uid stringlengths 32 32 | question stringlengths 16 2.61k | answer stringlengths 7 8.6k | eva4b_label stringclasses 3 values | choices listlengths 3 3 | eva4b_label_letter stringclasses 3 values |
|---|---|---|---|---|---|
2d1900aa22eee3c1e10181660c89af01 | You've got arguably certainly the best portfolio audio-wise on sports in North America. We've seen a lot of announcements on DraftKings. I know they probably distribute like the Dan Le Batard content through you. But can you talk about how online sports betting and the halo around that? I know sports viewing is down, but you still have a lot -- some benefits there. Is there any prospects for direct deals? I mean you have Action Network and some other assets that are super high profile. | So sports betting has always been a direct corollary to live sports. So when you look at where we'll go in audio, live sports, betting and other things, we've had a fantasy sports program for a long time. We have, as you saw recently with baseball, tied up digital rights. So the key to sports betting is, I believe, the affiliation and the relationship with the live sports events. And certain things, anyone can do and, others, you need the live and the authorized rights with the leagues digitally. And that's the position we're in right now. We're going to continue. We've tried things with this and other things. We're looking to create what will be the marquee in that area. The issue is it's easy when you see the NFL or baseball and all that, it's one of those. We're watching and analyzing all that's out there. And when one or two emerge, we'll be there in, and you'll hear more about that soon. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
48e9db20137038861853f218f1cdd10a | I was wondering on the cadence of continued paid promotional subscriber losses. Granted you said that you'd be on the path to maybe losing 1.5 million this year. But is there a path to that going to zero at some point? Or is that always going to be part of your range of the OEM relationships? And then secondly, related to the OEM payment impact that were lower in the first quarter, how much of that was timing and how much was related to the change in these contracts? | Yes. Maybe, Jennifer, I'll take the second one first. David, yes, the -- as you saw, we -- the cash flow in the first quarter, 211 was in line with our expectations. We had some working capital timing movements, some incremental cash interest, as I talked about. So nothing really unusual there. On the paid promotional sub losses, I think they'll continue to be -- I think I tried to at least size that for you for 2021. And they'll continue to be, I think, part of our OEM deals, as Jennifer talked about. We've made some amendments. We look at these deals holistically. I think paid promotional is still an important part of our relationships with the OEMs and the consumers. So I don't expect it to go -- to be eliminated. I don't know if there's anything you want to add to that, Jennifer. Yes, I think it's just one component, right? The trial structure. The overall deal economics. And again, we're focused on building penetration as are the OEMs. They've been very supportive of having the product in as many vehicles as possible. And every OEM is different in terms of what's important to them in terms of the economic structure. So the real key for us is driving self-pay subscribers as that's the biggest indicator of customer demand. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
b9117773359c5cba6dc761693047f7a4 | And on the royalty decision that got delayed another couple of months, what is embedded in your expectations needed for this year? What should we be looking for? | Yes, David, so I'll just -- I'll reiterate what I think we talked about at the year-end call. We've taken a pragmatic view. I think that what we pay, what we have lobbied for in the hearing and what they're asking for is all public information. I think we've taken a pragmatic view. It's embedded in our guidance. And frankly, it's embedded in our first-quarter results. So as you know, we'll know June 15th, and we can certainly update everyone the next time we're together. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
dfe696b8ee492c913c6c59bae514960d | First, could you -- there was a talk about you guys talking to AT&T about acquiring some of the spectrum that they have because it was complementary to some spectrum you have. And if that was true, I'm just curious as to whether or not that's something you're still interested in? And if so, what's the status of that process is or isn't, if you're comfortable talking about it? | So we've been working closely with AT&T and the FCC on the adjacent spectrum. And I think it's -- we're looking at various opportunities to use that in conjunction with government agencies. It's not for commercial purposes, but it's important to us to protect that guard band because it's next to our satellite spectrum. And we're making progress in terms of the steps we need to go through to put a test in market, and we feel confident that we'll be able to execute on that. