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Globe Specialty Metals (NASDAQ:GSM)

Q3 2013 Earnings Call

May 07, 2013 9:00 am ET

Executives

Malcolm Appelbaum - Chief Financial Officer and Chief Accounting Officer

Jeff Bradley - Chief Executive Officer and Chief Operating Officer

Alan Kestenbaum - Founder and Executive Chairman

Analysts

Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division

Luke Folta - Jefferies & Company, Inc., Research Division

Ian Corydon - B. Riley Caris, Research Division

Richard Garchitorena - Crédit Suisse AG, Research Division

Garrett S. Nelson - BB&T Capital Markets, Research Division

Meryl B. Witmer - Eagle Capital Management, LLC

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Globe Specialty Metals Inc. Third Quarter Fiscal 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. With us on the call today are Alan Kestenbaum, chief Executive Chairman; Jeff Bradley, Chief Executive Officer; and Mal Appelbaum, Chief Financial Officer. I will now turn the conference over to Mr. Appelbaum. Sir, please go ahead.

Malcolm Appelbaum

Good morning. I'm going to read a brief statement and then hand it over to our CEO, Jeff Bradley.

Statements made by management during this conference call that are forward-looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Globe's most recent SEC filings and the exhibits to those filings. Jeff?

Jeff Bradley

Good morning, everyone. Thank you for joining us on the call this morning. In our third quarter, revenues increased to $195.8 million and shipments of silicon metal and silicon alloys increased to 69,382 tons from the same quarter a year ago.

Unfortunately, the positive impact in the quarter from this level of shipments was not enough to overcome the lower realized prices and negative impacts of the outages and the impairment charges.

Adjusted EBITDA for the quarter was $14 million, down from $29.4 million in 3Q of fiscal '12. In spite of the drop in earnings this quarter, we are encouraged by the demand for our end markets, which led to increased revenue and increased shipments to customers. As we mentioned on the last call, we anticipate that this quarter would be negatively impacted by lower prices. We did not expect the extent of the cost impact on the maintenance outages.

The majority of our firm price and index silicon contracts are negotiated in the last 2 to 3 months of the calendar year for the upcoming year. 2012 pricing was set at the end of 2011 and 2013 was set at the end of 2012.Both compressed into the fourth calendar quarter of 2011 were higher than the fourth quarter of 2012, so our average 2013 contract prices are lower than our average 2012 prices. We also continue to see above market prices for our spot business each month.

We also experienced lower prices for silicon-based alloys. Our Argentina facility, which exports about 80% of its production to Europe continues to be negatively impacted by the soft economic situation there and we are also competing with lower prices for silicon alloys shift into the United States by the competition.

Turning to operations. We did not expect the plant outages in the quarter to negatively impact our costs to the extent we experienced. The outage at the company's largest furnace and alloy was taken down in December for a major overhaul. The overhaul, the repairs and the startup were more extensive and took longer than planned.

Our outages in Argentina and the installation of additional capacity at our quartz mine in Alabama took longer and were more costly than expectation. We have undertaken an analysis at the entire outage process, including engineering, execution aspects, to ensure we don’t encounter the unplanned downtime and added expense again in the future. Of course with outages come lost production, maintenance expense and unabsorbed fixed cost. But on the other hand, the outages will also translate into better operations in the future, which should start to be realized in the present and more fully realized in future quarters.

We had a very focused effort in the quarter on reducing working capital, including improving our inventory returns. This led to a decision in the quarter to reduce coal production at Alden, which adversely impacted our earnings in our coal business.

We also recorded a number of impairments in the quarter related to our electrode operation in China, Solsil which produced UMG, the Nigerian mining licenses and goodwill related to Argentina.

We continue to make progress in our Chinese electrode plant, but we scale back the production because we are developing a new process to produce electrodes that eliminate a costly operation that has historically been done on the outside. We also acquired our largest Chinese partner share in the quarter.

We continue to invest less than $1 million annually in R&D in our Solsil-operated metallurgical grade silicon business. Prices for this product had dropped, which forced a revisit of the technology. As a result, the technology has migrated and improved since the inception of business, and we have no plans to utilize the assets that we originally purchased 5 years ago.

The business and the security situation in Nigeria has changed, and we have decided not to continue with our investment there.

And finally, we took a $6 million impairment at our Argentina silicon alloy facility. As I mentioned, approximately 80% of our Production is exported to Europe. And although we are starting to see small improvement, we had experienced lower demand and evidenced -- and as a result, pricing pressure on the products we sell there. We have an internal team of people from the plant and our U.S. operations working jointly on productivity improvements and cost savings initiatives there.

