizes the preliminary purchase price accounting of the acquired assets and liabilities as of June 1, 2018.~~

The fair values were based on management’s analysis, including ~~preliminary~~ 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 ~~net~~ assets acquired ~~make use of~~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, ~~and~~ other current ~~and~~liabilities, 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 ~~judgement~~judgment and estimates.

~~Raw material inventory was valued using~~Asset retirement obligations assumed and the ~~cost approach. The fair value of Work-in-Process inventory and Finished goods inventory is a function~~related assets acquired were adjusted to reflect revised estimates of the ~~estimated selling price less the sum of any cost to complete, costs of disposal, holding costs and a reasonable profit allowance.~~

The fair value of non-depletable land was determined using the market approach which arrives at an indication of value by comparing the land being valued to land recently acquired in arm’s-length transactions for similar uses. Building and site improvements were valued using the cost approach in which the value is established based on thefuture cost of ~~reproducing or replacing~~dismantling, restoring, and reclaiming of certain sites. The contingent consideration arrangement in the asset, less depreciation from physical deterioration, functional obsolescence and economic obsolescence, if applicable. Personal property assets with an active and identifiable secondary market, such as mobile equipment were valued usingform of earn-out payments, is related to the market approach. Other personal property assets such as machinery and equipment, furniture and fixtures, leasehold improvements, laboratory equipment and computer software, were valued using the cost approach which is based on replacement or reproduction costspurchase of ~~the assets less depreciation from physical deterioration, functional obsolescence and economic obsolescence if applicable.~~certain coating technology. The fair value of the ~~mineral reserves, which is included in Property, plant, and equipment, net, were valued~~earn-out was determined using a scenario-based method due to the ~~income approach which is predicated upon the value~~linear nature of the ~~future cash flows that an asset will generate over its economic life.~~consideration payments.

The fair value of the ~~trade names and technology~~acquired intangible assets ~~was determined using~~and the ~~Relief from Royalty Method which is an income approach and is based on a search of comparable third party licensing agreements and~~

~~(Unaudited)~~related estimated useful lives at the Merger Date were the following:

~~discussion with management regarding the significance of the trade names and technology and the profitability of the associated revenue streams.~~ The fair value of the customer relationship intangible assets ~~was~~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 ~~DCF Method which is an income approach.~~

discounted cash flow method. The fair value of the ~~acquired~~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 ~~related estimated useful lives at the Merger Date were the following:~~

~~Goodwill is calculated as the excess~~profitability of the ~~purchase price over~~associated revenue streams.

Goodwill of $78.1 million and $217.1 million allocated to the ~~fair value of net identifiable assets acquired. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified~~Industrial and ~~separately recognized. The goodwill recognized~~Energy reporting units, respectively, is attributable ~~primarily~~ to the earnings potential of Fairmount Santrol’s product and plant portfolio, anticipated synergies, the assembled workforce of Fairmount Santrol, and other benefits that ~~the Company believes~~we believe will result from the Merger. ~~The $418,835~~During the third quarter of 2018 it was determined that the goodwill ~~is preliminary and is currently unable to be assigned~~allocated to the Energy reporting unit was impaired and ~~Industrial segments as the Company is~~was written off in ~~the process of determining the allocation between segments.~~its entirety. Refer to Note 22 for additional information. None of the goodwill is ~~expected to be~~ deductible for income tax purposes.

~~The fair value of the debt approximated the carrying value of the debt at June 1, 2018.~~

~~The Company~~We assumed the outstanding stock-based equity awards, (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. ~~The Company~~We recorded ~~$40,414~~$40.4 million of Merger consideration for the value of Awards earned prior to the Merger Date. The remaining value ~~will result in~~represents post-Merger compensation expense of ~~$10,416,~~$10.4 million, which will be recognized over the remaining vesting period of the Awards. In addition, at June 1, 2018, ~~the Company~~we recorded ~~$2,400~~$2.4 million of expense for Awards whose vesting was accelerated upon athe change in control and certain other terms pursuant to the Merger agreement and, therefore, considered a ~~Merger related~~Merger-related expense and recorded in ~~Other~~other non-operating expense, net in the accompanying Condensed Consolidated Statements of ~~Income.~~Income (Loss). Refer to Note 1213 for additional information.

The operating results of Fairmount Santrol have been included in the condensed consolidated financial statements from the Merger Date through June 30, 2018. The Company’s results include Fairmount Santrol revenues13

Covia Holdings Corporation and ~~net loss, which includes the impact of purchase accounting, as follows:~~Subsidiaries

The following unaudited pro forma condensed combined financial information presents ~~the Company’s~~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 ~~the Company’s~~our results. All ~~material~~ intercompany transactions during the

periods presented have been ~~eliminated.~~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 ~~addition~~additional depreciation, depletion and amortization on acquired property, plant and equipment and intangible assets. The pro forma results exclude ~~Merger related~~Merger-related transaction costs and expenses that were incurred in conjunction with the ~~transaction~~Merger in the three and six months ended June 30, ~~2018, respectively.~~2018.

The unaudited pro-forma condensed combined financial information is presented for ~~information~~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 ~~the Company’s~~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.

On May 31, 2018, prior to, and as a condition to the closing of the Merger, Unimin transferred assets and liabilities of its global high purity quartz business, also known as Unimin’s Electronics segment (“HPQ Co.”), to Sibelco in exchange for 170 shares (or 15,097 shares subsequent to the stock split) of Unimin common stock held by Sibelco.

The transaction was between entities under common control and therefore the Unimin common stock received from Sibelco was recorded at the carrying value of the net assets transferred at May 31, 2018, in the amount of $162,109, in Treasury stock within Equity. The transfer of HPQ Co. to Sibelco was a tax-free transaction.

The disposition of HPQ Co.~~’s business~~ qualified as discontinued operations, as it represented a significant strategic shift of ~~the Company’s~~our operations and financial ~~results. In addition,~~results and the ~~Electronics segment’s operations and~~ cash flows of HPQ Co. could be distinguished, operationally and for financial reporting purposes, from the rest of ~~the Company. The disposal of HPQ Co.’s business was a condition of the Merger agreement.~~Covia.

The ~~historical balance sheet and~~ statements of operations of the HPQ Co.’s 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.~~’s business,~~, except for certain allocated corporate overhead costs and certain costs associated with transition services provided by ~~the Company~~us to HPQ Co.~~’s business.~~ These previously allocated costs remain part of continuing operations.

The ~~carrying amounts~~operating results of ~~the major classes of assets and liabilities of the Company’s~~our discontinued operations ~~as of December 31, 2017 were~~in the three and six months ended June 30, 2018 are as follows:

Included in Other receivables is $17,296 for cash generated from July 1, 2017 through December 31, 2017 due from Covia to HPQ Co. This amount is included in Accrued expenses on Covia’s Condensed Consolidated Balance Sheets at June 30, 2018.

~~The operating results of the Company’s discontinued operations up to the Merger Date are as follows:~~

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 months ended June 30, 2018 ~~and 2017~~ were as follows:

Prior to the consummation of the Merger, Unimin redeemed ~~170~~0.17 million shares (or ~~15,097~~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 ~~208~~0.2 million shares (or ~~18,528~~18.5 million shares subsequent to the stock split) of common stock from Sibelco in exchange for a payment of ~~$520,377~~$520.4 million to Sibelco (the “Cash Redemption”). The Cash Redemption was financed with the proceeds of the ~~$1,650,000 term loan~~Term Loan (see Note 7)8) and cash on hand. ~~Unimin~~On June 1, 2018, we effected an 89:1 stock split with respect to our shares of ~~its~~ 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.

17As 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.

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 million was recorded in cost of goods sold, based on inventory turnover, during the three months ended June 30, 2019 and 2018, respectively, and $1.1 million and $19.2 million was recorded in cost of goods sold during the six months ended June 30, 2019 and 2018, respectively.

amended and restated its certificate of incorporation. This increased its authorized capital stock to 750,000 shares of common stock and 15,000 shares of preferred stock and decreased its par value per share from $1.00 to $0.01.

~~As a result of the Merger, Fairmount Santrol shareholders received 45,044 shares of Covia common stock, which were issued out of Covia treasury stock.~~

~~At June 30, 2018 and December 31, 2017, inventories consisted of the following:~~

As a result of the Merger, the Company recorded approximately $37,796 of fair value adjustments in inventory, which included approximately $7,593 of spare parts. Approximately $19,194 was recorded in cost of goods sold, based on inventory turnover, during the month of June 2018.

At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, property, plant, and equipment consisted of the following:

Finance right-of-use assets are included within machinery and equipment. Property, plant, and equipment of $90.3 million is included in assets held for sale at June 30, 2019.

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 adverse business conditions and the decline in our share price, we determined that the asset groups be tested for recoverability. 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 30, 2019.

In June 2018, ~~the Company~~we wrote down ~~$12,300~~$12.3 million of assets under construction related to a facility expansion that was terminated. The write-down reflects the cost of assets that could not be used or transferred to other ~~facilities~~facilities. This amount is included in Asset impairments on the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2018.

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 entered into a definitive purchase agreement with Mississippi Lime Company to sell the Calera, Alabama lime processing facility (“Calera”) for $135.0 million in cash, subject to certain adjustments set forth in the purchase agreement. Calera is a non-core asset included within our Industrial segment. The transaction closed on August 1, 2019, and resulted 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 and, therefore, does not qualify for presentation as discontinued operations.

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 ~~recorded~~expected to close in ~~Other operating expense, net.~~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.

We entered into separate agreements to sell 50 acres of vacant land in ~~thousands, except per share data)~~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 result in a net gain on sale.

~~(Unaudited)~~The assets and liabilities classified as held for sale at June 30, 2019 are as follows:

	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

At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, long-term debt consisted of the following:

On the Merger Date, ~~the Company~~we entered into ~~an agreement with Barclays Bank PLC, as administrative agent, for a $1,650,000 Senior Secured~~the $1.65 billion Term Loan ~~(the “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 ~~$4,125~~$4.1 million and quarterly interest payments beginning 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 ~~basis points~~ to 400 basis points depending on Total Net Leverage as(as hereinafter ~~defined,~~defined) with a LIBOR floor of 1.0% or the Base ~~Rate.~~Rate (as hereinafter defined). Total Net Leverage is defined as total debt net of up to ~~$150,000~~$150.0 million of non-restricted cash, divided by EBITDA. The Term Loan is secured by a first priority lien in substantially all ~~assets~~ of ~~Covia. The Company has~~our assets. We have the option to prepay the Term Loan without ~~penalty. Should the Company choose~~premium or penalty other than customary breakage costs with respect to ~~refinance the Term Loan, it would be subject to a 1.00% premium if refinanced at a lower interest rate within six months of the Merger Date.~~LIBOR borrowings. There are no financial covenants governing the Term Loan.

Notes to add one or more incremental term loan facilities and/or increase the commitments under a new five-year revolving credit facility (the “Revolver”), discussed below, in an aggregate principal amount up to the sum of $250,000, plus an amount of incremental facilities so that, after giving effect to any such incremental facility, on a pro-forma basis, the Total Net Leverage would not exceed 2.75:1.0 plus an amount equal to all voluntary prepayments of the Term Loan. In addition to incremental term loan facilities and Revolver increases, this incremental credit capacity will be allowed to be utilized in the form of (a) senior unsecured notes or loans, subject to a pro-forma Total Net Leverage ratio of up to 3.75:1.0, (b) senior secured notes or loans that are secured by the collateral on a junior basis, subject to a pro forma Total Net Leverage of up to 3.25:1.0, or (c) senior secured notes that are secured by the collateral on a pari passu basis, subject to a pro forma Total Net Leverage of up to 2.75:1.0.Condensed Consolidated Financial Statements

On ~~June 1, 2018,~~ the ~~Company~~Merger Date, we entered into ~~the Revolver with Barclays Bank PLC as administrative agent, which replaced the existing Silfin~~our five-year revolving credit facility ~~(hereinafter defined).~~(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 ~~$200,000.~~$200.0 million. The Revolver requires ~~only~~ quarterly interest payments at a rate derived from LIBOR plus 300 ~~basis points~~ to 375 basis points depending on the Total Net Leverage or from a Base Rate (selected at ~~the option of the Company)~~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, ~~the Company is~~we are also obligated to pay certain fees, quarterly in arrears, including letter of credit fees and unused facility fees.

financial covenants, which were amended on March 19, 2019 (“First Amendment”), requiring, among other things, that we maintain a ~~4.5:1.0~~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 ~~decreasing~~will automatically revert to ~~4.0:1.0 at December 31, 2018 and is primarily secured by a first priority lien on substantially all the assets of Covia.~~3.50:1.00. As of June 30, ~~2018, the Company was~~2019, we were in compliance with all covenants in accordance with the terms of the Revolver.

At June 30, ~~2018,~~2019, there was ~~$200,000~~$200.0 million of ~~available unused~~aggregate capacity on the Revolver with ~~$14,575~~$11.3 million committed to outstanding letters of credit, leaving net availability at ~~$185,425.~~$188.7 million. At June 30, ~~2018,~~2019, the Revolver had an interest rate of ~~5.6%~~6.1%. There were no borrowings under the Revolver at June 30, ~~2018.~~2019.

In July 2016, Unimin entered into a credit facility with Silfin NV (“Silfin”), a wholly-owned subsidiary of Sibelco, and had the ability to draw upon an overdraft facility up to $20,000. Upon closing of the Merger, the Silfin credit facility was cancelled and replaced with the Revolver, as previously described. At December 31, 2017, there were no borrowings outstanding under the Silfin credit facility.

On December 16, 2009, Unimin issued $100,000 principal amount of 5.48% Senior Notes, Series D (the “Series D Notes”). Interest on the Series D Notes was payable semiannually on June 16 and December 16 of each year. The Series D Notes were scheduled to mature on December 16, 2019 unless prepaid earlier. The note purchase agreement governing the Series D Notes contained an interest coverage ratio covenant of not less than 3.00:1.0 and a consolidated debt to consolidated EBITDA ratio covenant of not greater than 3.25:1.0. Unimin had the option to prepay at any time all, or from time to time any part of, the Series D Notes, in an amount not less than $5,000 principal amount of Series D Notes, at 100% of the principal amount of Series D Notes being prepaid, plus the Make-Whole Amount. The Make-Whole Amount was the excess of (i) the discounted value of all future principal and interest payments on the Series D Notes being prepaid, discounted from their scheduled payment dates to the date of prepayment in accordance with accepted financial practice at a discount rate of 0.50% over the yield-to-maturity of a U.S. Treasury security with a maturity equal to the remaining average life of the Series D Notes (based on the remaining scheduled payments on such Series D Notes) over (ii) the principal amount being prepaid (provided that the Make-Whole Amount may in no event be less than zero). Upon closing of the Merger, the Series D Notes were repaid with the proceeds of the Term Loan.

As a result of the debt transactions on the Merger Date, the Company recognized a loss on debt modification of $1,147, which is included in Interest expense, net for the three and six months ended June 30, 2018. The Series D Notes were subject to a prepayment penalty of $4,021, which the Company recognized $2,213 in Other non-operating expense, net for the three months ended June 30, 2018. The remaining amount of $1,809 was capitalized as deferred financing fees.