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0fc049eeec1436638cf5eae401657570 | Given that you're migrating from the XM Sirius platform to one, and you're going to have a bunch of spectrum free under your control, what thoughts do you have as far as how you could possibly monetize that? Because I assume the SEC will let you keep the licenses. I don't know how they wouldn't. Have your autonomous car companies or anyone approached you all and inquired about somehow being able to use some of that spectrum when you free it up? Or are you planning to use at all for incremental products for one of your other platforms? | We're still looking at a number of options there. I mean the decision around low-band satellites will likely come in the next 18 months. But today, we still have a significant number of subscribers on the low band. And we want to continue to maintain and support that business. But over time, we have looked at, and we'll continue to look at opportunities to work with other companies on ideas, whether it's data services or video or other implementations. But of course, there's always the opportunity to use that very efficient broadcast spectrum to enhance our audio offering. And that could be more opportunities to build out different business models, including free. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
4fe58f277b430764795bb5ecb3ae4d4f | I think you mentioned on a previous call about the omni platform deal that you had signed with Kevin Hart, where it's both on Sirius and Pandora and podcast and kind of doing that. And when it comes to major talent, I know that many of them are reluctant to be on anything other than the biggest platform you have. But I'm just curious as to how your success has been in attracting other major talents or even sort of A list, B or C list talent to some type of a SiriusXM omniplatform presence similar to what the model that you had highlighted that you had with Kevin. | So thank you for that question. Not only Kevin was sort of the prototype for it, we have others that you'll be hearing about shortly that are multi-platform deals. I would go the other way. All our talent now is -- that we discussed within our current talent, Andy Cohen is launching a music channel, in addition to his channel, but it will have playlist on Pandora as podcasts. We're largely sort of only talking about what someone's audio content interests are? And then figuring out what they would like and what would work for us on all three platforms where relevant. This is almost now, I'd say, our standard procedure. We don't have too many people that are just coming in and saying, I'd like to be on one platform or the other. I think you'll see with U2 and Drake and others, you'll see some migration into platforms and things. This is what we like most about our three-pronged attack. It gives customization. We have people that due to schedules, like Kevin, may want a podcast for a while. Others want to do live radio due to topical events and current stories in the news. Others feel music is part of their life, but they don't have a way of expressing it and they'll do playlist. So this will be the standard operating procedure going forward, not the exception. Exactly. More than safe to say. And the last point on that is awareness is the key point any content creator, no matter what you want, whether it's a live sporting event or anything, they want to know. And our three platforms allow what, I think, is the ultimate version of cross-promotion on any piece of content out there. So yes, they're all really excited when they come in to chat about it. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
afcdcf41212aac0caa0f6b379e9a6bdf | One, involving your ad sales process. I wonder if you could talk about the ad sales integration with through a variety of options, especially between Pandora and Sirius? And whether the app usage and availability has broadened ad avails significantly? And then separately, on the 360 rollout process, en route to 360L being your default version, as you mentioned, is there any targeted process to -- by price or demographics served or anything else that you're trying to do to get the 360L service rolled out to specific categories sooner than others? | So on the advertising side, we've been able to, I think, capitalize on our strengths on the sales team side under John Trimble. We've brought all the teams together. They'll still soon be launching under a new umbrella SiriusXM Media, which brings together all of the capabilities that we have on the sales side across the teams to offer advertisers really efficient opportunities to buy across scaled audiences. We reach 150 million listeners. And we just offer a great suite of opportunities across multiple formats and platforms on our owned and operating platform and off platforms. And we have all of the tech solutions to support that as well across AdsWizz and including Simplecast that we bought last year to provide enhanced podcast capabilities on the distribution and hosting analytics side as well. So we're really well positioned from an advertising side. As it relates to the inventory on our owned and operated platforms, clearly, Pandora is the largest, and we continue to monetize really strongly there. But we are growing our ad revenue on Stitcher and off-platform, and we have a nice business on the SiriusXM broadcast side as well. The SiriusXM digital side continues to build, and we hope that will contribute more in the future on the advertising side. For 360L, we are very focused on broadly distributing this right now. So we haven't focused on specific demographics or cohorts necessarily. The objective is to rapidly roll that out. And we expect to be in about 25% of our installs this year in terms of what's new and coming to the market. And we've talked about the fact that we have about 2 million vehicles in markets that are capable today. So we have great progress. It's moving very quickly. And the builds as most of our OEMs are now making it plan of record. And we'll -- moving forward because of all the data we're going to get from 360L in the vehicles, which is really new to us, we will be able to customize, I believe, our pricing and packaging even more to support demand for different segments. But today, we're just focused on getting the awareness up for the features that are there because when users take advantage of those features, there's a significant increase in value, in their attributed ease of use. And we're looking for improvements, obviously, related to that across conversion and retention as well. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