We have been successful in reducing cost at the Becancour, Canada facility, but the plant's cost of production is still not in line with our other operations. The contract with the union workforce expired at the end of April, and we were not able to achieve the concessions that were necessary to bring this facility in line with our other plants. As a result, we initiated a lockout late last week. We continue to operate 1 of the 3 furnaces at the plant with the management, and they've been doing an excellent job.

In closing, we are clearly disappointed with the results for the quarter. We believe that many of these costs will not recur in the future, and I'm working with all our operations to ensure we get back to operating the most efficient and lowest cost facilities in the industry. Mal?

Malcolm Appelbaum

Thank you, Jeff. We have 2 financial related slides, which you will view automatically if you're listening to the call through our website. Just click on the maximize button on the bottom of the window to expand the slides to full screen. Otherwise, the slides are posted in the events and presentation section of our website, www.glbsm.com.

Silicon metal shipments increased 14% or 5,000 metric tons in the third quarter from the second quarter, and silicon-based alloy shipments increased 9% or 2,400 metric tons. Silicon metal average selling prices declined 4% in the third quarter from the second quarter as a result of our calendar 2012 contracts being replaced with lower-priced 2013 contracts.

Excluding sales to our joint venture partners, third-party silicon pricing declined 6%. Silicon-based alloy average selling prices declined 2% in the quarter, some of this price decline was offset by lower rare earth costs, which are an additive to certain silicon-based alloys.

Cash cost of production increased by 10% per ton in the third quarter and included approximately $7 million of expense related to plant maintenance outages, a decreasing coal production and startup of the new quartz wash plant at our quartz mines in Alabama.

Globe took pretax impairment charges of $50.4 million in the quarter, which included $16.9 million to write off Nigerian exploratory mining licenses, $20.4 million to write down equipment originally acquired to manufacture solar-grade silicon for our Solsil, $7.1 million to write down goodwill related to Globe's electrode factory in China and $6 million to write down goodwill related to Globe's business in Argentina. These impairment charges totaled $43.9 million after-tax.

Reported EBITDA totaled a loss of $32.8 million in the quarter and included the impairment charges I previously mentioned along with the receipt of $4.3 million of business interruption insurance proceeds related to events that occurred in prior years and several other minor items. Adjusted EBITDA in the third quarter was $14 million compared to $30.2 million in the second quarter.

Sales from the third quarter increased 9% from the second quarter as total shipments increased 12% or 7,400 metric tons.

Our third quarter gross margin was 7% compared to 18% in the second quarter. The decrease is related to the decline in average selling prices and the higher cost of production.

SG&A expense was $13.3 million in the third quarter and included a $500,000 charge for remeasuring our stock option liability and $300,000 of transaction-related and due diligence expenses. Excluding these items, SG&A expense was $12.5 million in the quarter, a $1.1 million increase from the second quarter.

Reported results were impacted by the impairment charges, business interruption insurance proceeds received, transaction-related and due diligence expenses, remeasuring the stock option liability and the gain we took to revalue an equity investment. Excluding these benefits and charges, adjusted EBITDA for the third quarter was $14 million.

We consolidate our joint ventures with Dow Corning at our Alloy, West Virginia and Becancour, Canada plants. Dow Corning's 49% interest in those joint ventures equates to EBITDA of $2.6 million in the third quarter. Results included $1.6 million charge for foreign exchange losses, which represents the gain on the mark-to-market of our ForEx hedges, more than offset by the revaluation of working capital and debt denominated in foreign currencies. Adjusted EBITDA was $14 million and adjusted diluted earnings per share were nil per share.

The next slide is a sales bridge showing the $15.9 million increase in sales in the third quarter. Lower average selling prices decreased sales by $7 million while higher volumes increased sales by $19.7 million.

The next slide is an EBITDA bridge showing the $16.2 million decrease in adjusted EBITDA from the second quarter to the third quarter. Price and sales mix served to lower EBITDA by $7 million while increased volume increased EBITDA by $2.2 million. The plant maintenance outages and the reduction in coal output reduced EBITDA by $6.1 million, and an increase in production costs reduced EBITDA by another $3 million.

The next slide shows cash flow for the period. Cash provided by operations in the third quarter was $27 million. Working capital decreased by $10.4 million in the quarter, which included a $24.2 million decrease in inventories that was partially offset by a $10 million increase in accounts receivable related to higher sales in the quarter. Cash capital expenditures totaled $18.1 million in the quarter and the dividend payments were $4.7 million. At March 31, we had $161 million of cash and $150.8 million of debt.