~~At June 30, 2017, Unimin had two outstanding term loans (collectively the “Unimin Term Loans”). The Unimin Term Loans each had a maturity date of July 2019 and a fixed rate of 4.09%.~~

On February 1, 2017, Unimin entered into an additional term loan with Silfin for $49,600. The loan had a floating annual interest rate of 6-month LIBOR USD plus a margin of 127 basis points and was initially payable on February 1, 2018. On February 1, 2018, Unimin amended the term of the loan to mature on August 1, 2018. This loan had a rate of 2.73% at December 31, 2017.

~~Upon closing of the Merger, the Unimin Term Loans were repaid with the proceeds from the Term Loan.~~

Other borrowings at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 was comprised of a promissory note with anthree unrelated third ~~party~~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 30, 2019 and December 31, 2018. The promissory note’s third unrelated party, which is classified as liabilities held for sale at June 30, 2019, does not require any interest payments. See Note 7 for further detail.

~~Unimin Canada Limited, a subsidiary~~One of ~~the Company,~~our subsidiaries has a ~~2,000~~2.0 million Canadian dollar overdraft facility with the Bank of Montreal. ~~The Company has~~We have guaranteed the obligations of ~~Unimin Canada Limited~~the subsidiary under the facility. As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there were no borrowings outstanding under the overdraft facility. The rates of the overdraft facility were 4.95% at June 30, 2019 and December 31, 2018.

At June 30, ~~2018~~2019 and December 31, ~~2017, the Company~~2018, we had ~~$1,900~~$1.9 million of outstanding letters of credit not backed by a credit facility.

~~As part of the Merger, the Company assumed Fairmount Santrol’s outstanding $10,000~~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 ~~1.54%~~1.94% at June 30, ~~2018.~~2019. The bond matures on September 1, 2027 and is collateralized by a letter of credit of ~~$10,000.~~$10.0 million.

At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, accrued expenses consisted of the following:

~~As of December 31, 2017, the Company owed HPQ Co. $17,296 for cash generated by HPQ Co. from July 1, 2017 through December 31, 2017.~~

The table below shows the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively:

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Numerators:

Net income from continuing operations attributable to Covia Holdings Corporation

$
17,062

$
30,189

$
53,848

$
43,561

Income from discontinued operations, net of tax

3,830

6,612

12,587

10,080

Net income attributable to Covia Holdings Corporation

$
20,892

$
36,801

$
66,435

$
53,641

Denominator:

Basic weighted average shares outstanding

123,460

119,645

121,552

119,645

Dilutive effect of employee stock options and RSUs

706

-

706

-

Diluted weighted average shares outstanding

124,166

119,645

122,258

119,645

Continuing operations earnings per common share – basic

$
0.14

$
0.25

$
0.44

$
0.36

Continuing operations earnings per common share – diluted

0.14

0.25

0.44

0.36

Discontinued operations earnings per common share – basic

0.03

0.06

0.11

0.09

Discontinued operations earnings per common share – diluted

0.03

0.06

0.10

0.09

Earnings per common share – basic

0.17

0.31

0.55

0.45

Earnings per common share – diluted

$
0.17

$
0.31

$
0.54

$
0.45

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
	(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
Income from discontinued operations, net of tax		-			3,830		-			12,587
Net income (loss) attributable to Covia Holdings Corporation	$	(34,394	)	$	20,892	$	(86,639	)	$	66,435
Denominator:
Basic weighted average shares outstanding		131,458			123,460		131,373			121,552
Dilutive effect of employee stock options and RSUs		-			706		-			706
Diluted weighted average shares outstanding		131,458			124,166		131,373			122,258

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

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

Earnings (loss) per share – basic		(0.26	)		0.17		(0.66	)		0.55
Earnings (loss) per share – diluted	$	(0.26	)	$	0.17	$	(0.66	)	$	0.54

~~As noted in Note 4, the Company~~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 30, 2019 and 2018 excludes 5.2 million and 1.4 million potential shares of common stock, respectively. The calculation of diluted weighted average shares outstanding for the six months ended June 30, 2019 and 2018 excludes ~~1,375~~2.9 million and 1.4 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 ~~shares~~stock would be antidilutive.

The dilutive effect of 0.2 million and 0.3 million shares 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 ~~assets and other long-term~~ liabilities. Changes in the fair value of derivatives are recorded each period in ~~current earnings or in~~ other comprehensive income ~~depending on whether a derivative is designated and qualifying as part of a hedging relationship and, if it is, depending on the type of hedging relationship.~~(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, ~~the Company~~we entered into two interest rate swap agreements ~~with a total notional value of $300,000~~and, on December 20, 2018, we entered into three additional interest rate swap agreements as a means to partially hedge ~~its~~our variable interest rate risk on ~~debt instruments.~~the Term Loan. An additional interest rate swap held by Fairmount Santrol ~~with a notional value of $210,000~~ was assumed in conjunction with the Merger. The ~~total notional value of the swap agreements represents approximately 31% of term debt outstanding at June 30, 2018. The~~following table summarizes our interest rate swap agreements ~~mature~~ at June ~~1, 2025, June 1, 2023, and September 5,~~30, 2019 and ~~effectively fixes~~December 31, 2018:

At the ~~variable rate in a range of 2.80% to 2.92% for the portion of the variable rate debt that is hedged.~~

~~Covia’s~~Merger Date, our existing interest rate swaps ~~qualify,~~qualified, but ~~are~~were not designated for hedge accounting ~~therefore, changes~~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 ~~are~~were included in interest expense in the ~~current~~related period. ~~The Company’s~~Amounts reported in accumulated other comprehensive loss related to interest rate swaps ~~if designated, would~~will be ~~accounted for~~reclassified to interest expense as ~~cash-flow hedges. Receiving such treatment requires extensive administration and documentation, which~~interest payments are made on the ~~Company expects~~Term Loan. We expect $4.2 million to ~~complete prior to~~be reclassified from accumulated other comprehensive income into interest expense within the ~~end of 2018.~~ next twelve months.

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

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

The ~~Company recorded a net offset to interest expense~~table below presents the effect of our derivative financial instruments on the Condensed Consolidated Statements of Income (Loss) in the ~~current period for~~three and six months ended June 30, 2019 and 2018:

All of our derivative financial instruments are designated as hedging instruments in the ~~change~~six months ended June 30, 2019. The table below presents the effect of our derivative financial instruments that were not designated as hedging instruments in ~~fair value of~~ the ~~interest rate swaps as follows:~~six months ended June 30, 2018.

Financial instruments held by ~~the Company~~us include cash equivalents, accounts receivable, accounts payable, long-term debt (including the current portion thereof) and interest rate swaps. We are also obligated for contingent consideration for certain coating technology that is subject to fair value measurement. 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, ~~the Company utilizes~~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, ~~the Company is~~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 ~~the Company’s~~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 ~~represent~~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 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, for ~~the Company’s~~our long-term debt:

Quoted Prices

Other

in Active

Observable

Unobservable

Markets

Inputs

Inputs

Long-Term Debt Fair Value Measurements

(Level 1)

(Level 2)

(Level 3)

Total

June 30, 2018

Term Loan

$
-

$
1,645,875

$
-

$
1,645,875

$
-

$
1,645,875

$
-

$
1,645,875

December 31, 2017

Unimin Term Loans

$
-

$
272,000

$
-

$
272,000

Series D Notes

-

104,000

-

104,000

$
-

$
376,000

$
-

$
376,000

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

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

The following table presents the amounts carried at fair value as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 for ~~the Company’s~~our other financial instruments.

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 1011 for additional information.

~~Stock based compensation includes restricted stock units (“RSUs”) and stock options (“Options” and, together with the RSUs, the “Awards”),~~The Level 3 liabilities consisted of a liability related to contingent consideration, which ~~were assumed~~is a pre-acquisition contingent arrangement in the form of earnout payments related to the coating technology that we acquired as part of the Merger. ~~These Awards are governed by three plans:~~The fair value on the ~~FMSA Holdings Inc. Long Term Incentive Compensation Plan (the “2006 Plan”),~~Merger Date of the ~~FMSA Holdings, Inc. Stock Option Plan (the “2010 Plan”)~~earnout was $9.5 million and determined using the ~~FMSA Holdings Inc. Amended and Restated 2014 Long Term Incentive Plan~~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”), and nonqualified stock options (“Options” and, together with the ~~“LTIP”~~RSUs and PSUs, the “Awards”). ~~The combined plans authorized~~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 ~~issued both non-qualified Options as well as RSUs. Options are exercisable as set forth in each individual option agreement.~~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 ~~are~~became fully vested as part of the Merger ~~Date. The~~agreement. PSUs granted under the 2014 Plan were converted to RSUs as part of the Merger agreement. In addition, the Merger agreement ~~calls~~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 ~~from~~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 ~~repricing~~pricing model. ~~Subsequent to the Merger Date and through June 30, 2018, the Company did not grant any Options to purchase shares of common stock and~~

We did not issue any ~~RSUs.~~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 months ended June 30, 2019 is as follows:

~~Since~~We recorded stock compensation expense of $3.3 million and $0.8 million in the three months ended June 30, 2019 and 2018, respectively, and $6.1 million and $0.8 million in the six months ended June 30, 2019 and 2018, respectively. Prior to the Merger, ~~Date,~~we did not compensate employees with stock-based payments and, accordingly, we did not record any stock compensation expense in the ~~Company recorded $3,193 of expense related to these Options and RSUs of which $2,400 was due to accelerated vesting.~~five months ended May 31, 2018. Stock compensation expense ~~net of the amount due to accelerated vesting~~ is included in selling, general, and administrative expenses on the Condensed Consolidated Statements of Income (Loss) and in ~~Additional~~additional paid-in capital on the Condensed Consolidated Balance Sheets. ~~Refer to Note 2 for additional information.~~

~~The Company computes~~We compute and ~~applies~~apply to ordinary income an estimated annual effective tax rate 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 ~~six~~three months ended June 30, ~~2018, the Company~~2019, we recorded a tax ~~expense~~benefit of ~~$16,324~~$5.1 million on ~~income~~a loss before income taxes of ~~$70,278~~$39.5 million resulting in an effective tax rate of ~~23.2%~~13.0%, compared to tax expense of ~~$16,370~~$6.5 million on income before income taxes of ~~$59,931~~$23.6 million resulting in an effective tax rate of 27.3% for the same period of ~~2017.~~2018. The decrease in the effective tax rate is primarily attributable to ~~the decrease in the corporate income tax rate to 21% resulting from the Tax Act. The decrease was partially~~a valuation allowance set up for interest expense disallowed under IRC Section 163(j) offset by the ~~non-deductibility of certain expenses incurred in connection with the Merger and foreign provisions of the Tax Act.~~benefit from depletion. The effective rate differs from the U.S. federal statutory rate primarily due ~~primarily~~ to depletion, the impact of foreign taxes, tax provisions requiring U.S. income inclusion of foreign income, and ~~the foreign provisions of the Tax Act.~~a valuation allowance set up for interest expense disallowed under IRC Section 163(j).

For the six months ended June 30, 2018, the Company remains provisional for legislative changes of the Tax Act. The SEC has provided up to a one-year measurement period, ending December 22, 2018, for the Company to finalize the accounting for the impacts of the Tax Act. Accordingly, the Company will continue to evaluate the provisional estimates, as certain items may differ, potentially materially, due to further refinement of the calculations, changes in interpretations and assumptions made, and further guidance that may become available. During the six months ended June 30, 2018, there were no adjustments made to previous estimates related to the Tax Act.

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 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. 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).

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

In the ~~U.S, the Company sponsors~~U.S., we sponsor the Unimin Corporation Pension Plan, a defined benefit plan for hourly and salaried employees ~~(the “Pension~~(“Pension Plan”) and the Unimin Corporation Pension Restoration Plan (a non-qualified supplemental benefit plan) ~~(the “Restoration~~(“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 new entrants effective November 1, 2017. The Pension Plan was frozen as of December 31, 2018 for all non-union employees. Until the Restoration Plan was amended to exclude new entrants on August 15, 2017, all salaried participants eligible for the Pension Plan were also eligible for the Restoration Plan. The Restoration Plan was 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 a retiree medical plan 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 December 31, 2018, the retiree medical plan was terminated for salaried employees but remains open to certain groups of hourly employees.

In Canada, ~~the Company sponsors~~we sponsor three defined benefit retirement plans. Two of the retirement plans are for hourly employees and one is for salaried employees. ~~The~~Salaried employees were eligible to participate in a plan ~~for salaried employees consisted~~consisting of a defined benefit portion that has been closed to new entrants since January 1, 2008 and a defined contribution portion for employees hired after January 1, 2018. In addition, there are two post-retirement medical ~~plans.~~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, ~~the Company sponsors~~we sponsor four retirement plans, two of which are seniority premium plans as defined by Mexican ~~labour~~labor law. The remaining plans are defined benefit plans with a minimum benefit equal to severance payment by unjustified dismissal according to Mexican ~~labour~~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, ~~the Company~~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 ~~and~~are collectively referred to as the “Unimin Pension Plans.” The Wedron and Troy Grove pension plans are collectively referred to as the ~~“Pension~~“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.”

InWe have applied settlement accounting in the six months ended June ~~2018,~~30, 2019 due to distributions exceeding the ~~Company recorded a curtailment gain of $5,193~~current period service and interest costs. These amounts are included in ~~connection with the transfer of HPQ Co. to Sibelco. The gain was recognized in Accumulated~~ other ~~comprehensive income in~~non-operating expense, net on the Condensed Consolidated ~~Balance Sheets.~~Statements of Income (Loss).

The following tables summarize the components of net periodic benefit costs for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 as follows:

~~The Company~~We contributed ~~$5,915~~$0.7 million and ~~$1,227~~$5.9 million to the ~~plans~~Covia Pension Plans for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Contributions into the ~~plans~~Covia Pension Plans for the year ended December 31, ~~2018~~2019 are expected to be ~~$12,932.~~$3.0 million.

Accumulated other comprehensive ~~income (loss)~~loss is a separate line within the Condensed Consolidated Statements of Equity that reports ~~the Company’s~~our cumulative income (loss) that has not been reported as part of net income (loss). ~~Items that are included in this line are the income (loss) from foreign currency translation, actuarial gains (losses) and prior service cost related to pension and other post-employment liabilities.~~ The components of accumulated other comprehensive loss attributable to Covia Holdings Corporation at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows:

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended June 30, ~~2018:~~2019:

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

The Company leases railway equipment, operating equipment, mineral properties, and buildings under a number of operating lease arrangements. The Company is obligated to pay minimum annual lease payments under certain non-

cancelable operating lease agreements which have original terms that extend to 2024. Agreements for office facilities and office equipment leases are generally renewed or replaced by similar leases upon expiration.

