Attached files
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed statement of operations for the three months ended March 31, 2018 and for the years ended December 31, 2017, 2016, 2015 and the unaudited pro forma condensed balance sheet as of March 31, 2018, give effect to the disposition by Unimin Corporation (now known as Covia Holdings Corporation) (Unimin or the Company) of its global high purity quartz business (the HPQ business) to a wholly owned subsidiary of its parent company SCR-Sibelco NV (Sibelco). The summary unaudited pro forma condensed statements of operations is prepared as if such disposition occurred on January 1, 2015, and the summary unaudited pro forma condensed balance sheet is prepared as if such disposition occurred on March 31, 2018. The following unaudited pro forma condensed financial statements are based on the historical financial statements of Unimin and are intended to illustrate how the transaction might have affected the historical financial statements of Unimin if each had been consummated as of the dates indicated above and do not represent future market conditions. The unaudited pro forma condensed financial statements reflect preliminary estimates and assumptions based on information available at the time of preparation.
The unaudited pro forma condensed financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have actually resulted had the transaction occurred as of the dates indicated, nor should they be taken as necessarily indicative of the future financial position or results of operations of the Company. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled Risk Factors in the Companys Registration Statement on Form S-4 (File No. 333-224228). In addition, the unaudited pro forma condensed financial statements include adjustments that are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes to the information presented.
The unaudited pro forma condensed financial statements have been prepared solely to illustrate the effects of the disposition of the HPQ business in accordance with SEC rules regarding dispositions of assets. These pro forma condensed financial statements do not reflect the business combination transaction between Unimin and Fairmount Santrol Holdings Inc. and related refinancing transactions, which have been reflected in the pro forma financial statements contained in the Companys Registration Statement on Form S-4 and which will be included in a subsequent Form 8-K/A to be filed by Unimin.
The following unaudited pro forma condensed financial statements should be read in conjunction with the consolidated financial statements, the accompanying notes and the related management discussion and analysis of financial condition and results of operations for the year ended December 31, 2017 contained in the Companys Registration Statement on Form S-4.
Covia Holdings Corporation
Unaudited Pro Forma Condensed Balance Sheet
As of March 31, 2018
(in thousands, except per share data)
Historical Unimin |
HPQ Carveout (Note 1) |
Unimin Pro Forma Total |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 284,274 | $ | (31,000 | ) | $ | 253,274 | |||||
Accounts receivable, net of allowance for doubtful accounts |
274,542 | (32,739 | ) | 241,803 | ||||||||
Inventories, net |
110,212 | (26,199 | ) | 84,013 | ||||||||
Other receivables |
28,217 | | 28,217 | |||||||||
Prepaid expenses and other current assets |
19,112 | (934 | ) | 18,178 | ||||||||
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Total current assets |
716,357 | (90,872 | ) | 625,485 | ||||||||
Noncurrent assets: |
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Property, plant and equipment, net |
1,256,192 | (93,829 | ) | 1,162,363 | ||||||||
Intangible assets, net |
26,483 | (1,588 | ) | 24,895 | ||||||||
Goodwill |
53,512 | | 53,512 | |||||||||
Deferred tax assets, net |
9,019 | | 9,019 | |||||||||
Other assets |
2,730 | | 2,730 | |||||||||
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Total noncurrent assets |
1,347,936 | (95,417 | ) | 1,252,519 | ||||||||
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Total assets |
$ | 2,064,293 | $ | (186,289 | ) | $ | 1,878,004 | |||||
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 87,954 | $ | (5,163 | ) | $ | 82,791 | |||||
Current portion of long-term debt |
49,742 | | 49,742 | |||||||||
Accrued expenses and other current liabilities |
77,129 | (6,998 | ) | 70,131 | ||||||||
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Total current liabilities |
214,825 | (12,161 | ) | 202,664 | ||||||||
Noncurrent liabilities: |
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Long-term debt |
366,942 | | 366,942 | |||||||||
Employee benefit obligations |
99,079 | | 99,079 | |||||||||
Deferred tax liabilities, net |
72,219 | (7,648 | ) | 64,571 | ||||||||
Other noncurrent liabilities |
30,437 | (436 | ) | 30,001 | ||||||||
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Total noncurrent liabilities |
568,677 | (8,084 | ) | 560,593 | ||||||||
EQUITY |
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Equity: |
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Unimin common stock, $1.00 par value, 2,000,000 shares authorized; 1,776,666 shares issued and 1,343,714 shares outstanding at March 31, 2018 |
1,777 | | 1,777 | |||||||||
Additional paid-in capital |
43,941 | 258,000 | 301,941 | |||||||||
Accumulated other comprehensive loss, net |
(118,294 | ) | | (118,294 | ) | |||||||
Retained earnings |
1,963,999 | | 1,963,999 | |||||||||