Income tax benefits for the third quarter was $5.9 million for an effective rate of 13%. This rate was artificially low as a result of certain of the impairment charges not being tax deductible. Excluding these discrete items, we expect the tax rate going forward to remain in the range of 32%.

We have 3 plant maintenance outages in the fourth fiscal quarter, including a 60-day outage in Beverly, Ohio. As we previously indicated for calendar 2013, we expect to produce and sell approximately 110,000 metric tons of silicon metal, not including the material produced for our joint venture partner at Alloy and Becancour, and 120,000 metric tons of silicon-based alloys.

Looking forward to our fourth fiscal quarter, we expect adjusted EBITDA to increase modestly from the third quarter despite the impact of the work stoppage at Becancour. Also, we have been advised that the debt capital markets are strong, and we are considering pursuing a private fund offering to refinance our revolving credit facility and provide funds for general corporate purposes, including acquisitions. Any such offerings would be subject to market and other conditions.

I would like now to hand over the call to our Executive Chairman, Alan Kestenbaum.

Alan Kestenbaum

Thank you, Mal and Jeff. At this time, I would like to address my fellow shareholders. The earnings this quarter were not satisfactory. Paradoxically, this occurred despite improved shipment volumes for major products. To summarize from a high level, there were 3 major categories of causes for the poor results: Impairments, the sales prices and the operations. These are not excuses, they are facts. The question now is, what can we, or are we doing about it?

With respect to the impairments, as you have heard, impairments are dictated by accounting rules. In the specific cases of the manganese mining assets and Solsil, as we have done in the past, when circumstances change, we change course, minimize our losses, and move on as we pursue new opportunity and strategies with better returns.

With respect to sales prices. As you know, we sell into a market in which prices are driven by supply and demand, as well as the pricing practices of our competitors. For the most part, demand in the U.S. U.S. is fine, and we expect it to continue to be so. Europe, on the other hand, is weak. This has resulted in modest supply and demand imbalances. And while we think the stage is being set for a more robust time generally, we are not going to sit idly by waiting for a worldwide recovery to adjust that imbalance. For example, and as announced, we've initiated a dumping investigation against unfairly low-priced Chinese silicon metal imports into Canada. Assuming we succeed, we will then open up an additional commercially viable market free of dumped products and essentially expand the North American market by almost 10%. While I will not be able to go into details on this call, we will continue to consider other types of measures to improve our position.

As to the maintenance outages, the outages had to occur. While the impact seems bad, these investments should have a payback to improve performance. Unfortunately, that performance doesn't get realized in the quarter of the outage and the uncapitalized cost of these outages hit at once. In some cases, the outages and recovery period took longer than they should have. This area can be corrected through better engineering and planning. We are reviewing this area of the company at this time, and we'll make changes if needed.

To improve overall costs, we continue to look at all areas of the company and we'll take strong measures such as the one announced Friday, where we called a lockout to once and for all address the high labor costs and significantly improve the cost structure at Becancour, Canada to make it competitive with the cost structures at our other plants.

The decision was simple. There was no benefit to running a plant that is marginally profitable but a consumer of CapEx cash, especially at a time of the above mentioned supply-demand imbalance. We are confident that these measures will ultimately result in an improved cost structure and will lead to an overall improved profitability of Globe.

In summary, there is no silver bullet that improves everything instantly. We've built a great company with solid fundamentals and growth story remain intact, but this quarter exposed some weaknesses that will be addressed and handled. Some of these improvements will take weeks and some will take months, but we're now hard at work addressing these areas and we'll continue to relentlessly attack on multiple fronts the areas that require it, all while we continue to pursue a disciplined growth strategy and take other measures to improve shareholder returns.

Malcolm Appelbaum

We'd now like to open the call to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Ian Zaffino from Oppenheimer.

Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division

Could you guys give us an idea of how much Becancour added from an EBITDA perspective to this quarter? And what sort of the hit we're going to see in the June quarter because of the lockout?

Malcolm Appelbaum

This is Mal, Ian. As indicated, Becancour is not a significant contributor of profitability at the moment, hence our moves with labor. To this quarter, it added something like $2 million in total EBITDA, and the expected decline in EBITDA, if the lockout continued, let's say, for an entire quarter, would only be $1 million to $2 million.

Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division

Okay. And then, just as far as some of the acquisitions, you started to write off a few of them. All then, I guess is, somewhat of a -- leaves to have some issues, call it that. Does that impact kind of the accretion that you originally thought you would get there, or are we going to potentially write off of all them, too[ph] ? Help us understand what you're thinking there.

Alan Kestenbaum

Not at all. Alden, as we mentioned on the call, was scaled back to deal with some inventories. When you do a scale back in mining, you get impacted initially by some unabsorbed fixed costs that we experienced this quarter, and Alden remains a very core important asset and a great asset that we expect to continue to be a meaningful part of our earnings and our story for many years to come.

Jeff Bradley

And just to add to what Alan said about Alden, we've talked about the benefit of this coal, this very reactive coal, the blue gem coal. So just to amplify what Alan said, it's a very important asset for the company.

Operator

And our next question comes from the line of Luke Folta from Jefferies.

Luke Folta - Jefferies & Company, Inc., Research Division

First question I had on the cost side. Stripping out the impairment charges that were incurred in the quarter, you noted in the release about an $8 million stepup in operating costs and also then about 2/3 of it or over 2/3 of it was due to the outages that you had in the quarter. I just want to understand, so should we be thinking about those costs basically going away, heading into the fourth quarter? I know you had said that there's also a 60-day outage, I think, at Beverly as well. So I guess, how do we think about those kind of one-time costs and how they flow through the model over the next couple of quarters?

Jeff Bradley

As we look at this quarter, we are winding down those outages. We haven't totally wound down the alloy outage yet. The Argentina outage is behind us. As Alan said, the good news is we've made these improvements and we're looking for the benefit us as we go forward. We are right now, this quarter, we have an alloy at the Beverly plant, it's a large outage. Alan mentioned 60 days that we will see an impact from that outage. But overall, the good news is, these outages are winding down. We're getting them behind us. We've made the improvements. We'll see the improvements in the future, and we would expect the onetime hits this quarter to come out by the end of this quarter and then we'll move forward from there. Now in terms of outages for the balance of the year, we're looking at one additional outage for the balance of the calendar year. We haven't put the business plan together yet for next year, but we would expect one more outage in the second calendar half of this year.

Luke Folta - Jefferies & Company, Inc., Research Division

And have you seen -- I guess, cost increases elsewhere in the system because you'd said the majority of these costs were due to onetimers, but there's also kind of some other cost increases. Is that basically just due to higher labor and power? And can you give us some sense of kind of what that amount was?

Jeff Bradley

Yes, the other part of this is on the startup and we have the absorption issues. But we also, in addition to the outages, we also struggled with the restart at some of the furnaces and that impacted our costs as well.

Malcolm Appelbaum

And so Luke, in the bridge, the EBITDA bridge, we included $3 million of higher cost quarter-over-quarter, which is related to those items not directly tied to the maintenance outages or the Alden scaleback, as Jeff indicated.

Luke Folta - Jefferies & Company, Inc., Research Division

Got it, okay, that makes sense. Okay, also just in terms of selling prices, when we think about how that develops over the course of the year, it looks like -- I'm just looking at Ryan's Notes morning on how their indices are tracking. It looks like we've gotten kind of a nice bounce back in ferrosilicon prices here over the last couple of months, while silicon metal prices have kind of, I mean, at least in the Ryan's index, has come down a couple of pennies here over the last month or so. So I guess, when you add it all together, is this the low point of the year as far as what you think your average selling price is going to be? And can you give us a sense, is the book fully closed for the year as far as your full-year contracts and how that worked out as far as like fixed versus variable?

Jeff Bradley

Addressing this quarter, we would guide you to pricing being flat over last quarter. In terms of the order book, as we've always said, we always leave a percentage on the order book open for spot business. On the last call, I addressed having about 80% of the order book full, and then we have the balance left to spot. Is this a low point? I would hope it is. We're still optimistic about the demand out in the markets. I talked about it in the comments. We would hope that by the end of this year, pricing is higher. But really, all I can really guide you to right now is that the pricing this quarter, we expect to be flat and hopefully by the end of this year, the pricing will be up.

Alan Kestenbaum

And my added commentary to that as well is, look, we don't have to be always price takers. We have certain things and swings within this company that can improve the environment for us and certain things we need to do differently and we will. That doesn't mean that I'm guiding towards any higher prices. As Jeff said, we're guiding towards flat prices. But we do need to look at how we go about selling products and how we handle marketing in general.