68dca111af30ffebe1387b4668dd8bb3 | First one, just on the Ford Direct win, congratulations on that. Just wondering if you could help us understand the dynamics on that. You're one of five. How does this line up with the GM precedent? How many incumbents were they prior? And then also, if you could just give us an idea of when potentially dealers can start opting in to work with dealer Inspire, what will be the cadence of that rollout, that would be great. | The Ford and GM deal are similar in approximate size of the opportunity, GM has got about 1,000 more dealers in our network than four. But I think there are some fundamental differences. Number one, recall that GM was an exclusive provider with one website company prior to opening it up. And Ford has always provided choice. So we're not going against an entrenched customer base that's all consolidated with one provider. So Ford's got five providers now that they've opened up to where GM went from one to three. And so there are some fundamental differences in the opportunity based on existing providers. As far as timing goes, when the announcement was made, obviously, it began the excitement within Ford and within dealer Inspire and dealers contacting us about our solutions vis-a-vis their existing providers. So slightly smaller opportunity, but yet our pipeline has begun just a few weeks ago. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0f548e7b771b024e9f98551f03d6b5d2 | I believe your leverage target was three times. It looks like you guys have hit back on a net leverage basis. Just curious now how you're thinking about the use of cash? You guys have done well with our recent acquisitions, haven't done anything in a while. Curious your thoughts on maybe doing some inorganic growth and leveraging M&A? And just in general, how you plan to deploy free cash flow going forward? Will debt pay down continue to be the priority? | Yes. I would say, we're really excited that we were able to bring leverage down below the three times level. That being said, I don't think our capital allocation priorities have materially changed. We remain focused on driving growth in the business, both organically and also inorganic opportunities could be of interest to us, as well as continuing to pay down debt, which we think just gives us far more strategic flexibility as we think about driving growth in the future. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
46b9919825c9e086926782c287937fd5 | Alex, was a pretty strong dealer customer add number in Q1, kind of in line with what we thought on the DI and the website customers. So always tough to kind of parse out underlying organic versus DI and dedup. But maybe if you can just help us think about as we go forward here, obviously, we're all very well aware of the inventory constraints. I don't know if we have thoughts on consumer demand pull forward, especially with the massive amount of stimulus that's in the market, but you seem to still be having pretty good traction. You talked about dealer retention. So I don't know that we should be expecting similar size of step-up. I guess your guidance would really imply that anyway. But just how do you think about sort of the legacy or underlying core marketplace dealer count growth going forward given the marketplace dynamics? | Thanks, Dan. Well, look, we're really pleased that we had record sales in Q1. The year started strong. And by the way, continues the momentum. We're growing our dealer count well in Q4 of '19 and grew it again in Q1 before COVID. So we were on a growth trajectory before COVID. Certainly, the whole world changed in Q2 of last year, but we're right back on that growth agenda and again, experienced record sales in Q1. I think we are not expecting to set another record in Q2. But that said, we're finding really strong persistent work on the retention front. Our dealer base is sticky and strong and that's accentuated by our solutions revenue mix. I think where we see opportunities continues to be on the ARPD side. Even though there are inventory shortages, our digital solution COVID strategy continues to grow at a strong rate. And we're pleased that dealerships with fewer visits to their physical showroom are shifting more to invest in digital technologies and tools, which has been a growth vector for us for quite some time and is part of our differentiated strategy. I think on the traffic side, we definitely believe we pulled forward some traffic. I know February was muted a bit by snowstorms across the U.S., which led to some of the softening in the Q1 trends. But we are seeing persistent consumer demand. We believe that, that is going to lead us to a robust retail market for much of 2001 or '21. I think maybe it's worth adding to that I think COVID has also brought a lot of new consumers into the market for a purchase of a car, whether it's because they're nervous about mass transit options or some of the shifts in terms of people moving from urban to suburban areas are also driving an increased attractiveness of car ownership. That's a great point. We're seeing growth in sales rates in markets like San Francisco, New York, cities that used to not really think highly of car ownership, and we're seeing great retail sales volumes in those markets. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0f0a1ac0606b03622218f217febe03ac | You always talk about the strength you're seeing with fuel. I mean, just to kind of go off of your comments as to go about ARPD growth. Obviously, I would think, a pretty good contributor. You probably don't want to break it out, but how rapidly is that scaling in terms of where it's being offered, uptake to tax rate? You can kind of give us there, I think would be very helpful. | Well, I think what's exciting about fuel, Dan, is that it's leading to some of the strong gains you're seeing in ARPD. And yet that product platform has only penetrated less than 15% of the U.S. So we've seen strong initial adoption by the most digitally progressive dealers across the country, but we've got a long way to go to fully penetrate fuel across the U.S. So I feel like we're still in the very early innings of our introduction of fuel, which is why we're still in education mode, helping dealerships understand the efficiency of narrow casting your message only to end market shoppers and that being far more efficient than a lot of the mass marketing the dealers is still spending on today. And I think to sort of build on the ARPD growth, fuel has certainly been really beneficial to us as we look year over year. But we've increasingly, particularly as BI has continued to grow, look at the cross-selling opportunities between our solutions customers and our marketplace customers as then we penetrate our base more deeply with our set of products, we're also seeing really nice growth in ARPD from that. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0e3715cc1e4f777e68cda8095a320866 | You mentioned strong SCO helped reduce the planned marketing investments. Can you talk about the sustainability of this strength? Is it growing versus the competition? Do you expect this to kind of persist throughout the year? | Our SCO strength certainly has been persistent over the past three years. There's been no platform growing its share of organic traffic more consistently and repeatedly quarter to quarter than cars. And so we think key to that is our differentiated content strategy, while other marketplaces, just harvest listings, we're the largest producer of original programming, whether that's our expert reviews or our dealer review platform, we're generating tons of unique content that can only be found on cars. And Google is certainly rewarding that authority. And so yes, we do think it's been proven to be very durable and consistent. As you know, we spend consistently less on marketing than our peer group, but yet are generating outsized traffic than they are because we spend more in sales. They spend more on marketing, but yet we're growing faster, driven by SEO strength. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
8354890eae52ccc8ec9b1befc600b187 | Maybe just looking at opportunities in the landscape, maybe, I'll call it, auto tech. You have fuel, you have dealer Inspire, one of your big competitors got into kind of the auction environment. Do you see opportunities out there as dealers get? I think they're zeroing in on finding inventory more creatively or more aggressively? Are there other areas that get involved as maybe more transactional as opposed to maybe more lead gen or web presence type services? | Sure. Well, look, we still got a lot of runway to go with our existing organic solutions, right? We're still under 5,000 dealers on websites and a much bigger universe. We still haven't even really begun to focus on the independent dealer segment with website solutions and fuel, as I mentioned before, early, early innings. So we've got a lot of upside and growth to have on our existing solutions. I think there has been a lot more investment in Autotech in the past year, driven by COVID. And what's exciting about that is all of these technologies really need distribution. And whether that distribution is to a large consumer installed base on our marketplace platform or through our robust sales network that's established with over 19,000 dealers, we can bring solutions to market. And so we are contacted frequently by a lot of the innovations in the category who've got great technology but really need distribution. And so we will continue to look for solving problems in either consumer market or the dealer market, if there's pain points there that we can deploy technology to drive out cost from the industry or to make the process better. We're active in looking at those opportunities. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
9719179184e1d4447c9aefb428cfd5b8 | Curious on the dealer growth and the customer pick up there. How much of that was reactivation of suspended dealers versus new dealer growth? | Well, look, everybody lost a lot of dealers during the pandemic, Ryan. And so we're almost back to our pre-COVID levels. So a good healthy percentage of that is dealers coming back. We saw particular unnoted strength in franchise dealers engaging in the platform. And so we're right back almost to our pre-Covid levels. And we were growing dealer account, again, pre-Covid. So I don't have the exact percentage of new sales that were former dealers, but we're definitely bringing back a lot of the accounts that we lost during the pandemic. We are. And the great thing is we're actually bringing back a lot of new accounts. It's a mix of new and folks who suspended during the COVID period. But I think it's, call it, roughly 50-50 between the two buckets. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