~~Total operating~~Operating lease rental expense ~~included in the Condensed Consolidated Statements of Income was $18,079 and $12,321~~ for the three ~~months ended June 30, 2018~~ and ~~2017, respectively, and $33,225 and $24,454 for the~~ six months ended June 30, 2018 was $18.1 million and ~~2017, respectively.~~$33.2 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:

~~The Company is~~We are involved in various legal proceedings, including as a defendant in a number of ~~lawsuits filed in several jurisdictions.~~lawsuits. Although the outcomes of these proceedings and lawsuits cannot be predicted with certainty, inwe do not believe that any of the ~~opinion of management, it is not~~ pending legal proceedings and lawsuits are reasonably ~~possible~~ ~~that the ultimate resolution of these matters will~~likely to have a material adverse effect on ~~the Company’s~~our financial position, or results of operations ~~that exceeds the accrual amounts.~~or cash flows. In addition, ~~management believes~~we believe that ~~the Company’s substantial level of~~our insurance coverage will mitigate these claims.

~~The Company has~~We and/or our predecessors have been named as a defendant, usually among many defendants, in ~~various~~numerous product liability ~~claims~~lawsuits brought by or on behalf of current or former employees of our customers alleging damages caused by silica ~~exposure causing silicosis. During the six months ended June 30, 2018, the Company was dismissed from three claims.~~exposure. As of June 30, ~~2018,~~2019, there were ~~141~~63 active silica-related products liability ~~claims~~lawsuits pending in which ~~the Company is~~we are a defendant. Although the outcomes of these lawsuits cannot be predicted with certainty, ~~in the opinion of management, it is~~we do not ~~reasonably possible~~believe that ~~the ultimate resolution of~~ these matters ~~will~~are reasonably likely to have a material adverse effect on ~~the Company’s~~our financial position, ~~or results of operations.~~

Fairmount Santrol, now known as Bison Merger Sub I, LLC, has been named as a defendant in several lawsuits in which alleged stockholders claim Fairmount Santrol and its directors violated securities laws in connection with the Merger. Fairmount Santrol and its directors believe these allegations lack merit. Although the outcomes of these lawsuits cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on the Company’s financial position or results of operations.

~~The Company~~ was served notice of a lawsuit seeking declaratory judgment that the Merger constitutes an event of default under certain operating lease agreements. Although the outcome of this lawsuit cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of this matter will have a material adverse effect on the Company’s financial position or results of operations. or cash flows.

On March 18, 2019, 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. We are cooperating with the SEC’s investigation. Given that 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.

~~The Company has~~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 ~~$1,318~~$3.1 million and ~~$809~~$1.3 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$2,180~~$5.6 million and ~~$1,465~~$2.2 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

~~The Company sells~~We sell minerals to Sibelco and certain of its subsidiaries (“related parties”). Sales to related parties amounted to ~~$1,093~~$2.3 million and ~~$4,251~~$1.1 million in the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$2,702~~$4.5 million and ~~$6,119~~$2.7 million in the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. At June 30, ~~2018~~2019 and December 31, ~~2017, the Company~~2018, we had accounts receivable from related parties of ~~$405~~$2.1 million and ~~$2,878,~~$0.8 million, respectively. These amounts are included in Accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets.

~~The Company purchases~~We purchase minerals from certain ~~of its~~ related parties. Purchases from related parties amounted to ~~$2,959~~$2.0 million and ~~$5,020~~$3.0 million in the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$5,171~~$2.0 million and ~~$7,375~~$5.2 million in the six months ended June 30, ~~2018~~2019

and 2018, respectively. At June 30, ~~2018~~2019 and December 31, ~~2017, the Company~~2018, we had accounts payable to related parties of ~~$3,809~~$4.0 million and ~~$7,692,~~$0.5 million, respectively. These amounts are included in Accounts payable in the accompanying Condensed Consolidated Balance Sheets.

Prior to the Merger, Sibelco ~~would provide~~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 ~~the Company.~~us. Prior to the Merger, during the two ~~months ended May 31, 2018~~ and ~~three months ended June 30, 2017, Unimin incurred $2,417 and $1,718, respectively for management and administrative services from Sibelco. In the~~ five months ended May 31, 2018, ~~and six months ended June 30, 2017,~~ Unimin incurred ~~$2,445~~$2.4 million and ~~$1,718,~~$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.~~Income (Loss).

Additionally, ~~the Company is~~we are compensated for providing transitional services, such as accounting, human resources, information technology, mine planning, and geological services, to HPQ CoCo. and such compensation is recorded as a reduction of cost in selling, general, and administrative expenses. Compensation for these transitional services was ~~$4,386~~$0.01 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $0.1 million and $0.1 million in the six months ended June 30, ~~2018. This amount is~~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 30, 2019 and December 31, 2018.

On June 1, 2018, ~~the Company~~we entered into an agreement with Sibelco ~~where~~whereby Sibelco ~~is providing~~provides sales and marketing support for certain products supporting the ~~Performance Coatings~~performance coatings and ~~Polymer Solutions~~polymer solutions markets in North America and Mexico, for which ~~the Company will~~we pay a 5% commission of revenue, and in the rest of the world, for which ~~the Company will~~we pay a 10% commission of revenue. Sibelco is also ~~assisting~~assists with sales and marketing efforts for certain products in the ceramics and sanitary ware industries outside of North America and Mexico for which ~~the Company will~~we pay a 5% commission of revenue. In addition, ~~Covia is providing~~we provide sales and marketing support to Sibelco for certain products ~~supporting for certain~~used in ceramics ~~products~~ in North America and Mexico for which ~~the Company earns~~we earn a 10% commission of revenue. ~~For the three and six months June 30, 2018, the Company~~We recorded commission expense of ~~$286~~$1.1 million and $0.4 million in the three months ended June 30, 2019 and 2018, respectively, and $2.1 million and $0.4 million in the six months ended June 30, 2019 and 2018, respectively. These amounts are recorded in Selling, general and administration expenses.

~~Previously,~~Prior to the ~~Company~~Merger Date, we had ~~the Unimin Term Loans~~term loans outstanding with ~~Silfin.~~a wholly-owned subsidiary of Sibelco. During the three and six months ended June 30, 2018, we incurred $1.2 million and ~~2017, the Company incurred $3,129 and $5,023,~~$3.1 million, respectively, of interest expense for ~~the Unimin Term Loans.~~such term loans. These costs are reflected in ~~interest~~Interest expense, net in the accompanying Condensed Consolidated Statements of ~~Income.~~Income (Loss). Upon closing of the Merger, ~~the Unimin Term Loans~~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.

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

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

At June 30, 2019, we had one customer whose accounts receivable balance exceeded 10% of total accounts receivable. This customer comprised approximately 15% of the accounts receivable balance at June 30, 2019. At December 31, 2018, we had two 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 months ended June 30, 2019 and 2018, one customer exceeded 10% of revenues. This customer accounted for 11% and 13% of revenues in the six months ended June 30, 2019 and 2018, respectively. This customer is part of our Energy segment.

~~The Company organizes its~~We organize our business into two 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. Our products serve hydraulic fracturing operations in the U.S., Canada, Argentina, Mexico, China, and northern Europe. The ~~reportable segments are consistent with how management views~~Industrial segment provides raw, value-added and custom-blended products to the ~~markets served by~~glass, ceramics, metals, coatings, polymers, construction, foundry, filtration, sports and recreation and various other industries.

Prior to the ~~Company and~~second quarter of 2019, the ~~financial information reviewed by the~~Company’s chief operating decision maker ~~in deciding how to allocate resources and assess performance.~~

~~The chief operating decision maker~~(“CODM”) primarily ~~evaluates~~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.

28The 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.

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Revenues

Energy

$
326,746

$
157,383

$
534,207

$
287,606

Industrial

181,672

166,696

344,032

323,785

Total revenues

508,418

324,079

878,239

611,391

Segment gross profit

Energy

101,288

40,616

166,783

66,064

Industrial

51,819

52,318

95,826

95,911

Total segment gross profit

153,107

92,934

262,609

161,975

Operating expenses excluded from segment gross profit

Selling, general, and administrative

31,377

21,220

56,601

42,045

Depreciation, depletion, and amortization

36,744

23,896

63,875

47,558

Other operating expense, net

12,944

813

12,944

1,836

Interest expense, net

9,497

5,250

14,688

10,605

Other non-operating expense, net

38,923

-

44,223

-

Income from continuing operations before provision for income taxes

$
23,622

$
41,755

$
70,278

$
59,931

~~On May 31, 2018, Unimin transferred certain assets, which consisted of~~Segment information for all periods presented in the ~~Electronics segment, to Sibelco. The disposition of the Electronics segment qualifies as discontinued operations and, therefore, the Electronics segment information~~table below has been ~~excluded from~~revised accordingly to reflect the ~~above table.~~new measure of profit and loss.

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
	(in thousands)
Revenues
Energy	$	251,547		$	326,746	$	487,622		$	534,207
Industrial		193,389			181,672		385,560			344,032
Total revenues		444,936			508,418		873,182			878,239

Segment contribution margin
Energy		40,912			103,390		62,931			168,885
Industrial		65,109			51,819		116,731			95,826
Total segment contribution margin		106,021			155,209		179,662			264,711

Operating costs of idled facilities and excess railcar capacity		7,054			2,102		14,009			2,102
Selling, general, and administrative		38,644			31,377		80,604			56,601
Depreciation, depletion, and amortization		59,204			36,744		117,299			63,875
Asset impairments		-			12,300		-			12,300
Restructuring and other charges		9,535			-		11,537			-
Other operating expense (income), net		1,670			1,150		(4,722	)		1,663
Operating income (loss) from continuing operations		(10,086	)		71,536		(39,065	)		128,170
Interest expense, net		27,866			8,991		53,002			13,669
Other non-operating expense, net		1,571			38,923		3,758			44,223
Income (loss) from continuing operations before provision (benefit) for income taxes	$	(39,523	)	$	23,622	$	(95,825	)	$	70,278

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.

In the six months ended June 30, 2018 and 2017, one customer exceeded 10% of revenues. This customer accounted for 13% of revenues in the six months ended June 30, 2018 and 2017. This customer is part of the Company’s Energy segment.

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. ~~The Company’s goodwill balance~~Goodwill was ~~$472,347~~$119.8 million and ~~$53,512~~$131.7 million at June 30, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018, respectively, and is entirely attributable to the Industrial segment. The ~~Company evaluates goodwill on an annual basis at October 31, or more frequently if management believes indicators of impairment exist. The following table summarizes the~~ activity in ~~intangible assets, net for~~goodwill in the six months ended June 30, ~~2018~~2019 is as follows:

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. Calera and the ~~year ended December~~ W&W Railroad included in assets and liabilities held for sale were determined to be businesses and, therefore, goodwill of $8.6 million and $3.2 million, respectively, was allocated to the assets held for sale at June 30, 2019. There were no events or changes in circumstances that would more likely than not result in an impairment in the carrying value of goodwill at June 30, 2019.

Intangible assets, net includes acquired supply agreements ~~and~~which are classified as held for sale at June 30, 2019, acquired stream mitigation rights, ~~of $20,692~~customer relationships, trade names and ~~$3,484, respectively, at June 30, 2018, and $21,956 and $3,640, respectively, at December 31, 2017.~~acquired technology. 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 ~~June 30,~~December 31, 2018.

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

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

In September 2018 and November 2018, we idled operations 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. 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.

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 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 months ended June 30, 2019 includes other charges related to executive severance and benefits of $5.5 million. These other charges are included in Accrued expenses on the Consolidated Balance Sheet and are 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.

~~Introduction~~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 ~~Part I, Item 2~~encourage companies to provide prospective information, so long as those statements are identified as forward-looking and ~~Part II, Item 1 and Item 1A~~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.

~~We define various terms to simplify the presentation of information~~Certain statements in this ~~Quarterly~~ Report on Form 10-Q (this “Report”). Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” “Covia,” “our business” and “our company” refer to Covia Holdings Corporation and our consolidated subsidiaries and predecessor companies. We use Adjusted EBITDA herein as a non-GAAP measure of our financial performance. See further discussion of Adjusted EBITDA at Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~This Report contains~~are forward-looking statements ~~that~~within the meaning of the Act, and such statements are ~~subject~~intended to ~~risks and uncertainties.~~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. Forward-looking~~ statements, ~~give our current expectations~~ and ~~projections relating~~such statements are subject to ~~our financial condition, results of operations, plans, objectives, future performance~~risks and ~~business.~~uncertainties. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. ~~These~~Forward-looking statements ~~may include~~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 ~~such as~~ “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” ~~“plan,~~“intend,” ~~“intend,~~“plan,” “believe,” “assume,” ~~“guide,” “target,” “may,”~~ “will,” “should,” “may,” “can have,” ~~“likely”~~“likely,” “target,” “forecast,” “guide,” “guidance,” “outlook,” “seek,” “strategy,” “future,” and ~~other~~similar words ~~and terms of similar meaning in connection with any discussion of the timing~~ or ~~nature of future operating or financial performance or other events. For example,~~expressions identify forward-looking statements. Similarly, all statements we make relating to our ~~estimated~~strategies, plans, goals, objectives and ~~projected~~targets as well as our estimates and projections of results, sales, earnings, costs, expenditures, cash flows, growth rates, initiatives, and ~~financial results, our plans and objectives for future operations, growth~~the outcomes or ~~initiatives, strategies or the expected outcome or impact~~impacts of pending or threatened litigation or regulatory actions are also forward-looking statements. ~~All forward-looking~~

Forward-looking statements are ~~subject~~based upon a number of assumptions and factors concerning future conditions that may ultimately prove to ~~risks~~be inaccurate and ~~uncertainties that may~~could cause actual results to differ materially from those ~~that we expected, including:~~

~~In addition, risks related to the Merger and Merger agreement~~ that could cause actual results ~~to differ materially from our forward-looking statements include:~~

We derive many of our forward-looking statements from our knowledge of our operations, our asset base, and our operating forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results 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 ~~Unimin’s Registration Statement~~the Form 10-K, and may be discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form ~~S-4 related to the Merger~~10-Q and ~~other SEC filings.~~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 ~~that the~~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. ~~The forward-looking~~Forward-looking statements ~~included in this Report are made~~speak only as of the date ~~hereof.~~they are made. We ~~undertake no~~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.

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~ ~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

The ~~following~~financial information, discussion and analysis ~~of financial condition and results of operations~~that follow should be read ~~together~~in conjunction with ~~the~~our condensed consolidated financial statements ~~of our company~~ and the related notes ~~thereto and other financial information appearing elsewhere~~included in this Report as well as the ~~consolidated~~ financial ~~statements,~~and other information included in the ~~accompanying notes~~Form 10-K.

We are a leading provider of diversified mineral-based and ~~the related management discussion and analysis of financial condition and results of operations~~material solutions for the ~~year ended December 31, 2017 contained in Unimin’s Registration Statement on Form S-4. The following discussion contains forward- looking statements that involve risks, uncertainties~~Industrial and assumptions. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” Covia’s actual results could differ materially from those contained in the Company’s forward-looking statements as a result of many factors, including those discussed herein and in the section entitled “Risk Factors” in our Registration Statement on Form S-4 related to Merger. The following discussion contains certain financial measures that are not in accordance with Generally Accepted Accounting Principles (“GAAP”), including EBITDA and Adjusted EBITDA. See “— Key Metrics Used to Evaluate Covia’s Business” for a reconciliation of net income to EBITDA and Adjusted EBITDA.

