Why Covia Holdings Corp (NYSE: CVIA) stock is soaring

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Covia Holdings Corp (NYSE: CVIA) stock surged 20.79% on November 14th, 2018 (Source: Google finance) though the company in the third quarter of FY 18 has reported the adjusted earnings per share of ($2.20), versus $0.32 reported last year. Revenue for the quarter came in at $523.4 million versus the consensus estimate of $612.95 million. The revenue declined by 17% compared to the third quarter of 2017 and down 27% sequentially, both on a pro forma basis, driven by lower Energy volumes and average selling prices. Total volumes of 8.2 million tons, a decline of 15% compared to the third quarter of 2017 and down 19% sequentially, both on a pro forma basis, driven by lower Energy volumes.

Net loss from continuing operations of $288.8 million, or $2.20 per share, driven by the pre-tax impact of $265.3 million in non-cash impairment charges of goodwill and other assets, $24.1 million in restructuring charges, and $5.6 million in merger-related expenses.

Moreover, adjusted EBITDA of $84.1 million, a decline of 42% compared to the third quarter of 2017 and down 53% sequentially, both on a pro forma basis. Net cash flow provided by operating activities of $104.7 million aided by strong Industrial segment performance and reduced working capital.

Additionally, The Company plans to idle its two operating facilities in Voca, Texas by the end of January 2019, resulting in a decrease of 1.6 million tons of Texas Gold capacity. Since September, the Company has idled or announced plans to idle 4.9 million tons of Energy capacity. In addition, the Company recently completed an expansion of its Canoitas facility in Mexico to add capacity and meet increasing demand from containerized glass customers.

Covia’s Crane and Kermit in-basin facilities in West Texas commenced shipments in the middle of the third quarter of 2018 and sold a combined total of approximately 180,000 tons during the period. The two plants are expected to ramp up to their stated annual production capacity of 6 million tons by the end of the first quarter of 2019. Covia’s new Seiling, Oklahoma in-basin facility began production in November 2018. This facility is expected to ramp up to its stated 2 million ton annual production capacity by the end of the first quarter of 2019.

For the fourth quarter 2018, Industrial volumes are expected to be in the range of 3.4 million to 3.5 million tons, similar to the fourth quarter of 2017 on a pro forma basis. Energy volumes are expected to be relatively flat sequentially and be in the range of 4.3 million to 4.5 million tons. Selling, general and administrative expenses are expected to be approximately $45 million, which includes $3 million in non-cash stock compensation. Capital expenditures are expected to be in the range of $50 million to $55 million.

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