Treasury stock, 432,952 shares at March 31, 2018 |
(610,632 | ) | (424,044 | ) | (1,034,676 | ) | ||||||
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Total equity |
1,280,791 | (166,044 | ) | 1,114,747 | ||||||||
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Total liabilities and shareholders equity |
$ | 2,064,293 | $ | (186,289 | ) | $ | 1,878,004 | |||||
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See accompanying notes to the Unaudited Pro Forma Condensed Financial Information
Covia Holdings Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Three Months Ended March 31, 2018
(in thousands, except per share data)
Historical Unimin |
HPQ Carveout (Note 1) |
Unimin Pro Forma Total |
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Revenue |
$ | 414,607 | $ | (44,786 | ) | $ | 369,821 | |||||
Cost of goods sold (excludes depreciation, depletion and amortization) |
288,565 | (28,246 | ) | 260,319 | ||||||||
Operating Expenses |
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Selling, general and administrative expenses |
29,224 | (4,000 | ) | 25,224 | ||||||||
Depreciation, depletion and amortization expense |
29,409 | (2,278 | ) | 27,131 | ||||||||
Other operating expense (income), net |
(40 | ) | 40 | | ||||||||
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Income from operations |
67,449 | (10,302 | ) | 57,147 | ||||||||
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Interest expense, net |
5,191 | | 5,191 | |||||||||
Other expense, net |
5,300 | | 5,300 | |||||||||
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Total other expenses, net |
10,491 | | 10,491 | |||||||||
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Income before provision for income taxes |
56,958 | (10,302 | ) | 46,656 | ||||||||
Income tax provision |
11,416 | (1,545 | ) | 9,871 | ||||||||
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Net income |
$ | 45,542 | $ | (8,757 | ) | $ | 36,785 | |||||
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Earnings per share: |
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Basic and diluted |
$ | 33.89 | $ | 31.33 | ||||||||
Weighted average shares outstanding: |
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Basic and diluted |
1,344 | (170 | ) | 1,174 |
See accompanying notes to the Unaudited Pro Forma Condensed Financial Information
Covia Holdings Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 2017
(in thousands, except per share data)
Historical Unimin |
HPQ Carveout (Note 1) |
Unimin Pro Forma Total |
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Revenue |
$ | 1,444,487 | $ | (149,375 | ) | $ | 1,295,112 | |||||
Cost of goods sold (excludes depreciation, depletion and amortization) |
1,032,957 | (100,775 | ) | 932,182 | ||||||||
Operating Expenses |
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Selling, general and administrative expenses |
115,971 | (14,519 | ) | 101,452 | ||||||||
Depreciation, depletion and amortization expense |
112,705 | (11,145 | ) | 101,560 | ||||||||
Other operating expense, net |
2,948 | 155 | 3,103 | |||||||||
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Income from operations |
179,906 | (23,091 | ) | 156,815 | ||||||||
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Interest expense, net |
14,653 | | 14,653 | |||||||||
Other expense, net |
19,300 | | 19,300 | |||||||||
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Total other expenses, net |
33,953 | | 33,953 | |||||||||
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Income before benefit for income taxes |
145,953 | (23,091 | ) | 122,862 | ||||||||
Income tax benefit |
(8,218 | ) | (621 | ) | (8,839 | ) | ||||||
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Net income |
$ | 154,171 | $ | (22,470 | ) | $ | 131,701 | |||||
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Earnings per share: |
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Basic and diluted |
$ | 114.71 | $ | 112.18 | ||||||||
Weighted average shares outstanding: |
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Basic and diluted |
1,344 | (170 | ) | 1,174 |
See accompanying notes to the Unaudited Pro Forma Condensed Financial Information
Covia Holdings Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 2016
(in thousands, except per share data)
Historical Unimin |
HPQ Carveout (Note 1) |
Unimin Pro Forma Total |
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Revenue |
$ | 1,093,476 | $ | (110,780 | ) | $ | 982,696 | |||||
Cost of goods sold (excludes depreciation, depletion and amortization) |
826,945 | (72,480 | ) | 754,465 | ||||||||
Operating Expenses |
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Selling, general and administrative expenses |
112,715 | (11,794 | ) | 100,921 | ||||||||
Depreciation, depletion and amortization expense |
116,259 | (11,210 | ) | 105,049 | ||||||||
Goodwill and other asset impairments |
9,634 | | 9,634 | |||||||||
Other operating expense (income), net |
8,471 | (642 | ) | 7,829 | ||||||||
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Income from operations |
19,452 | (14,654 | ) | 4,798 | ||||||||
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Interest expense, net |
23,999 | | 23,999 | |||||||||
Equity in (earnings) of affiliated companies |
(1,022 | ) | | (1,022 | ) | |||||||
Other expense, net |
12,923 | | 12,923 | |||||||||
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Total other expenses, net |
35,900 | | 35,900 | |||||||||