~~Covia is an application-focused minerals company providing materials solutions to customers drawing from a diversified product portfolio.~~Energy markets. We produce a wide range of specialized silica sand, ~~feldspar,~~ nepheline syenite, feldspar, calcium carbonate, clay, kaolin, lime, and ~~limestone~~lime products for use in the ~~energy~~glass, ceramics, coatings, metals, foundry, polymers, construction, water filtration, sports and ~~industrial~~recreation, and oil and gas markets in North America and around the world. ~~Covia has 43 sand~~We currently have 41 active mining facilities with over 5345 million tons of annual ~~sand~~mineral processing capacity and more than 1.5 billion tons of proven and probable mineral reserves that serve both the industrial and energy markets. All of our sand processing facilities are open with the exception of Hager Bay, Wisconsin. We also have 13four active coating facilities ~~providing in excess of two~~with 1.6 million tons of annual coating capacity. Our mining and coating facilities span North America and also include operations in China and Denmark. ~~The~~Our U.S., Mexico, and ~~Canadian~~Canada operations ~~are among the largest, most flexible, and cost-efficient facilities~~have many sites in ~~the industry with~~ close proximity to our customer base.

Our operations are organized into two segments based on the primary end markets we ~~serve: (i)~~serve – Energy and ~~(ii)~~ 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 the standards of the American Petroleum Institute (“API”).~~additives. Our Energy segment products ~~service~~serve hydraulic fracturing operations ~~throughout~~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, ~~all over the world.~~ primarily in North America.

We believe our ~~two market~~ 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 ~~reduce~~mitigate the cyclicality of our earnings.

We are capable of Class I railroad deliveries to each of North America’s major oil and gas producing basins and also have the flexibility to ship our product via barge, marine terminals and trucks to reach our customers as needed. We operate an integrated logistics platform with over 70 proppant distribution terminals and a fleet of approximately 17,020 railcars considering car returns that took place throughout the year and subleases and excluding customer cars in the railcar fleet. Seven of our production facilities and 18 in-basin terminals are capable of shipping and receiving unit trains, respectively, which reduces freight costs and improves cycle times for our railcar fleet.

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 ~~was~~ merged into a ~~wholly owned~~wholly-owned subsidiary of ~~Unimin. Fairmount Santrol~~Unimin and ceased to exist as a separate corporate ~~entity,~~entity. Immediately following the consummation of the Merger, Unimin changed its ~~shares ceased trading,~~name to Covia Holdings Corporation and began operating under that name. The common stock of Fairmount Santrol was delisted from the ~~NYSE. The combined entity as a result~~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, ~~began operating and trading as Covia.~~the former stockholders of Fairmount Santrol ~~stockholders in the aggregate~~ (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 ~~Unimin, with~~Covia. Approximately 65% of the outstanding shares of Covia common stock was owned by Sibelco ~~owning the remaining 65%.~~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 ~~June~~September 30, 2017 through June 1, 2018 less (ii) ~~the~~ $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 million and $38.9 million in the three months ended June 30, 2019 and 2018, respectively, and $0.9 million and $44.2 million in the six months ended June 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 months ended June 30, 2019 includes the results of Fairmount Santrol. The Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2018 ~~we incurred $38.9 million~~only includes the results of Fairmount Santrol from June 2018. The Condensed Consolidated Balance Sheet at December 31, 2018 and ~~$44.2 million~~forward reflect the results of Covia. 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 ~~expenses, respectively. In~~information prior to the ~~three and six months ended June 30, 2017, we did not incur any Merger-related expenses.~~ Merger Date.

As previously disclosed ~~Note 1 of the unaudited condensed consolidated financial statements included~~ 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 ~~global high purity quartz business (“HPQ Co.”)~~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 ~~certain~~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 ~~detailing tax-related matters governing~~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; however,~~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 ~~this~~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 ~~predominantly~~significantly influenced by the level of ~~drilling and~~well completions ~~activity~~ by ~~oil and natural gas~~ exploration and production (“E&P”) and oil field services (“OFS”) companies, which ~~in turn,~~ depends largely on the current and anticipated profitability of developing oil and natural gas reserves. ~~Drilling and completions activity rebounded~~Completions declined in ~~2017~~the second half of 2018 as a result of ~~rising~~operator budgetary constraints and lower oil ~~prices and higher completions activities. Recent~~prices. Completions activity in the first half of 2019 remained relatively consistent with the second half of 2018. West Texas Intermediate ~~benchmark pricing is $67 per barrel as of August 2018 as compared with $50~~(“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 per barrel and proppant demand has rebounded from the lower levels of late 2018.

Proppant supply grew throughout 2018 and in early ~~2017.~~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 in the second half of 2018 and first half of 2019, resulting in significantly lower proppant pricing and some facilities idling or reducing production. We expect this supply imbalance to continue through the second half of 2019.

In response to ~~the improved returns generated~~changing market demands, we idled operations at mines in 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 at certain of our Northern White sand plants. In total, we have reduced our Energy segment annual production capacity by nearly 9.0 million tons through these ~~increases in hydrocarbon prices, oil~~capacity reduction measures, allowing us to lower fixed plant costs and natural gas exploration and production companies have increased their capital spending on drilling and completion activities since early 2017, and the demand for oilfield activities has increased. According to GE Baker Hughes North American Rig Count, the number of active total land drilling rigs in the U.S. has increased from a low of 634 rigs as reported on January 13, 2017 to 1,030 active drilling rigs as reported on July 27, 2018.consolidate volumes into lower cost operations.

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. ~~Covia’s~~The sales in ~~these industries~~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. ~~Within these industries,~~Overall sales within our Industrial segment remains solid with certain sectors, ~~provide~~including containerized glass in Mexico, providing above-average growth due to consumer, regulatory ~~and~~and/or manufacturing ~~trends.~~trends, while 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.

~~Covia’s~~Our management uses a variety of financial and operational metrics to analyze ~~Covia’s~~our performance across ~~its~~our Energy and Industrial segments. ~~The determination of~~We determine our reportable segments is based on the primary industries ~~Covia serves, its~~we serve, our management structure and the financial information ~~that is~~ reviewed by ~~Covia’s~~our chief operating decision maker in deciding how to allocate resources and assess performance. ~~Covia evaluates~~We evaluate the performance of ~~these~~our segments based on their volumes sold, average selling price, and segment ~~gross profit,~~contribution margin and associated per ton ~~metrics~~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. ~~Covia views~~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 ~~its~~ profitability and ~~reviews~~review these measurements frequently to analyze trends and make decisions.

Segment gross profit is ~~a key metric that management uses to evaluate our operating performance and to determine resource allocation between segments. Segment gross profit is~~ defined as segment revenue less segment cost of sales, ~~not including~~excluding depreciation, depletion and amortization expenses, ~~and does not include any~~ selling, general, and administrative costs, orand corporate costs.

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

~~Covia defines~~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 is a key metric we use to evaluate our operating performance and to determine resource allocation between segments. 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 lease expense of intangible assets in our calculation of Adjusted EBITDA as ~~subsequently shown.~~a result of the adoption of Topic 842.

~~Covia’s management believes~~We believe EBITDA and Adjusted EBITDA are useful because they allow ~~Covia~~ management to more effectively evaluate ~~its~~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 ~~Covia’s~~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 ~~Covia’s~~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 ~~Covia’s~~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. ~~Management compensates~~We compensate for

these limitations by relying primarily on ~~Covia’s~~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 ~~Covia attempts~~we attempt to determine EBITDA and Adjusted EBITDA in a manner that is consistent with other companies in ~~its~~our industry, ~~Covia’s~~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. ~~Covia believes~~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,
	2019			2018		2019			2018
	(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
Interest expense, net		27,866			8,991		53,002			13,669
Provision (benefit) for income taxes		(5,136	)		6,454		(9,190	)		16,324
Depreciation, depletion, and amortization expense		59,204			36,744		117,299			63,875
EBITDA		47,540			69,251		74,472			147,716

Non-cash stock compensation expense⁽¹⁾		3,316			793		6,082			793
Asset impairments⁽²⁾		-			12,300		-			12,300
Restructuring and other charges⁽³⁾		12,124			-		14,126			-
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			-
Adjusted EBITDA	$	65,325		$	121,267	$	99,776		$	205,032
_____________

(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).

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in thousands)				(in thousands)				(in thousands)				(in thousands)
Operating Data
Energy
Total tons sold		4,274		2,819		7,250		5,281
Tons sold										4,582		4,274		9,014		7,250
Revenues	$	326,746	$	157,383	$	534,207	$	287,606	$	251,547	$	326,746	$	487,622	$	534,207
Segment gross profit	$	101,288	$	40,616	$	166,783	$	66,064	$	33,858	$	101,288	$	48,922	$	166,783
Industrial
Total tons sold		3,346		3,119		6,317		6,087
Tons sold										3,596		3,346		7,161		6,317
Revenues	$	181,672	$	166,696	$	344,032	$	323,785	$	193,389	$	181,672	$	385,560	$	344,032
Segment gross profit	$	51,819	$	52,318	$	95,826	$	95,911	$	65,109	$	51,819	$	116,731	$	95,826

~~As a result of the Merger, Covia’s reported financial~~Financial results for the ~~three months ended June 30, 2018 contain results for Unimin for the~~ two and five months ended May 31, 2018 ~~including~~only include legacy Unimin. Our financial results, and the table above, exclude HPQ Co. (legacy Unimin’s Electronics ~~segment,~~segment), which was ~~spun off~~distributed to Sibelco at the close of the Merger and is reported as discontinued operations ~~and is excluded from the table above. Covia’s second quarter 2018 results also include the combined~~in our condensed consolidated financial ~~results of Unimin and Fairmount Santrol~~statements for ~~the one month ended June 30,~~ 2018.

Three Months Ended June 30, ~~2018~~2019 Compared to Three Months Ended June 30, ~~2017~~2018

Revenues were $444.9 million for the three months ended June 30, 2019 compared to revenues of $508.4 million for the three months ended June 30, 2018, a decrease of $63.5 million, or 12%. With the inclusion of legacy Fairmount Santrol revenues for the two months ended May 31, 2018 of $203.9 million, total revenues for the three months ended June 30, 2018 were $712.3 million. Total revenues for the three months ended June 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 8.2 million tons for the three months ended June 30, 2019 compared to ~~$324.1~~volumes of 7.6 million tons for the three months ended June 30, 2018, an increase of 0.6 million, or 8%. 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 declines in the Energy business.

Revenues in the Energy segment were $251.5 million for the three months ended June 30, 2017, an increase $184.3 million, or 57%. Total company revenues for the three month period ended June 30, 2018 included $96.1 million in revenues from Fairmount Santrol for the month of June 2018. The remaining increase in revenue year over year was due2019 compared to ~~higher volumes and improved pricing over the prior year period.~~

~~Revenues in the Energy segment were~~ $326.7 million for the three months ended June 30, 2018, ~~compared to $157.4~~a decrease of $75.2 million, or 23%. With the inclusion of legacy Fairmount Santrol Energy revenues for the ~~three~~two months ended ~~June 30, 2017, an increase~~May 31, 2018 of ~~$169.3~~$179.3 million, ~~or 108%.~~total Energy ~~segment~~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, ~~included $84.4 million in revenues from~~including legacy Fairmount Santrol revenues for the ~~month of June~~two months ended May 31, 2018. ~~The increase in~~ Energy ~~segment revenue was~~revenues decreased primarily due to ~~growth in demand for proppant~~continued pricing and volume declines coupled with unfavorable product mix toward local sand ~~as well as increased~~sales and sales at the mine, each of which carry lower average selling prices. ~~Total volumes~~Volumes sold into the Energy segment were 4.6 million tons in the three months ended June 30, 2019, compared to 4.3 million tons in the three months ended June 30, 2018, an increase 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 30, 2019 increased $15.4 million, or 7%, compared to ~~2.8~~$236.1 million in the three months ended March 31, 2019. This sequential change was primarily driven by increases in volume in Northern White and local sands, as well as increases in Northern White sand pricing. Volumes in the Energy segment for the three months ended June 30, 2019 increased 0.2 million tons, or 5%, compared to 4.4 million tons in the three months ended ~~June 30, 2017, an increase of 1.5~~March 31, 2019. Energy volumes increased sequentially across both raw sand and value-added product lines.

Revenues in the Industrial segment were $193.4 million ~~tons, or 54%. For~~for the three months ended June 30, ~~2018, Fairmount Santrol contributed approximately 1.0 million tons of Energy volumes for the month of June 2018.~~

~~Revenues in the Industrial segment were~~2019 compared to $181.7 million for the three months ended June 30, 2018, ~~compared to $166.7~~an increase of $11.7 million, or 6%. 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, ~~2017, an increase of $15.0 million, or 9%.~~2018 were $206.3 million. Total Industrial ~~segment~~ revenues for the three ~~month period~~months ended June 30, 2019 decreased $12.9 million, or 6%, from the three months ended June 30, 2018, ~~included $11.8 million in revenues from~~including legacy Fairmount Santrol revenues for the ~~month of June~~two months ended May 31, 2018. Volumes sold into the Industrial segment were 3.6 million tons in the three months ended June 30, 2019, compared to 3.3 million tons for the three months ended June 30, 2018, ~~compared to 3.1~~an increase of 0.3 million tons, or 9%. 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, ~~2017, an increase of~~2018 were 3.8 million tons. Total Industrial volumes for the three months ended June 30, 2019 decreased 0.2 million tons, or ~~6%. For~~5%, from the three months ended June 30, 2018, including legacy Fairmount Santrol ~~contributed 0.2 million tons of Industrial~~ volumes for the ~~month of June~~two months ended May 31, 2018. ~~The revenue increase~~Volume decreases were primarily attributed to weather-related declines in the Industrial segment was driven by an annual price increase implemented at the beginning of 2018 as well as a shift in product sales towards higher value-added products which have an associated higher selling price.building and construction end-markets.

~~Total~~Segment gross profit was $99.0 million for the three months ended June 30, 2019 compared to segment gross profit ~~was~~of $153.1 million for the three months ended June 30, 2018, ~~compared~~a decrease of $54.1 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 ~~$92.9~~lower volumes as a result of the proppant market downturn coupled with 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 costs. Additionally, for the three months ended June 30, 2019 gross profit was negatively impacted by $2.1 million in costs associated with operating lease expense related to the adoption of Topic 842.

Segment contribution margin was $106.0 million in the three months ended June 30, 2019 and further excludes $1.1 million of operating costs of idled facilities and $6.0 million of excess railcar capacity costs. Segment contribution margin was $155.2 million in the three months ended June 30, 2018 and excludes $0.1 million and $2.0 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 million for the three months ended June 30, ~~2017, an increase of $60.2 million, or 65%. Total segment gross profit included $12.5 million in segment gross profit related~~2019 compared to Fairmount Santrol for the month of June 2018, which includes $19.2 million of additional expense included in cost of goods sold, which is related to the $30.2 million write-up of Fairmount Santrol’s inventories to fair value under GAAP. The increase in segment gross profit year over year was primarily due to the increase in volumes sold and average selling prices in the Energy segment.