Luke Folta - Jefferies & Company, Inc., Research Division

Would that suggest something more along the lines of maybe reducing output to match demand and maybe focus more on pricing as opposed to volumes, is that what you're referring to?

Alan Kestenbaum

No, I'm referring to a lot of things and I don't want to get into details, but just to make the point that there are certain things that we can do as well to deal with some of the supply and demand imbalances.

Operator

And our next question comes from the line of Ian Gordon from B. Riley and Company.

Ian Corydon - B. Riley Caris, Research Division

Just wanted to clarify on the guidance for an improvement in EBITDA in the calendar second quarter. Is that just because there's less impact from the maintenance outages, or is there something else that you expect to drive that EBITDA improvement?

Jeff Bradley

Yes, Ian, as I said, we look for the -- we love for the pricing to remain flat. We definitely see a modest improvement and that's based on winding down these outages. But overall, we expect the quarter to be up with pricing flat.

Ian Corydon - B. Riley Caris, Research Division

Okay. And can you tell us what production run rate Alden is at and what are the plans going forward?

Jeff Bradley

We don't typically talk about the run rate at Alden. The plan's going forward right now. You know that we have the Becancour plant down, and that will obviously have an impact on Alden.

Ian Corydon - B. Riley Caris, Research Division

Okay. So we should expect then that production to still be down in Q2, is that fair? And would you expect that to improve in the back half as the outages are going?

Jeff Bradley

What we expect at Alden is, we're not going to be at full production because of the Becancour plant. But what we do hope is we hope to remove all these unabsorbed costs that we saw in the first quarter.

Alan Kestenbaum

Yes, and to explain that a little bit more. I mean, Alden has never been in full production, right? I mean, we have a 3-million-ton capacity at the wash plants. We've got 30 million tons at various stages of reserves and resources. So the notion of a full operation like the smelter is a little bit different when it comes to a mine. What we mean is when you stop mining, some of the costs continue, and we experienced some of that before we could dial back some of the equipments and some of the other fixed expenses that we had during the quarter. So operating at a lower level does not necessarily mean we'd have to operate at the same cost structure because the cost centers are module in nature. And if you wind down an activity at a particular mine, you stop incurring those fixed costs and therefore, the site, having a level of production that is lower to the extent of the Becancour outage, costs should stabilize as we eliminate some of the fixed costs that exist at a particular mine site, and we operate several mine sites. So I just wanted to explain that in terms of when you think about full capacity, not full capacity, it's a little bit different when you're talking about the mining operations and the smelter.

Ian Corydon - B. Riley Caris, Research Division

Got it. And then on the silicon alloy side, commodity for our silicon prices have typically been a pretty good proxy for your silicon alloy sales, which I know are much more specialized products. Obviously, that didn't hold up in the quarter and I guess a lot of the issues are Argentina. If you could just address prices for specialty ferrosilicon, as well as the other alloys that you sell that might be helpful.

Jeff Bradley

Yes, again, we still look -- we still got a very nice premium for these specialty alloys that we sell. I addressed Argentina, 80% of Argentina's product ends up in Europe. We talked about the slowdown in Europe that's definitely having an impact on us. But overall, the ferrosilicon business is a good business. Pricing is down from the start of the year. We started at a -- started at low point, pricing went up and then it came back down.

Malcolm Appelbaum

And generally, when it comes to pricing on ferrosilicon, where there is a larger presence of import sources and such, we do need to react some tons to pricing practices of our competitors.

Operator

And our next question comes from the line of Richard Garchitorena from Crédit Suisse.

Richard Garchitorena - Crédit Suisse AG, Research Division

So the first question, I guess, just wanted to touch on the write-down at the electrode facility in China. I guess, first off, so you're still operating that facility and utilizing the current production, is that right?

Jeff Bradley

Yes, Rick, this is Jeff. Yes, we are, but as I talked about in the comments, the technology is changing there, just as the technology game change on the UMG. And we have had a process in place and a formulated place for the recipe -- or, I'm sorry, for the electrodes that forced us to use an outside service. We are now changing the technology, changing the process to reduce costs, and that's the -- and then we had our annual cost of impairment there and with the technology change, we've backed off the production there and had the impairments.

Malcolm Appelbaum

And Rich, This is Mal, we just wrote off the goodwill, which you know, has a higher standard than PP&E. We left the full PP&E on the books because it is a strategically very important asset to us.