3e6f4ffa7a4adf7b90005be901971cd2 | How much is left in kind of the pipeline of suspended accounts that haven't necessarily made a decision whether to drop or to reactivate yet? | I don't know if that's necessarily the right way for us to look at it, right? What we're trying to do is go out there and create like a healthy dealer base that is interested in not just our marketplace solutions, but our entire suite of products, which includes BI and fuel. So we're evaluating the opportunity that way as opposed to specifically suspended dealers. Right. We have no dealers that we are grandfathering in or had anybody. We ended that in Q3 of last year, where we basically said, do you either need to resign or we'll cancel the outright. So we've got no dealers in a suspended status from last year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
a686c0b77210c1e7f4de28e83133ec6e | And then just on Q2, I get the OEM revenue down and the challenging new vehicle, just from the supply side, etc. But I guess, it sounds like fuel is on fire. It sounds like DI is doing well. You have this new for GM's ramping. I guess, all of the good stuff that you talked about with the business, it feels like that should be able to offset. But I guess, is the OEM channel really that challenged, that it's more than offsetting all of those things relative to Q1. | Well, look, we are being cautious because the chip shortage is a macro factor that's evolving by the day. So I think our low end of the guidance range is partially driven by that, like there's just a lot of uncertainty there. I would say we're seeing really strong robust trends on the demand side and on the dealer side, which are all going to be growth. But on a subscription basis, the great success we had in Q2 only contribute so much to the Q2 picture. It definitely accelerates and continues throughout the year, but with so much uncertainty around the OEM front, we did provide a more cautious outlook because of the uncertainty there. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
3a99adeaadf4e05e8b2bcc042d964cd4 | So I guess are you assuming potentially dealer churn because of that environment? Or do you think dealer growth can continue, and this is primarily an ARPD, I guess, headwind? | Yes. It's not an ARPD headwind. That's been strong and growing. And dealer count has been solid as well. In fact, we grew dealer count in April. So we're seeing the growth trends on dealer continue. I think where we've applied some conservatism is just on the national uncertainty and outlook there, which, as you know, doesn't impact ARPD, but rather our national revenue bucket? Yes. No, that's right. I think when we look at the business in terms of dealer revenue, we do see a lot of momentum there between our solutions business, right? DI grew 25% year over year just in Q1. And in the marketplace, we continue to see really strong retention rates. And there is strength in sort of the franchise base of dealers that we have an orientation toward. So what you see in the guidance range we've put forward on the revenue front is some level of conservatism, which we thought was prudent just given the uncertainty around the inventory supply chain. It's a little bit out of our control. And OEM revenue has always been that OEM and national revenue line has always been slightly more volatile because it's not a traditional subscription business that we have on the dealer revenue side. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
70791b5dcae100b918f4f7c0d5889181 | You talked about or I guess the online shopper, there's a lot of push toward end-to-end online solutions for dealers. Have you seen any cannibalization of your marketplace subscriptions with customers that are doing more with DI? | No. It's just the opposite. In fact, as dealers are embracing digital retail, increasingly, what we're hearing from dealers is wanting to augment their website volume with users from our marketplace. And we're seeing this through the DI connected platform right now. If a user comes to the dealer's website through cars.com, they are converting at two times the rate of all their other traffic sources combined. And so that's been one of the exciting things on COVID is that with showrooms empty, dealers are studying these digital metrics with a much finer tooth come and seeing the qualitative aspects of our audience. And so we now have more inbound demand for dealers wanting to source in market audiences because they see that it converts higher. Yes. And just to build on Alex's comment, I mean, as we look at our shared customers who are using both the dealer Inspire products as well as marketplace, that's actually grown substantially year over year. It's up, I want to say, over 20%. So we are seeing more uptake as opposed to two left. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
2ea0ad86e4511209c423975aabfd277a | Can you talk about the relative sizing of your MSR and Agency portfolio today? If I look at Slide 13, it looks like the interest rate sensitivity from both is the relatively kind of matched up. Can you just talk about kind of your expectations and willingness to kind of continue to grow the relative size of each? | Sure. Good morning, Doug. Thanks for joining us. That's a good question.