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Loss before benefit for income taxes |
(16,448 | ) | (14,654 | ) | (31,102 | ) | ||||||
Income tax benefit |
(20,113 | ) | (2,780 | ) | (22,893 | ) | ||||||
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Net income (loss) |
$ | 3,665 | $ | (11,874 | ) | $ | (8,209 | ) | ||||
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Earnings per share: |
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Basic and diluted |
$ | 2.73 | $ | (6.99 | ) | |||||||
Weighted average shares outstanding: |
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Basic and diluted |
1,344 | (170 | ) | 1,174 |
See accompanying notes to the Unaudited Pro Forma Condensed Financial Information
Covia Holdings Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 2015
(in thousands, except per share data)
Historical Unimin |
HPQ Carveout (Note 1) |
Unimin Pro Forma Total |
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Revenue |
$ | 1,472,903 | $ | (101,225 | ) | $ | 1,371,678 | |||||
Cost of goods sold (excludes depreciation, depletion and amortization) |
1,127,794 | (61,900 | ) | 1,065,894 | ||||||||
Operating Expenses |
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Selling, general and administrative expenses |
118,514 | (9,990 | ) | 108,524 | ||||||||
Depreciation, depletion and amortization expense |
126,294 | (15,369 | ) | 110,925 | ||||||||
Goodwill and other asset impairments |
150,038 | | 150,038 | |||||||||
Other operating expense (income), net |
27,131 | (544 | ) | 26,587 | ||||||||
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Loss from operations |
(76,868 | ) | (13,422 | ) | (90,290 | ) | ||||||
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Interest expense, net |
36,187 | | 36,187 | |||||||||
Equity in (earnings) of affiliated companies |
(4,970 | ) | | (4,970 | ) | |||||||
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Total other expenses, net |
31,217 | | 31,217 | |||||||||
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Loss before benefit for income taxes |
(108,085 | ) | (13,422 | ) | (121,507 | ) | ||||||
Income tax benefit |
(35,727 | ) | (2,429 | ) | (38,156 | ) | ||||||
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Net loss |
$ | (72,358 | ) | $ | (10,993 | ) | $ | (83,351 | ) | |||
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Earnings per share: |
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Basic and diluted |
$ | (53.84 | ) | $ | (71.00 | ) | ||||||
Weighted average shares outstanding: |
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Basic and diluted |
1,344 | (170 | ) | 1,174 |
See accompanying notes to the Unaudited Pro Forma Condensed Financial Information
Covia Holdings Corporation and Subsidiaries
Notes to Unaudited Pro Forma Condensed Financial Information
(in thousands, except per share data)
Note 1. Description of the Disposition and Pro Forma Adjustments
HPQ Carveout
As contemplated by the Merger Agreement, dated as of December 11, 2017 (the Merger Agreement), among Unimin, Sibelco, Fairmount Santrol Holdings Inc., Bison Merger Sub, Inc. and Bison Merger Sub I, LLC, on May 31, 2018, Unimin contributed certain assets, including its global high purity quartz business, which consists of Unimins Electronics segment, to Sibelco North America, Inc. (Sibelco North America), in exchange for all of the stock of Sibelco North America and the assumption by Sibelco North America of certain liabilities related to the business being transferred. Prior to the consummation of the Merger, Unimin redeemed 169,550 shares of its common stock from Sibelco in exchange for 100% of the stock of Sibelco North America transferred by Unimin to Sibelco. Accordingly, the pro forma adjustments are being made to exclude the assets, liabilities, stockholders equity, revenue and net income of the HPQ business, which are not part of the Company following consummation of the transactions contemplated by the Merger Agreement.
The adjustment to eliminate the net assets sold to, and liabilities assumed by, Sibelco and to recognize the preliminary estimated gain was determined as follows:
Value of Unimin stock received |
$ | 424.0 | ||
Net Assets transferred |
(166.0 | ) | ||
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Estimated after-tax gain |
$ | 258.0 |
The transfer of the HPQ business to Sibelco is a tax-free spin-off and therefore, there will not be any tax expense on the gain for this transaction. Since the transaction is between entities under common control, the gain is reflected as an adjustment to additional paid in capital.
Note 2. Basis of Pro Forma Presentation
The accompanying unaudited pro forma condensed financial statements were prepared in accordance with Article 11 of Regulation S-X and are based on the audited historical financial information of Unimin. The audited historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed financial statements to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable and (3) with respect to the unaudited pro forma condensed statement of operations, expected to have a continuing impact on Unimins results.
The unaudited pro forma condensed financial information gives effect to the disposition to be accounted for in accordance with ASC 205, Presentation of Financial Statements, with the disposition treated as a discontinued operation, as if the disposition had been completed on January 1, 2015, for statement of operations purposes, and on March 31, 2018, for balance sheet purposes.