~~Segment gross profit in the Energy segment was~~ $101.3 million for the three months ended June 30, 2018, a decrease of $67.4 million, or 67%. 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 30, 2019, the Energy segment gross profit included $2.1 million of operating lease expense related to the adoption of Topic 842. The remaining Energy segment gross profit decrease was primarily due to lower volumes, downward pricing pressure and related reduction in profitability, as a result of the proppant market softness. On a sequential basis, Energy segment gross profit for the three months ended June 30, 2019 increased $18.8 million compared to ~~$40.6~~$15.1 million in the three months ended March 31, 2019. This sequential change was primarily driven by increases in volumes of Northern White and local sands, as well as Northern White sand pricing increases.

Industrial segment gross profit was $65.1 million for the three months ended June 30, ~~2017, an increase of $60.7 million, or 150%. Energy segment gross profit included $9.0 million in Energy segment gross profit related~~2019 compared to Fairmount Santrol for the month of June 2018 and $18.0 million of additional expense included in cost of goods sold, which was related to the write-up of Fairmount Santrol’s inventories to fair value under GAAP. The increase in segment gross profit was primarily due to higher selling prices and volume which was offset by higher mine production costs.

~~Segment gross profit in the Industrial segment was~~ $51.8 million for the three months ended June 30, 2018, ~~compared to $52.3~~an increase of $13.3 million, or 26%. 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, ~~2017, a decrease of $0.5 million, or 1%. Industrial segment~~2018, including legacy Fairmount Santrol gross profit ~~included $3.5 million~~for the two months ended May 31, 2018. The increase in Industrial segment gross profit related to Fairmount Santrol for the month of June 2018 and $1.2 million of additional expense, which was related to the write-up of Fairmount Santrol’s inventories to fair value under GAAP. The decline in segment gross profit waswere primarily due to ~~higher production and energy~~reductions in manufacturing costs inas a result of cost reduction initiatives as well as the ~~U.S. and Mexico coupled with greater foreign exchange impact on~~effect of pricing increases instituted at the ~~Mexican related sales.~~beginning of 2019.

Selling, general and administrative expenses (“SG&A”) increased ~~$10.2~~$7.2 million, or ~~48%~~23%, to $38.6 million for the three months ended June 30, 2019 compared to $31.4 million for the three months ended June 30, 2018. With the inclusion of legacy Fairmount Santrol SG&A for the two months ended May 31, 2018 ~~compared to $21.2~~of $20.1 million, ~~for~~total SG&A was $51.5 million. Total SG&A decreased $12.9 million, or 25%, from the three months ended June 30, ~~2017.~~2018, including legacy Fairmount Santrol SG&A for the two months ended May 31, 2018. SG&A for the three months ended June 30, 2019 included $3.3 million of stock compensation expense. SG&A in the three months ended June 30, 2018 included ~~$6.1~~$0.8 million of ~~SG&A expenses~~stock compensation expense incurred post-Merger in ~~spending from Fairmount Santrol for~~ the month of June ~~2018 and stock compensation expense of $0.8 million.~~

~~Excluding stock compensation expense and the impact of Fairmount Santrol spending for the month of June, SG&A increased over the prior year~~2018. The decrease is primarily due to ~~a higher compensation base~~expense reduction initiatives, headcount rationalization, and ~~related compensation as well as an increase~~synergy realization. Additionally, we experienced favorable healthcare claims activity, which resulted in ~~general business expenses as part of increased volumes in the business.~~reduced healthcare costs.

Depreciation, depletion and amortization (“DD&A”) increased ~~$12.8~~$22.5 million, or ~~54%~~61%, to ~~$36.7~~$59.2 million for the three months ended June 30, ~~2018~~2019 compared to ~~$23.9~~$36.7 million in the three months ended June 30, ~~2017.~~2018. The increase ~~in expense~~compared to the comparable period was due to ~~$9.6~~the inclusion of mineral reserves depletion for production facilities acquired in connection with the Merger.

We did not incur asset impairments in the three months ended June 30, 2019, however, we incurred asset impairments of $12.3 million in the three 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 $9.5 million in the three months ended June 30, 2019, 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 June 30, 2019 is $5.5 million of ~~depreciation, depletion~~other charges related to executive severance and ~~amortization expense from Fairmount Santrol for~~benefits. There were no restructuring charges in the ~~month of~~three months ended June 30, 2018. The higher expense was due to more assets placed in service largely due to the commissioning of the West Texas mining facility, as well as the expansion of our Utica facility and the write-up to fair value of the Fairmount Santrol property, plant, and equipment and intangibles under GAAP.

Other operating expense (income), net increased ~~$12.1~~$0.5 million to ~~$12.9~~$1.7 million for the three months ended June 30, ~~2018~~2019 compared to $0.8 million in the three months ended June 30, 2017. Other operating expense included $144 thousand in income from Fairmount Santrol for the month of June 2018 primarily related to non-controlling interest. The remaining increase in Other Operating Expense is due to the write-off of a terminated project, which was started by Unimin and subsequently terminated by Covia as part of the Company’s capital optimization strategy.

~~Operating income from continuing operations increased approximately $25.0 million to $72.0~~$1.2 million for the three months ended June 30, ~~2018 compared~~2018. Other operating expense (income), net 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 ~~$47.0~~an easement granted for consideration on one of our Virginia properties.

Operating income (loss) from continuing operations decreased approximately $81.6 million to a loss of $10.1 million for the three months ended June 30, ~~2017. Earnings included $3.6~~2019 compared to income of $71.5 million ~~from Fairmount Santrol~~ for the ~~month of~~three months ended June 30, 2018. The change in operating income from continuing operations for the three months ended June 30, 2019 was largely due to the ~~higher~~lower profitability in the Energy segment ~~for reasons noted above which was offset by increased SG&A expenses.~~and restructuring and other charges of $9.5 million.

Interest expense increased ~~$4.2~~$18.9 million to ~~$9.5~~$27.9 million for the three months ended June 30, ~~2018~~2019 compared to ~~$5.3~~$9.0 million for the three months ended June 30, ~~2017.~~2018. The increase in interest expense ~~for the three months ended June 30, 2018~~ is primarily due to the ~~debt that~~interest on our Term Loan, which was incurred for the ~~Company incurred~~entirety of the second quarter of 2019, but only for the month of June in the second quarter of 2018. The Term Loan was used to finance the Merger.

Other non-operating expense, net ~~was~~decreased $37.3 million to $1.6 million in the three months ended June 30, 2019 compared to $38.9 million in the three months ended June 30, ~~2018, which includes~~2018. The decrease is due to lower legal, accounting, ~~financial advisory services, severance, accelerated stock awards, debt extinguishment~~ and other expenses incurred in connection with the ~~Merger.~~Merger, partially offset by the acceleration of previously deferred pension-related expenses due to settlement accounting application in the second quarter of 2019 as distributions exceeded the current period service and interest cost recognized.

The provision for income taxes decreased $11.6 million to a benefit of $5.1 million for the three months ended June 30, 2019 compared to expense of $6.5 million for the three months ended June 30, ~~2018 compared~~2018. Income before income taxes decreased $63.1 million to ~~$11.6~~a loss of $39.5 million for the three months ended June 30, ~~2017. Income before~~2019 compared to income ~~taxes decreased $18.2 million to~~of $23.6 million for the three months ended June 30, ~~2018 compared to $41.8 million for the three months ended June 30, 2017.~~2018. The decrease in tax expense ~~recorded during the second quarter of 2018~~ was primarily related to the decrease in income before ~~income taxes.~~taxes, offset by a valuation allowance set up for interest expense disallowed under IRC Section 163(j). The effective tax rate was ~~27.3%~~13.0% and ~~27.7%~~27.3% for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The decrease in the effective tax rate is primarily attributable to ~~the decrease in the corporate income tax rate to 21% resulting from the Tax Act. The decrease was partially~~a valuation allowance set up for interest expense disallowed under IRC Section 163(j) offset by the ~~non-deductibility of certain expenses incurred in connection with the Merger and foreign provisions of the Tax Act.~~benefit from depletion. The effective rate differs from the U.S. federal statutory rate primarily due ~~primarily~~ to depletion, the impact of foreign taxes, tax provisions requiring U.S. income inclusion of foreign income, and ~~the foreign provisions of the Tax Act.~~

~~For the three months ended June 30, 2018, the Company remains provisional~~a valuation allowance set up for legislative changes of the Tax Act. The SEC has provided up to a one-year measurement period, ending December 22, 2018, for the Company to finalize the accounting for the impacts of the Tax Act. Accordingly, the Company will continue to evaluate the provisional estimates as certain items may differ, potentially materially, due to further refinement of the calculations, changes in interpretations and assumptions made, and further guidance that may become available.

~~During the three months ended June 30, 2018, there were no adjustments made to previous estimates related to the Tax Act.~~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 ~~Holdings Corporation~~ decreased ~~$15.9~~$55.3 million to a loss of $34.4 million for the three months ended June 30, 2019 compared to income of $20.9 million for the three months ended June 30, 2018, ~~compared~~which includes $3.8 million from discontinued

operations. The remaining change in net income attributable to ~~$36.8~~Covia is primarily due to decreases in revenues and gross profit and increases in SG&A, DD&A, and restructuring and other charges discussed above.

Adjusted EBITDA decreased $56.0 million to $65.3 million for the three months ended June 30, ~~2017 due~~2019 compared to ~~the factors previously noted.~~

~~Adjusted EBITDA increased $50.9 million to $121.8~~$121.3 million for the three months ended June 30, ~~2018 compared to $70.9 million for the three months ended June 30, 2017.~~2018. Adjusted EBITDA for the three months ended June 30, ~~2018~~2019 excludes the impact of ~~$0.8~~$3.3 million of non-cash stock compensation expense, ~~$12.3~~$12.1 million in restructuring and other charges ~~from the write-off of a terminated project, which was started by Unimin~~ and ~~subsequently terminated by Covia as part of the Company’s capital optimization strategy,~~restructuring-related charges, $0.2 million in Merger-related and ~~transaction-related~~integration expenses and $2.1 million in costs ~~and expenses of $38.9 million. Adjusted EBITDA for the three months ended June 30, 2018 includes $19.2 million of additional~~associated with operating lease expense ~~included in cost of goods sold~~ related to the ~~write-up~~adoption of ~~Fairmount Santrol’s inventories to fair value. Fairmount Santrol contributed $25.6 million in Adjusted EBITDA for the month of June 2018.~~Topic 842. The ~~increase~~change in Adjusted EBITDA is largely due to ~~increased~~the revenues, gross profit, ~~for the reasons previously noted offset by higher~~and SG&A ~~spending.~~factors discussed above.

Six Months Ended June 30, ~~2018~~2019 Compared to Six Months Ended June 30, ~~2017~~2018

Revenues were $873.2 million for the six months ended June 30, 2019 compared to revenues of $878.2 million for the six months ended June 30, 2018, a decrease of $5.0 million, or 1%. With the inclusion of legacy Fairmount Santrol revenues for the six months ended June 30, 2018 of $477.3 million, total revenues for the six months ended June 30, 2018 were $1,355.5 million. Total revenues for the six months ended June 30, 2019 decreased $482.3 million, or 36%, from the six months ended June 30, 2018, including legacy Fairmount Santrol revenues for the five months ended May 31, 2018. Volumes were 16.2 million tons for the six months ended June 30, 2019 compared to ~~$611.4~~total volumes of 13.6 million tons for the six months ended June 30, 2018, an increase of 2.6 million tons, or 19%. 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 months ended June 30, 2018 were 19.2 million tons. Total volumes for the six months ended June 30, 2019 decreased 3.0 million tons, or 16%, from the six months ended June 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 million for the six months ended June 30, 2017, an increase of $266.8 million, or 44%. Total company revenues for the six month period ended June 30, 2018 included $96.1 million in revenues from Fairmount Santrol for the month of June 2018. The remaining increase in revenue year over year was due2019 compared to ~~higher volumes and improved pricing over the prior year period.~~

~~Revenues in the Energy segment were~~ $534.2 million for the six months ended June 30, ~~2018 compared to $287.6 million~~2018. With the inclusion of legacy Fairmount Santrol Energy revenues for the ~~six~~five months ended ~~June 30, 2017.~~May 31, 2018 of $421.5 million, total Energy ~~segment~~revenues were $955.7 million. Total Energy revenues for the six months ended June 30, 2019 decreased $468.1 million, or 49%, from the six months ended June 30, 2018, ~~included $84.4 million in revenues from~~including legacy Fairmount Santrol revenues for the ~~month of June~~five months ended May 31, 2018. ~~The increase in~~ Energy ~~segment revenue was~~revenues decreased primarily due to ~~growth in demand for proppant~~pricing declines coupled with unfavorable product mix toward local sand ~~as well as increased~~sales and sales at the mine, each of which carry lower average selling prices. ~~Total volumes~~Volumes sold into the Energy segment were 9.0 million tons in the six months ended June 30, 2019 compared to 7.3 million tons in the six months ended June 30, 2018, ~~compared to 5.3 million tons in the six months ended June 30, 2017~~ an increase of ~~2.0~~1.7 million tons, or ~~38%~~23%. ~~For~~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 months ended June 30, 2018 ~~Fairmount Santrol contributed approximately 1.0~~were 11.9 million ~~tons of Energy~~tons. Total volumes for the ~~month~~six months ended June 30, 2019 decreased 2.9 million tons, or 24%, from the six months ended June 30, 2018, including legacy Fairmount Santrol volumes for the five months ended May 31, 2018. Revenues declines in the Energy segment were driven by lower volumes, a greater mix of ~~June 2018.~~local sand sales, and overall lower proppant pricing.

Revenues in the Industrial segment were $385.6 million for the six months ended June 30, 2019 compared to $344.0 million for the six months ended June 30, 2018, ~~compared to $323.8~~an increase of $41.6 million, or 12%. With the inclusion of legacy Fairmount Santrol Industrial revenues for the ~~six~~five months ended ~~June 30, 2017, increase~~May 31, 2018 of ~~$20.2~~$55.8 million, ~~or 6%.~~total Industrial ~~segment~~ revenues for the six months ended June 30, 2018 ~~included $11.8~~were $399.8 million. Total Industrial revenues for the six months ended June 30, 2019 decreased $14.2 million, ~~in revenues~~or 4%, from the six months ended June 30, 2018, including legacy Fairmount Santrol revenues for the ~~month of June~~five months ended May 31, 2018. Volumes sold into the Industrial segment ~~increased 3% to 6.3~~were 7.2 million tons in the six months ended June 30, ~~2018~~2019, compared to ~~6.1~~6.3 million tons ~~in the six months ended June 30, 2017. For~~for the six months ended June 30, 2018, an increase of 0.9 million tons, or 14%. With the inclusion of legacy Fairmount Santrol ~~contributed 0.2 million tons of~~ Industrial ~~segment~~ volumes for the ~~month~~five months ended May 31, 2018 of 1.0 million tons, total Industrial volumes for the six months ended June ~~2018. The~~30, 2018 were 7.3 million tons, a slight decrease of 0.1 million tons, or 1%. Total Industrial revenue ~~increase~~decreases are primarily attributable to lower transportation-related revenues. Revenues also decreased due to lower volumes in the ~~Industrial segment was driven by an annual price increase implemented at the beginning of 2018~~ceramics markets, as well as ~~a shift~~weather-related declines in ~~product sales towards glass float~~the building and ~~fiber and higher value-added products which have an associated higher selling price.~~construction end-markets.

