Having a healthy balance sheet and access to capital positions Covia to invest in opportunities, manage risks, and attract long-term investors. Covia is a diverse and balanced organization with a strong ability to deliver total customer solutions. Our two complementary segments—Energy and Industrial—help to insulate the Company from Energy volatility, but with strong growth potential during Energy upcycles. Continuing to improve our capital structure, reduce our debt, and control our costs helps us Deliver on Promise to improve our financial strength and operational flexibility.
Covia employs a multi-faceted and multi-year strategic approach to improve our capital structure and control costs. Some of these steps in 2018 included reducing expenses by consolidating production into lower-cost plants and aligning our resources with market demand. Our board of directors reviews and approves all major capital expenditures.
During all cycles, Covia takes a disciplined and fiscally prudent approach to managing costs. Our size, scale, and distribution network allow us to maximize production at the lowest-cost facility and increase our bargaining power.
We continue to utilize unit trains to drive efficiencies in time, resources, and cost. Additional drivers of our growth and long-term financial stability include: having a diverse mix of Energy and Industrial customers; a broad range of value-added products; a comprehensive distribution and logistics network; and, a positive reputation from our legacy companies.
In 2018, Covia consolidated sand capacity into our largest, most efficient unit-train-capable facilities, and we commissioned three, in-basin plants with a combined eight million tons of nameplate capacity. We idled or reduced capacity at several mines as part of these efforts to reposition capacity and control costs. Our Industrial business delivered solid results and provided stable cash flows.
Covia recently identified a powerful new surfactant that improves the performance of resin-coated sand at a lower cost. This chemistry more effectively wets our resin-coated sand, which also improves flowability, and was implemented at all resin-coating facilities. These characteristics offer numerous benefits, including:
- Less material build-up on equipment;
- More efficient delivery and pumping;
- Stability at room temperature; and,
- Elimination of a post-treatment step.
Together, this improves the value of our resin-coated sands, increasing growth potential.
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Consistent with the Company’s strategy, Covia will focus on net debt reduction in 2019. We expect to complete a targeted investment to expand our Industrial capacity in Mexico to serve increasing demand for container glass. At the same time, we will drive significant focus on reducing operating costs and capital spending to increase the Company’s cash flow.