Alan Kestenbaum

And also, when you say the word use, I want to expand the definition of use. Use is not just what we produce there, this has been an excellent tool for us to push down prices from alternative third-party suppliers and improve prices and payment terms. So having this facility operating even in the low level is a big advantage for us because as we go out and seek other supply sources, and you might have heard there's some other electrode producers, there has been an expansion of electrode capacity and that capacity has deflated prices, and it's something that we're starting to realize in terms of improved payment terms and pricing. So it's actually a nice thing to use both from our own production but also from a purchasing standpoint.

Richard Garchitorena - Crédit Suisse AG, Research Division

Great, okay. So that ,I guess -- so just by the end of this calendar year, do you expect that to be back running as previous?

Jeff Bradley

Well, again, previous, we've always said that we have always bought from outside sources as well. We have a total capacity there of 15,000 tons and at any given time, we've run roughly 5,000 to 9,000 tons. So it's all a matter of the technology being proven out, the process being proven out. One of the things that takes time here is the cycle times. It takes about 6 to 8 weeks to get the electrodes produced. And then once you get that done, then we've got to ship from China to the U.S. Then they go into our process, and the total cycle time is about 9 months.

Alan Kestenbaum

And the decision on expanding output there is going to be strictly an economic one as to what is better for us, buying from the outside, taking into account the cycle, as Jeff just mentioned, pricing, payment conditions and so forth as compared to producing it ourselves.

Richard Garchitorena - Crédit Suisse AG, Research Division

Okay, great. And then, I believe, Mal had mentioned that you are anticipating a bond deal. Can you remind us where liquidity is right now, what your target ratio is, and what are your thoughts for potential acquisitions in the future?

Malcolm Appelbaum

Well, in terms of liquidity, we have $160 million approximately available on our revolver today. We have another $160 million of cash, so we're very liquid. We're actively looking at a large number of potential transactions in the current marketplace, some very interesting opportunities largely outside of the United States and very close to home. As you know, we don't stray from our -- or don't want them to stray from our core activities.

Operator

And our next question comes from the line of Garrett Nelson from BB&T Capital Markets.

Garrett S. Nelson - BB&T Capital Markets, Research Division

Most of my questions have been answered, but on the $75 million repurchase authorization you guys announced last week, the press release was worded as if the company fully expects to make those repurchases over the next 8 months. Is that the case? And how does the company weigh the returns of a buyback versus, say, an accretive acquisition given your ability to pay a substantial portion in cash?

Malcolm Appelbaum

Yes. The company has a very high threshold for returns, as you know, based on the historic results with our acquisitions, buying businesses, typically a 2 to 3x forward EBITDA. So our return expectations are very high. We put that plan in place so that it would be available. The press release did indicate that if the purchases occurred, they would occur over the next relatively short period of time, but that does not necessarily mean the company will purchase stock. We have these high expectations for returns. We have a pipeline full of transactions that look very attractive. And we'll evaluate buybacks, meaningful buybacks, not simply doing window dressing. If the opportunities arise to achieve the same level of returns, we could -- we believe we could achieve on acquisitions. Having said all of that, we do believe strongly in returning cash earnings to shareholders, hence the declaration of the dividend several years ago, relatively early for a newly public company, what was -- and the increase from the dividend that we've made now several times in trying to make the point that we do believe our ultimate goal is to generate meaningful cash earnings and return those cash earnings to shareholders.

Operator

[Operator Instructions] Our next question comes from the line of Meryl Witmer from Eagle Capital.

Meryl B. Witmer - Eagle Capital Management, LLC

I'm wondering on the maintenance outages that you've taken, was there anything more extensive or different about these versus prior years? And then just how often you do a maintenance outage per a given plant?

Jeff Bradley

Meryl, the alloy outage was somewhat of a different outage. That was a probably every 15- to 20-year outage where we have extensive work. Part of the extension of the outage, the unplanned piece was we actually uncovered more issues with the furnace than we had anticipated and planned for. And this is the area that we've discussed during this call that we think we can make a lot of improvement on. I'm getting together with all the operations, doing a much better job on the planning side and on the engineering side. So whether it's is a 8-day outage or a 60-day outage, it's done in budget, in time, and then on top of that, is the restart because the restart's important, too. That's where you really lose some of that costs. Restarting the furnace to take X amount of days to come up to target and that's another area that we really have a lot of focus on.

Operator

And I see no additional questions in the queue at this time.

Jeff Bradley

Okay, thank you very much. We really appreciate your interest in the company, and we look forward to speaking with you on the next call. Thank you. Have a good day.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a good day.

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