~~Total~~Segment gross profit was $165.6 million for the six months ended June 30, 2019 compared to segment gross profit ~~was~~of $262.6 million for the six months ended June 30, 2018, ~~compared~~a decrease of $97.0 million, or 37%. 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 months ended June 30,

2018 was $420.7 million. Total segment gross profit for the six months ended June 30, 2019 decreased $255.1 million, or 61%, from the six months ended June 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 ~~$162.0~~lower volumes as a result of the proppant market downturn coupled with 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 costs. Additionally, for the six months ended June 30, 2019 gross profit was negatively impacted by $4.2 million in costs associated with operating lease expense related to the adoption of Topic 842.

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

Energy segment gross profit was $48.9 million for the six months ended June 30, ~~2017, an increase of $100.6 million, or 62%. Total segment gross profit included $12.5 million in gross profit related~~2019 compared to Fairmount Santrol for the month of June 2018 and $19.2 million of additional expense included in cost of goods sold, which is related to the $30.2 million write-up of Fairmount Santrol’s inventories to fair value under GAAP. The increase in segment gross profit year over year was primarily due to the increase in volumes sold and average selling prices in the Energy segment.

~~Segment gross profit in the Energy segment was~~ $166.8 million for the six months ended June 30, 2018, ~~compared~~a decrease of $117.9 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 million. Total Energy segment gross profit for the six months ended June 30, 2019 decreased $254.6 million, or 84%, from the six months ended June 30, 2018, including legacy Fairmount Santrol gross profit for the five months ended May 31, 2018. For the six months ended June 30, 2019, the Energy segment gross profit included $4.2 million of operating lease expense related to ~~$66.1~~the adoption of Topic 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. The remaining Energy segment gross profit decrease was primarily due lower volumes, downward pricing pressure and related reduction in profitability as a result of the proppant market softness, driven by lower Northern White sand and local sand pricing, as well as higher unit production costs due to lower Northern white sand volumes.

Industrial segment gross profit was $116.7 million for the six months ended June 30, ~~2017, an increase of $100.7 million. Energy segment gross profit included $9.0 million in Energy segment gross profit related~~2019 compared to Fairmount Santrol for the month of June 2018 and $18.0 million of additional expense, which was related to the write-up of Fairmount Santrol’s inventories to fair value under GAAP. The increase in segment gross profit was primarily due to higher selling prices and volume which was offset by higher mine production costs.

~~Segment gross profit in the Industrial segment was~~ $95.8 million for the six months ended June 30, 2018, ~~compared to $95.9~~an increase of $20.9 million, or 22%. 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 million and flat year over year. For the six months ended June 30, ~~2017, a decrease of $0.1 million, or 0%.~~2019, the Industrial segment gross profit included ~~$3.5 million in Industrial segment gross profit related to Fairmount Santrol for the month of June 2018 and $1.2~~$0.6 million of ~~additional~~ expense ~~which was~~ related to the write-up of legacy Fairmount Santrol’s inventories to fair value as a result of the Merger under GAAP. ~~The change in segment gross profit was due to higher production and energy costs in the U.S. and Mexico coupled with greater foreign exchange impact on Mexican related sales.~~

SG&A increased ~~$14.6~~$24.0 million, or ~~35%~~42%, to $80.6 million for the six months ended June 30, 2019 compared to $56.6 million for the six months ended June 30, ~~2018 compared to $42.0 million~~2018. SG&A for the six months ended June 30, ~~2017.~~2019 includes stock compensation expense of $6.1 million. 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 million. Total SG&A decreased $20.2 million, or 20%, from the six months ended June 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 ~~$6.1~~$0.8 million ~~in spending~~ of ~~SG&A expenses from Fairmount Santrol for~~stock compensation expense incurred post-Merger in the month of June ~~2018 and stock compensation expense~~2018. The remainder of ~~$0.8 million. SG&A excludes any Merger-related expenses, which have been included in Other non-operating expense, net.~~

~~Excluding stock compensation expense and~~ the ~~impact of Fairmount Santrol spending for the month of June, SG&A increased over the prior year~~decrease is primarily due to ~~a higher compensation base~~expense reduction initiatives, headcount rationalization, and ~~related compensation as well as an increase~~synergy realization. Additionally, we experienced favorable healthcare claims activity, which resulted in ~~general business expenses as part of increased volumes in the business.~~reduced healthcare costs.

Depreciation, depletion and amortization increased ~~$16.3~~$53.4 million to ~~$63.9~~$117.3 million for the six months ended June 30, ~~2018~~2019, compared to ~~$47.6~~$63.9 million in the six months ended June 30, ~~2017.~~2018. The increase ~~in expense~~compared to the prior year comparable period was due to ~~$9.6~~the inclusion of mineral reserves depletion for production facilities acquired in connection with the Merger.

We did not incur asset impairments in the six months ended June 30, 2019, however, 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 million in the six months ended June 30, 2019, primarily related to separation costs and relocation costs as a result of the Merger and minimum quantity penalties incurred in connection with reduction production at idled facilities. Included in the six months ended June 30, 2019 is $5.5 million of ~~depreciation, depletion~~other charges related to executive severance and ~~amortization expense from Fairmount Santrol for~~benefits. There were no restructuring charges in the ~~month of~~six months ended June 30, 2018. The increase in expense was due to more assets placed in service largely due to the start-up of the West Texas mining facilities, as well as the commissioning of our Utica expansion and the write-up to fair value of the Fairmount Santrol property, plant, and equipment and intangibles under GAAP.

Other operating expense ~~increased $11.1~~(income), net decreased $6.4 million to ~~$12.9~~income of $4.7 million for the six months ended June 30, ~~2018~~2019 compared to ~~$1.8~~expense of $1.7 million in the six months ended June 30, ~~2017.~~2018. Other operating expense ~~included $144 thousand in income from Fairmount Santrol~~(income), net for the ~~month of~~six months ended June ~~2018 primarily~~30, 2019 included the income related to ~~non-controlling interest. The remaining increase~~realization of customary take-or-pay provisions of certain customer supply agreements. Additionally, for the six months ended June 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 ~~Other Operating Expense is due to the write-off of a terminated project, which was started by Unimin~~Mexico and ~~subsequently terminated by Covia as part of the Company’s capital optimization strategy.~~Virginia.

Operating income (loss) from continuing operations ~~increased $58.7~~decreased $167.3 million to ~~$129.2~~a loss of $39.1 million for the six months ended June 30, ~~2018~~2019 compared to ~~$70.5~~income of income of $128.2 million for the six months ended June 30, ~~2017. Earnings included $3.6 million from Fairmount Santrol for the month of June~~ 2018. The change in operating income from continuing operations for the six months ended June 30, 2019 was largely due to the ~~higher~~lower profitability in the Energy segment ~~for reasons noted above which was~~and restructuring and other charges of $11.5 million, offset by ~~increased SG&A expenses.~~ other operating income as noted above.

Interest expense increased ~~$4.1~~$39.3 million, or ~~39%~~287%, to ~~$14.7~~$53.0 million for the six months ended June 30, ~~2018~~2019 compared to ~~$10.6~~$13.7 million for the six months ended June 30, ~~2017.~~2018. The increase in expense ~~for the six months ended June 30, 2018~~ is primarily due to the ~~debt that~~interest on our Term Loan, which was incurred for the ~~Company incurred~~entirety of 2019, but only for the month of June in the second quarter of 2018. The Term Loan was used to finance the Merger.

Other non-operating expense, net ~~was~~decreased $40.4 million to $3.8 million in the six months ended June 30, 2019 compared to $44.2 million in the six months ended June 30, ~~2018, which includes~~2018. The decrease is due to lower legal, accounting, ~~financial advisory services, severance, accelerated stock awards, debt extinguishment~~ and other expenses incurred in connection with the ~~Merger.~~ Merger, partially offset by the 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 ~~$0.1~~$25.5 million to a benefit of $9.2 million for the six months ended June 30, 2019 compared to expense of $16.3 million for the six months ended June 30, ~~2018 compared~~2018. Income before income taxes decreased $166.1 million to ~~$16.4~~a loss of $95.8 million for the six months ended June 30, ~~2017. Income before~~2019 compared to income ~~taxes increased $10.4 million to~~of $70.3 million for the six months ended June 30, ~~2018 compared~~2018. The decrease in tax expense was primarily related to ~~$59.9 million~~the decrease in income before taxes, offset by 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, ~~2017. The decrease in tax expense recorded during~~2019 and 2018, ~~was primarily related to the decrease in the corporate income tax rate to 21% resulting from the Tax Act. The effective tax rate was 23.2% and 27.3% for the six months ended June 30, 2018 and 2017,~~ respectively. The decrease in the effective tax rate is primarily attributable to ~~the decrease in the corporate income tax rate to 21% resulting from the Tax Act. The decrease was partially~~a valuation allowance set up for interest expense disallowed under IRC Section 163(j) offset by the ~~non-deductibility of certain expenses incurred in connection with the Merger and foreign provisions of the Tax Act.~~benefit from depletion. The effective rate differs from the U.S. federal statutory rate primarily due ~~primarily~~ 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 ~~foreign provisions~~relevant period. Each quarter, we update our estimate of the ~~Tax Act.~~annual effective tax rate. If our estimated effective tax rate changes, we make a cumulative adjustment.

Net income attributable to Covia decreased $153.0 million, or 230%, to a loss of $86.6 million for the six months ended June 30, 2018, the Company remains provisional for legislative changes of the Tax Act. The SEC has provided up to a one-year measurement period, ending December 22, 2018, for the Company to finalize the accounting for the impacts of the Tax Act. Accordingly, the Company will continue to evaluate the provisional estimates as certain items may differ, potentially materially, due to further refinement of the calculations, changes in interpretations and assumptions made, and further guidance that may become available. During the six months ended June 30, 2018, there were no adjustments made to previous estimates related to the Tax Act.

~~Net income attributable to Covia Holdings Corporation increased $12.8 million, or 24%,~~2019 compared to $66.4 million for the six months ended June 30, 2018, ~~compared~~which includes $12.6 million from discontinued operations. The

remaining change in net income attributable to ~~$53.6~~Covia is primarily due to decreases in revenues and gross profit and increases in SG&A, DD&A, and restructuring and other charges discussed above.

Adjusted EBITDA decreased $105.2 million to $99.8 million for the six months ended June 30, ~~2017 due~~2019 compared to ~~the factors previously noted.~~

~~Adjusted EBITDA increased $88.0 million to $206.1~~$205.0 million for the six months ended June 30, ~~2018 compared to $118.1 million for the six months ended June 30, 2017.~~2018. Adjusted EBITDA for the six months ended June 30, ~~2018~~2019 excludes the impact of ~~$0.8~~$6.1 million of non-cash stock compensation expense, ~~$12.3~~$14.1 million in restructuring and other charges ~~from the write-off of a terminated project, which was started by Unimin~~ and ~~subsequently terminated by Covia as part of the Company’s capital optimization strategy,~~restructuring-related charges, $0.9 million in Merger-related and ~~Merger-related~~integration expenses ~~of $44.2 million. Adjusted EBITDA for the six months ended June 30, 2018 includes $19.2~~and $4.2 million ~~of additional~~in costs associated with operating lease expense ~~included in cost of goods sold, which is~~ related to the ~~$30 million write-up~~adoption of ~~Fairmount Santrol’s inventories to fair value under GAAP. Fairmount Santrol contributed $25.6 million~~Topic 842. The change in ~~Adjusted EBITDA for the month of June 2018. The remaining increase in~~

Adjusted EBITDA is largely due to ~~increased~~the revenues, gross profit, ~~for the reasons previously noted offset by higher~~and SG&A ~~spending.~~factors discussed above.

Our liquidity is principally used to service our debt, ~~pay dividends to shareholders,~~ 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.

~~In connection with the Merger and on~~On the Merger Date, we entered into ana credit and guarantee agreement with a group of ~~books,~~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 athe $1.65 billion Term Loan and athe $200 million Revolver. The Term Loan matures ~~seven years after the Merger Date~~on June 1, 2025 and amortizes in equal quarterly installments in an amount equal to 1% per year, ~~beginning with the first full fiscal quarter after the Merger Date,~~ with the balance due at maturity. Loans under the Term Loan ~~would~~must be prepaid with ~~subject to various exceptions,~~ (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) ~~50%~~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 ~~(a)~~ customary “breakage” costs with respect to LIBOR ~~borrowings and (b) a 1.00% call protection premium applicable to certain “repricing transactions” occurring on or prior to the date that is six months after the Merger Date.~~borrowings.

The Revolver matures ~~five years after the Merger Date.~~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 ~~4.50:~~6.60:1.00 ~~to step down to 4.00:~~through December 31, 2019, 5.50:1.00 atfor the fiscal ~~quarter ended~~quarters ending March 31, 2020 to December 31, ~~2018.~~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.

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 ~~the Company’s~~our total net leverage ratio, ~~[the~~defined as the ratio of debt (less up to $150 million of cash) to EBITDA for the most recent four fiscal quarter ~~period],~~period, as follows:

The debt agreement provides that the interest rate spreads set forth in the table above will each be reduced by 0.25% if our corporate credit ratings issued in connection with the initial syndication of the Term Loan and Revolver are BB- (with a stable or better outlook) or higher and Ba3 (with a stable or better outlook) or higher from S&P and Moody’s, respectively. As of the date hereof, S&P and Moody’s have announced that our ratings of the combined company are at or above such levels.

The Term Loan and Revolver are guaranteed by all of our ~~wholly owned~~wholly-owned material restricted subsidiaries (including Bison Merger Sub, LLC, as successor to Fairmount Santrol, and all of the ~~wholly owned~~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 ~~the~~our assets and those of ~~the Company and~~ each ~~other~~ guarantor, including, but not limited to (a) a perfected first-priority pledge of all of the capital stock held by ~~the Company~~us or any ~~other~~ guarantor of each existing or subsequently acquired or organized ~~wholly owned~~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 ~~the~~our tangible and intangible assets and those of ~~the Company and~~ each guarantor.

The Term Loan and Revolver contain customary representations and warranties, affirmative covenants, negative covenants and events of default. Negative covenants ~~will~~ 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.

