I want to make sure I'm understanding the Attack sequence correctly.

Scenario
One AT-ST is shooting another in the rear.

Setup

1. The Attacker has only the MS-4 Twin Blaster Cannon.
2. The Attacker is inside the Defender's rear arc (gains Impact 1).
3. The Defender has heavy cover.

Steps

1. The Attacker declares Defender as the target.
2. The Attacker selects the MS-4 Twin Blaster Cannon for her weapon.
3. The Attacker gathers 2 red, 2 black, and 2 white dice.
4. The Attacker determines that the Defender is obscured.
5. The Attacker determines that the Defender has heavy cover.
6. The Attacker rolls: 2 hits, 1 surge, and 3 misses = 2 hits total.
7. The Defender applies heavy cover (-2 hits).
8. Result: 0 hits total.
9. Modify Attack Dice step. Nothing to modify, since cover cancelled the hits.

Since the Modify Attack Dice step comes after the Apply Dodge and Cover step, and there are no hits remaining, the Attacker does NOT get to apply Impact 1 and convert one of her hits to a crit, correct?

Yup all that looks correct. Just a note: if you have an aim token, the rerolls happen in your step 6, not step 9 (only pointing that out because it’s different than FFG’s other games, and commonly missed).

Thanks for reviewing! I think on more than one occasion I've flipped that hit to a crit too early in the process.

in short: cover applies before impact but after surge conversion.