~~In addition,~~ As of June 30, 2019, we were in compliance with all covenants in accordance with the credit agreement permits us to add one or more incremental term loan facilities and/or increase the commitments under the Revolver in an aggregate principal amount up to the sum of (x) $250 million, plus (y) an amount of incremental facilities so that, after giving effect to any such incremental facility, on a pro forma basis, the total net leverage ratio would not exceed 2.75:1.00, plus (z) an amount equal to all voluntary prepaymentsterms of the Term Loan. In addition to incremental term loan facilities and Revolver increases, this incremental credit capacity can be allowed to be utilized in the form of (a) senior unsecured notes or loans, subject to a pro forma total net leverage ratio of up to 3.75:1.00, (b) senior secured notes or loans that are secured by the collateral on a junior basis, subject to a pro forma total net leverage ratio of up to 3.25:1.00, or (c) senior secured notes that are secured by the collateral on a pari passu basis, subject to a pro forma total net leverage ratio of up to 2.75:1.00.Revolver.

The proceeds of the Term Loan were primarily used to ~~primarily~~ 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 78 in the condensed consolidated financial statements included in this Report for further detail.

As of June 30, ~~2018,~~2019, we had outstanding term loan borrowings of ~~$1.65~~$1.63 billion and cash on hand of ~~$136.4~~$112.1 million. ~~In addition, our Revolver can provide additional liquidity, if needed.~~ As of June 30, ~~2018, we had $200.0 million of availability~~2019, under our Revolver, ~~with $14.6~~we had $11.3 million committed to letters of credit, leaving net availability at ~~$185.4~~$188.7 million. As noted in Note 7 and Note 24, in July 2019, we entered into agreements to sell Calera and the W&W Railroad for a combined $240 million in cash. 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~~capital intensive and ~~future~~short-term capital expenditures ~~are expected~~related to certain strategic projects can be substantial. As of the date of this Report, we believe that our ~~cash on-hand, cash generated from operations, and amounts available under our Revolver~~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 exceed current liabilities and represents a measure of liquidity. Covia’s working capital was ~~$466.4~~$151.3 million at June 30, ~~2018~~2019 and ~~$468.7~~$216.3 million at December 31, ~~2017.~~2018. The decrease in working capital is primarily due to ~~the effects~~improvements in cash collections and days sales outstanding ratios of ~~purchase accounting.~~our accounts receivable portfolio, offset by increases in days payables outstanding and deferred revenue.

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

Net cash provided by operating activities was ~~$85.6~~$51.4 million for the six months ended June 30, ~~2018~~2019 compared with ~~$86.0~~$85.6 million ~~provided~~ in the six months ended June 30, ~~2017.~~2018. This ~~$0.4~~$34.2 million variance was primarily ~~the result of a $12.8 million increase in net income, a $15.6 million increase in depreciation, depletion, and amortization expense (largely~~ due to ~~purchase accounting adjustments), a $12.3 million noncash write-off~~lower earnings, the changes in working capital, noted previously, and the effect of the acquisition of the assets ~~under construction, and $9.8 million in other net increases to reconcile net income to net cash provided by operating activities, which was more than offset by a $50.9 million use~~ of ~~working capital.~~Fairmount Santrol.

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

Net cash used in investing activities was $62.6 million for the six months ended June 30, 2019 compared to $211.2 million for the six months ended June 30, ~~2018 compared~~2018. The $148.6 million variance was primarily related to ~~$28.8~~the decrease in capital expenditures and payments made in connection with the Merger.

Capital expenditures of $59.5 million ~~used for~~in the six months ended June 30, ~~2017. The $182.4 million variance was~~2019 were primarily focused on growth expenditures at our Canoitas, Mexico facility and the ~~result~~completion of Merger-related cash flows, such as the $31.0 million transferred to HPQ Co., and $64.6 million in net payments to Fairmount Santrol stockholders. Additionally, capital expenditures increased $86.5 million.

in-basin sand plants. Capital expenditures ofwere $115.7 million in the six months ended June 30, 2018 were primarily focused on construction of new facilities in West Texas, completion of the expansion of the Utica, Illinois, and Oregon facilities to support growth in the Energy segment, and expanding capacity at the Canoitas facility in Mexico. Capital expenditures were $29.2 million in the six months ended June 30, 2017 and were primarily focused on ~~a new enterprise resource planning (“ERP”) system~~completing our West Texas facilities, completion of expansion projects at our Illinois and ~~a tailings system in Kasota, Minnesota.~~Oregon facilities, and expanding capacity at our Canoitas, Mexico facility.

For ~~the second half of 2018,~~full year 2019, we expect capital expenditures to be in athe range of ~~$110~~$80 million to ~~$130~~$100 million. ~~This~~We expect these expenditures will primarily ~~includes~~include maintenance and growth capital expenditures ~~and greenfield mine projects in West Texas and Oklahoma.~~at existing locations.

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

Net cash used in financing activities was ~~$47.3~~$11.0 million in the six months ended June 30, ~~2018~~2019 compared to ~~$0.4~~$47.3 million used in the six months ended June 30, ~~2017.~~2018. The ~~$46.9~~$36.3 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, ~~partially offset by $1.11~~$1.13 billion in payments on Unimin and Fairmount Santrol debts, a $520.4 million Cash Redemption payment, and $41.2 million in ~~Merger related~~Merger-related debt refinancing fees. In the six months ended June 30, 2019, we paid $8.3 million in principal payments on our Term Loan.

Our business is affected ~~to some extent~~ 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. During the six months ended June 30, 2018,~~Mexico and are subject to certain inflationary pressures in ~~Mexico impacted costs during the period relative to the six months ended June 30, 2017.~~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 30, ~~2018,~~2019, we have contractual obligations for long-term debt, ~~capital~~finance leases, operating leases, ~~purchase obligations,~~ terminal operating costs, ~~leasehold interest payments, earnout payments,~~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 table are operating lease obligations, which are now recorded on our ~~Registration Statement on Form S-4.~~balance sheet as a result of the adoption of Topic 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 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$17.0~~$32.1 million and ~~$12.5~~$31.2 million, respectively, accrued for Asset Retirement Obligations, which include future reclamation costs. There were no ~~other~~ 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 on various other assumptions that we believe are ~~believed to be~~ reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in ~~Unimin’s Registration Statement on~~our Form ~~S-4.~~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 ~~recorded on the balance sheet~~reported at ~~their~~ fair ~~values.~~value in other non-current assets and other non-current liabilities. Changes in the fair value of derivatives are recorded each period in ~~current earnings or in~~ other comprehensive ~~income, depending on whether a derivative is~~income. For derivatives not designated as ~~part~~hedges, the gain or loss is recognized in current earnings. No components of aour hedging ~~relationship and, if it is, depending on~~instruments were excluded from the ~~type~~assessment of ~~hedging relationship. For~~hedge effectiveness. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in ~~which we are hedging~~exchange for making fixed-rate payments over the ~~variability of cash flows related to a variable-rate liability, the effective portion~~life of the agreements without exchange of the underlying notional value. The gain or loss on the ~~derivative instrument~~interest rate swap is ~~reported~~recorded in accumulated other comprehensive ~~income~~loss and subsequently reclassified into interest expense in the ~~periods~~same period during which ~~earnings are impacted by the variability of the cash flows of~~ the hedged ~~item. The ineffective portion of all hedges is recognized in current period~~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. ~~In management’s opinion,~~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 30, ~~2018,~~2019, the fair value of the interest rate swaps was ~~$0.8~~a liability of $21.1 million.

A hypothetical increase or decrease in interest rates by 1.0% on variable rate debt would have had an approximate ~~$1.4~~$8.2 million impact on our interest expense in the six months ended June 30, ~~2018.~~2019.

~~Credit risk is defined as the risk that a third party will not fulfill its contractual obligations and, therefore, generate losses for Covia.~~ We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. In the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, one customer exceeded 10% of our revenues. This customer accounted for 11% and 13% of our revenues in the six months ended June 30, 2019 and 2018, ~~and 2017.~~respectively. At June 30, ~~2018 and December 31, 2017,~~2019, we had one customer whose accounts receivable balance exceeded 10% of total receivables. Approximately 15% ~~and 13%~~ of our accounts receivable balance at June 30, ~~2018 and December 31, 2017, respectively,~~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. ~~Credit risk is also mitigated by contracting with multiple counterparties and limiting exposure to individual counterparties to clearly defined limits based upon the risk of counterparty default.~~

Despite examining our customers’ credit worthiness, we may still experience delays or failures in customer payments. Some of our customers have reported experiencing financial difficulties. With respect to customers that may file for bankruptcy protection, we may not be able to collect sums owed to us by these customers and also may be required to refund pre-petition amounts paid to us during the preference period (typically 90 days) prior to the bankruptcy filing.

We are subject to market risk related to foreign currency exchange rate fluctuations. Revenues from international operations represented ~~13%~~10% and ~~19%~~13% of our revenues for the six months ended June 30, ~~2018~~2019 and ~~2017,~~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 ~~are designed to ensure that information required to be disclosed by us~~term is defined in ~~reports that we file or submit under the Securities Exchange Act~~Rules 13a-15(e) and 15d-15(e) of ~~1934, as amended (“~~the Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.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. Management is required to apply its judgment in evaluating the cost-benefit relationship~~objectives of ~~possible~~such controls and procedures.

~~Under~~Our management, under the supervision and with the participation of our ~~management, including the~~ Chief Executive Officer (“CEO”) ~~(principal~~(our principal executive officer) and ~~the~~ Chief Financial Officer (“CFO”) ~~(principal~~(our principal financial officer), ~~we carried out an evaluation of~~has evaluated the effectiveness of our disclosure controls and procedures as ~~defined in Rules 13a-15(e) and 15d-15(e) under~~of the ~~Exchange Act, as~~end of ~~June 30, 2018. Our~~the period covered by this report. Based on that evaluation, our CEO and CFO have each concluded that ~~our~~such disclosure controls and procedures were effective ~~at the reasonable assurance level~~ as of ~~June 30, 2018.~~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 ~~for~~during the quarter ended June 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On June 1, 2018, Unimin and Fairmount Santrol merged to form Covia. Refer to Note 1 and Note 2 of the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2018 included elsewhere in this Quarterly Report on Form 10-Q. 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 ~~products~~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 30, ~~2018,~~2019, we were subject to approximately ~~141~~63 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 jurisdictions over the years. In accordance with the terms of our insurance ~~obligations,~~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 ~~claims~~lawsuits cannot be predicted with certainty, ~~in our view, none of these cases,~~management does not believe that the pending lawsuits, individually or in the aggregate, are reasonably ~~possible~~likely to have a material adverse effect on our ~~business,~~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, ~~and~~ results of ~~operations.~~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.

Beginning on April 24, 2018, alleged stockholders of Fairmount Santrol filed class actions against Fairmount Santrol and its directors in the United States District Courts for the Northern District of Ohio and for the District of Delaware. The lawsuits generally alleged that Fairmount Santrol and its directors violated the federal securities laws by issuing allegedly misleading disclosures in connection with the Merger. The lawsuits sought, among other things, to enjoin the special meeting at which stockholders of Fairmount Santrol were scheduled to vote on, among other items, a proposal to adopt the Merger agreement.

On May 14, 2018, counsel for the plaintiffs and counsel for the defendants entered into a memorandum of understanding that, among other things, provided for the dissemination of additional information to Fairmount Santrol stockholders and for dismissal with prejudice of the lawsuits. On May 15, 2018, Fairmount Santrol disseminated the supplemental disclosures to Fairmount Santrol stockholders through a current report on Form 8-K. Also on May 15, 2018, the plaintiffs withdrew their pending motions for a preliminary injunction. On May 25, 2018, at a special meeting of the stockholders of Fairmount Santrol, the holders of the majority of the outstanding shares of Fairmount Santrol voted to approve the Merger, among other things. On June 1, 2018, the Merger was effected pursuant to the Merger agreement. Pursuant to the memorandum of understanding, the parties are preparing a stipulation of settlement and other documentation to submit to the Court for approval.

In addition to other information set forth in this Report, you should carefully consider the risk factors discussed under the caption “Risk Factors” in ~~our Registration Statement on~~the Form ~~S-4.~~10-K. There have been no material changes to the risk factors previously ~~reported.~~disclosed in the Form 10-K.

ITEM 2. ~~UNREGISTERED~~UNREGISTERED SALES OF ~~EQUI~~TYEQUITY SECURITIES AND USE OF PROCEEDS

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 ~~the Company’s~~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 ~~has~~have also increased in recent years.

~~Covia Holdings Corporation is required to report certain~~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 ~~and that required information~~ is included in Exhibit 95.1 to this Report and is incorporated by ~~reference into this Report.~~reference.

The following ~~Exhibits~~documents are filed ~~with~~or furnished as exhibits to this Quarterly Report on Form ~~10-Q or are incorporated by~~10-Q. For convenient reference, each exhibit is listed in the following Exhibit Index according to ~~a prior filing~~the number assigned to it in ~~accordance with Rule 12b-32 under~~ the ~~Securities and Exchange Act~~Exhibit Table of ~~1934. All Exhibits not so designated are incorporated by reference to a prior filing as indicated.~~ 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.)

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐

	Page
Part I – Financial Information

~~Item 1 – Financial Statements (Unaudited)~~

~~Condensed Consolidated Statements of Income~~	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	7

~~Notes to Condensed Consolidated Financial Statements~~	8

Notes to Condensed Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	3634

Item 3 – Quantitative and Qualitative Disclosures about Market Risk	48

Item 4 – Controls and Procedures	49

Part II – Other Information	49

Item 1 – Legal Proceedings	49

Item 1A – Risk Factors	50

Item 12 – ~~Legal Proceedings~~Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 1A3 – ~~Risk Factors~~Defaults upon Senior Securities	50

Item 24 – ~~Unregistered Sales of Equity Securities and Use of Proceeds~~Mine Safety Disclosures	50

Item 5 – Other Information	50

Item 6 – Exhibits	50

Exhibit Index	51

~~Item 3 – Defaults upon Senior Securities~~	51

~~Item 4 – Mine Safety Disclosures~~	51

~~Item 5 – Other Information~~	51

~~Item 6 – Exhibits~~	51

~~Exhibit Index~~Signatures	52

~~Signatures~~	56

	Three Months Ended June 30, 2017							Six Months Ended June 30, 2017
	As Reported		Adjustments			As Revised		As Reported		Adjustments			As Revised
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)	$	232,236	$	(1,091	)	$	231,145	$	451,587	$	(2,171	)	$	449,416
Selling, general and administrative expenses		21,825		(605	)		21,220		43,250		(1,205	)		42,045
Interest expense, net	$	3,554	$	1,696		$	5,250	$	7,229	$	3,376		$	10,605

	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


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

	June 30, 2018			December 31, 2017
	(in thousands)
Assets
Current assets
Cash and cash equivalents	$	136,370		$	308,059
Accounts receivable, net of allowance for doubtful accounts of $5,141 and $3,682
at June 30, 2018 and December 31, 2017, respectively		418,301			219,719
Inventories, net		183,164			79,959
Other receivables		34,780			27,963
Prepaid expenses and other current assets		20,871			16,322
Current assets of discontinued operations		-			66,906
Total current assets		793,486			718,928

Property, plant and equipment, net		2,653,792			1,136,104
Deferred tax assets, net		7,497			7,441
Goodwill		472,347			53,512
Intangibles, net		170,015			25,596
Other non-current assets		23,504			2,416
Non-current assets of discontinued operations		-			96,101
Total assets	$	4,120,641		$	2,040,098

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	19,920		$	50,045
Accounts payable		185,753			101,983
Accrued expenses		121,403			88,208
Current liabilities of discontinued operations		-			10,027
Total current liabilities		327,076			250,263

Long-term debt		1,615,666			366,967
Employee benefit obligations		99,490			97,798
Deferred tax liabilities, net		230,416			62,614
Other long-term liabilities		84,802			29,057
Non-current liabilities of discontinued operations		-			8,084
Total liabilities		2,357,450			814,783

Commitments and contingent liabilities (Note 16)
Equity
Preferred stock: $0.01 par value, 15,000 authorized shares at June 30, 2018
Shares outstanding: 0 at June 30, 2018		-			-
Common stock: $0.01 par value, 750,000 and 178,000 authorized shares
at June 30, 2018 and December 31, 2017, respectively
Shares issued: 158,195 at June 30, 2018 and December 31, 2017
Shares outstanding: 131,120 and 119,645 at June 30, 2018 and
December 31, 2017, respectively		1,777			1,777
Additional paid-in capital		383,771			43,941
Retained earnings		1,984,892			1,918,457
Accumulated other comprehensive loss		(121,716	)		(128,228	)
Total equity attributable to Covia Holdings Corporation before treasury stock		2,248,724			1,835,947
Less: Treasury stock at cost
Shares in treasury: 27,075 and 38,550 at June 30, 2018
and December 31, 2017, respectively		(486,092	)		(610,632	)
Total equity attributable to Covia Holdings Corporation		1,762,632			1,225,315
Non-controlling interest		559			-
Total equity		1,763,191			1,225,315
Total liabilities and equity	$	4,120,641		$	2,040,098

	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

	One Month Ended June 30, 2018
Operating results of Fairmount Santrol
Revenues	$	96,141
Net loss	$	(3,513	)

	December 31, 2017
Accounts receivable, net	$	23,065
Inventories, net		24,856
Other receivables		17,995
Prepaid expenses and other current assets		990
Current assets of discontinued operations		66,906
Property, plant, and equipment, net		94,536
Intangibles, net		1,565
Total assets of discontinued operations	$	163,007

Accounts payable	$	4,510
Accrued expenses and other current liabilities		5,517
Current liabilities of discontinued operations		10,027
Deferred tax liabilities, net		7,648
Other noncurrent liabilities		436
Total liabilities of discontinued operations	$	18,111

	June 30, 2018		December 31, 2017
Raw materials	$	22,723	$	16,393
Work-in-process		17,470		1,738
Finished goods		106,267		35,905
Spare parts		36,704		25,923
Inventories, net	$	183,164	$	79,959

Interest Rate Swap Agreements	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%
Designated as cash flow hedge	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%
Designated as cash flow hedge	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%
Designated as cash flow hedge	June 1, 2025	2.87%		50,000	Term Loan	3%
			$	660,000		40%

December 31, 2018
Designated as cash flow hedge	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%
Designated as cash flow hedge	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%
Not designated as cash flow hedge	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%
			$	660,000		40%

		Assets (Liabilities)
Interest Rate Swap Agreements	Balance Sheet Classification	June 30, 2018
Non-qualifying cash flow hedge	Other non-current assets	$	1,581
Non-qualifying cash flow hedge	Other long-term liabilities		(767	)
		$	814

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

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

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

	Location of Loss on Derivative
	Interest expense, net				Interest expense, net
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(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
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	$	-


Derivatives Not Designated						Three Months Ended June 30,		Six Months Ended June 30,
as ASC 815-20 Cash Flow	Location of Gain	Three Months Ended June 30,			Location of Loss Recognized	2018		2018
Hedging Relationships	Recognized in Income on Derivative	2018			in Income on Derivative	(in thousands)
Interest rate swap agreements	Interest expense	$	(1,517	)	Interest expense, net	$	1,199	$	1,199


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

				Weighted					Weighted		Options			Weighted Average Exercise Price, Options		RSUs			Weighted Average Price at RSU Issue Date		PSUs			Weighted Average Price at PSU Issue Date
				Average Exercise		Restricted			Average Price at		(in thousands, except per share data)
	Options			Price, Options		Stock Units			RSU Issue Date
Outstanding at December 31, 2017		-		$	-		-		$	-
Assumed through acquisition		2,537			33.85		665			28.09
Outstanding at December 31, 2018												2,503		$	33.49		746		$	26.12		-		$	-
Granted												-			-		1,738			4.69		1,448			4.74
Exercised or distributed		(1	)		10.20		(4	)		-		-			-		(315	)		27.89		-			-
Forfeited		-			-		-			-		(7	)		38.61		(176	)		7.98		(203	)		4.74
Expired		-			-		-			-		(11	)		48.48		-			-		-			-
Outstanding at June 30, 2018		2,536		$	33.85		661		$	28.27
Outstanding at June 30, 2019												2,485		$	33.41		1,993		$	8.61		1,245		$	4.74

													Covia Pension Plans
	Pension Plans												Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended June 30,						Six Months Ended June 30,						2019			2018			2019			2018
	2018			2017			2018			2017			(in thousands)
Components of net periodic benefit cost
Service cost	$	2,190		$	2,020		$	4,392		$	4,041		$	551		$	2,190		$	1,102		$	4,392
Interest cost		2,340			2,398			4,673			4,795			2,084			2,340			4,168			4,673
Expected return on plan assets		(2,709	)		(2,494	)		(5,389	)		(4,988	)		(2,308	)		(2,709	)		(4,616	)		(5,389	)
Amortization of prior service cost		136			138			274			276			82			136			164			274
Amortization of net actuarial loss		1,301			1,211			2,605			2,423			522			1,301			1,044			2,605
Recognized settlement loss		439			80			439			160
Settlement loss														1,065			439			2,744			439
Net periodic benefit cost	$	3,697		$	3,353		$	6,994		$	6,707		$	1,996		$	3,697		$	4,606		$	6,994

									Postretirement Medical Plans
	Post-Retirement Medical Plans								Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,				2019		2018		2019		2018
	2018		2017		2018		2017		(in thousands)
Components of net periodic benefit cost
Service cost	$	267	$	246	$	533	$	491	$	73	$	267	$	146	$	533
Interest cost		209		218		420		437		120		209		240		420
Amortization of net actuarial loss		122		145		244		290		40		122		80		244
Net periodic benefit cost	$	598	$	609	$	1,197	$	1,218	$	233	$	598	$	466	$	1,197

									June 30, 2019
	June 30, 2018								Gross			Tax Effect		Net Amount
	Gross			Tax Effect		Net Amount			(in thousands)
Foreign currency translation adjustments	$	(54,237	)	$	-	$	(54,237	)	$	(50,182	)	$	-	$	(50,182	)
Amounts related to employee benefit obligations		(92,496	)		25,017		(67,479	)		(47,479	)		14,587		(32,892	)
Unrealized gain (loss) on interest rate hedges										(22,355	)		5,142		(17,213	)
	$	(146,733	)	$	25,017	$	(121,716	)	$	(120,016	)	$	19,729	$	(100,287	)

										Six Months Ended June 30, 2019
	Six Months Ended June 30, 2018									Foreign			Amounts related			Unrealized
	Foreign			Amounts related						currency			to employee			gain (loss)
	currency			to employee						translation			benefit			on interest
	translation			benefit						adjustments			obligations			rate hedges			Total
	adjustments			obligations			Total			(in thousands)
Beginning balance	$	(54,571	)	$	(73,657	)	$	(128,228	)	$	(53,389	)	$	(37,922	)	$	(3,914	)	$	(95,225	)
Other comprehensive income
before reclassifications		334			3,999			4,333			3,207			2,917			(13,755	)		(7,631	)
Amounts reclassified from accumulated
other comprehensive loss		-			2,179			2,179
Amounts reclassified from
accumulated other comprehensive loss											-			2,113			456			2,569
Ending balance	$	(54,237	)	$	(67,479	)	$	(121,716	)	$	(50,182	)	$	(32,892	)	$	(17,213	)	$	(100,287	)

		June 30, 2019
	Classification	(in thousands)
Lease assets
Operating right-of-use assets, net	Assets	$	396,680
Finance right-of-use assets, net	Property, plant, and equipment, net		11,556
Total lease assets		$	408,236
Lease liabilities
Operating lease liabilities, current	Current liabilities	$	67,720
Operating lease liabilities, non-current	Liabilities		296,678
Finance lease liabilities, current	Current portion of long-term debt		3,841
Finance lease liabilities, non-current	Long-term debt		3,942
Total lease liabilities		$	372,181

	Operating			Finance			Total
	(in thousands)
2019	$	86,666		$	4,434		$	91,100
2020		76,528			2,071			78,599
2021		64,989			948			65,937
2022		58,692			578			59,270
2023		44,834			212			45,046
2024 and Thereafter		104,643			-			104,643
Total lease payments		436,352			8,243			444,595
Less imputed lease interest		(71,954	)		(460	)		(72,414	)
Total lease liabilities	$	364,398		$	7,783		$	372,181

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

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

	Amortization
	(in thousands)
2019	$	6,390
2020		12,779
2021		12,779
2022		12,779
2023		12,779
Thereafter		10,706
Total	$	68,212

	Merger-related		Idled facilities		Total
	(in thousands)
Restructuring charges
Severance and relocation costs	$	1,921	$	2,868	$	4,789
Contract termination costs		-		1,293		1,293
Total restructuring charges	$	1,921	$	4,161	$	6,082

	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~~		Business Contribution Agreement, dated as of May 31, 2018, by and among Unimin Corporation, SCR-Sibelco NV and Sibelco North America, Inc. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

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 ~~Commission~~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 ~~Commission~~SEC on June 6, 2018) (File No. 001-38510).

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

10.1		~~Redemption~~Letter Agreement with Richard A. Navarre dated ~~as of~~ May ~~31, 2018, by and between Unimin Corporation and SCR-Sibelco NV~~8, 2019 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the ~~Commission~~SEC on ~~June 6, 2018)~~May 9, 2019) (File No. 001-38510).

10.2		~~Tax Matters~~Form of Restricted Stock Unit Agreement ~~dated as~~for Interim President and CEO for 2018 Omnibus Incentive Plan of ~~May 31, 2018, by and between Unimin~~Covia Holdings Corporation ~~and SCR-Sibelco NV~~ (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company, filed with the ~~Commission~~SEC on ~~June 6, 2018)~~May 9, 2019) (File No. 001-38510).

10.3		~~Distribution Agreement, dated as of June 1, 2018, by and between~~ Covia ~~Holdings Corporation and SCR-Sibelco NV~~Executive Severance Plan effective May 23, 2019 (incorporated by reference to Exhibit ~~10.3~~10.1 to the Current Report on Form 8-K of the Company, filed with the ~~Commission~~SEC on ~~June 6, 2018)~~May 29, 2019) (File No. 001-38510).

~~10.4~~10.4(x)(*)		Distribution Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.5~~		Exclusive Agency Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.6~~		Exclusive Agency Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.7~~		Non-Compete Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.8~~		Transition Services Agreement, dated as of May 31, 2018, by and between Unimin Corporation and Sibelco North America, Inc. (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~Exhibit No.~~		~~Description~~

~~10.9~~		Transition Services Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.10~~		Credit and Guarantee Agreement, dated as of June 1, 2018, by and among Covia Holdings Corporation, Barclays Bank PLC and BNP Paribas Securities Corp. as lead arrangers and joint bookrunners, and the other parties named therein (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.11~~		Pledge and Security Agreement, dated as of June 1, 2018, by and among Covia Holdings Corporation, Barclays Bank PLC and BNP Paribas Securities Corp. and the other parties named therein (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.12~~		Trademark License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.13~~		Trademark Assignment Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and Sibelco Nederland NV (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.14~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.15~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.16~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.17~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.18~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.19~~		Patent License Agreement, dated as of June 1, 2018, by and between Covia Holdings Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.19 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.20~~		Redemption Agreement, related to the Cash Redemption, by and between Unimin Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.20 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.21~~		Intercompany Note, related to the Cash Redemption, by and between Unimin Corporation and SCR-Sibelco NV (incorporated by reference to Exhibit 10.21 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018).

~~10.22~~		~~Form of Indemnification Agreement (incorporated by reference to Exhibit 10.22 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018)~~.

~~10.23~~		~~2018 Omnibus Incentive Plan of Covia Holdings Corporation (incorporated by reference to Exhibit 10.23 to the Current Report on Form 8-K of the Company, filed with the Commission on June 6, 2018)~~.

~~Exhibit No.~~		~~Description~~

~~10.24~~		Form of FMSA Holdings Inc. Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.11 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.25~~		Form of Stock Option Agreement for FMSA Holdings Inc. Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.12 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.26~~		Amendment I to the FMSA Holdings Inc. Long Term Incentive Compensation Plan Stock Option Agreement (incorporated by reference to Exhibit 10.13 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.27~~		Form of FMSA Holdings Inc. Stock Option Plan (incorporated by reference to Exhibit 10.14 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.28~~		Form of Stock Option Agreement for FMSA Holdings Inc. Stock Option Plan (incorporated by reference to Exhibit 10.15 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.29~~		Amendment I to the FMSA Holdings Inc. Stock Option Agreement (incorporated by reference to Exhibit 10.16 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.30~~		Fairmount Santrol Holdings Inc. 2014 Long Term Incentive Plan, as amended (incorporated by reference to Appendix A to the Definitive Proxy Statement of Fairmont Santrol Holdings Inc., filed with the Commission on April 6, 2017).

~~10.31~~		Form of Stock Option Agreement for FMSA Holdings Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.18 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.32~~		Form of Notice of Grant of Stock Option for FMSA Holdings Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.19 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014).

~~10.33~~		Form of Restricted Stock Unit Agreement for ~~FMSA Holdings Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.21~~Independent Directors Pursuant to the ~~registration statement on Form S-1 of Fairmont Santrol~~Covia Holdings ~~Inc., filed with the Commission on September 18, 2014)~~.

~~10.34~~		~~Form of Notice of Grant of Restricted Stock Unit for FMSA Holdings Inc. 2014 Long Term~~Corporation 2018 Omnibus Incentive Plan ~~(incorporated by reference to Exhibit 10.22 to the registration statement on Form S-1 of Fairmont Santrol Holdings Inc., filed with the Commission on September 18, 2014)~~.

~~10.35~~		Omnibus Amendment to Outstanding Stock Option Agreements under the FMSA Holdings Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K of Fairmont Santrol Holdings Inc., filed with the Commission on December 16, 2015).

~~10.36~~		Omnibus Amendment to Outstanding Restricted Stock Unit Agreements under the FMSA Holdings Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K of Fairmont Santrol Holdings Inc., filed with the Commission on December 16, 2015).

~~10.37~~		Omnibus Amendment to Outstanding Stock Option Agreements under FMSA Holdings Inc. 2006 Long Term Incentive Compensatory Plan (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Fairmont Santrol Holdings Inc., filed with the Commission on November 3, 2016).

~~10.38~~		Omnibus Amendment to Outstanding Stock Option Agreements under FMSA Holdings Inc. 2010 Stock Option Plan (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q of Fairmont Santrol Holdings Inc., filed with the Commission on November 3, 2016).