So as you point out on Slide 13, right, on the left-hand chart, you do see the interest rate sensitivity of the Agency RMBS and the MSRs being roughly equal and offsetting. But if you go to Slide 12, you see that there's a little bit of a difference between the mortgage spread exposure between the MSR and the RMBS. So it's not -- it's something is exactly interest rate hedge, it's not exactly the same as mortgage spread hedged exactly. The relative sizing amount of the MSR depends on level of interest rates as well as relative pricing.
We don't particularly have a target of what the right -- of what the terminal size of MSR is, that's a dynamical thing and we manage it actively. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
b5fae8d2660cb3c321f97cbd60106707 | Got it. And then if you could just -- I guess, how do you think about the current sizing of the flow program relative to the expected runoff or is it kind of sized for growth or is it size to kind of replace runoff at this point? | I'd say that, again, it's market dependent. We're very pleased with the amount of flow servicing that we're acquiring, which, as Matt said, is largely offsetting the run off. We do, as we've noted in the past, have recapture programs with our existing sub services as well and that's part of what we're doing also. The amount of relative size that we acquire in any period is a function of the price, right, that we are showing to our seller partners, right? If we were to increase our price substantially, we would get substantially more MSR volumes.
And so it's a balance between the attractiveness of the price that we're looking to see and the volumes that we're getting. Thanks for joining us. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
10bd08071c82fa55aaf96c60529401b5 | Hey, everybody. Good morning. One quick housekeeping question and then a couple of other questions. I didn't hear it, have you guys provided a book value quarter to date? | Good morning, Rick. Thanks for joining. We did not provide it. But through the end of last week -- it's early in the quarter.
But through the end of last week, we were up a little north of 2% so far in the quarter. So that's coming, again, from spread tightening -- we've seen some spread tightening in coupons. So that's where we are so far. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
54c41df0575e6de5942715b3460efa37 | Perfect. Thank you, and thank you for all the technical stuff. It's a really interesting call and the materials are helpful. I'd love to understand Slide 11 a little bit better in terms of MSR pricing.
It's consistent with what we've heard anecdotally, which is that with the big supply of MSR available due to production that pricing remains benign, how do we think about what we're seeing on Slide 11 in context of the marginal tightening of MSR spreads that you guys have referred to as well? I just need to understand the dynamic between that slide and that comment. | Sure. Good morning, Rick. Nice to have you here. I'll take that one.
Well, I mean, as you see in the chart on the lower left, the price multiple of new flow that we're acquiring is a little north of a three multiple. We did say that the MSR spread has tightened marginally, maybe only 50 basis points, that doesn't have a big impact on the price. And so maybe the price went up from three to 3.1 multiple or something like that. So it's a pretty small effect, but noticeable in the returns. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
490b77b109dfc125dfbf80e070bd9b42 | Got it. OK. And then last question for me. As you increase modestly the allocation to IO, can you help us -- and again, just putting this in context of what we saw last year, think about liquidity and funding for those assets, and does this create a risk that we should be considering? | Sure. I'll take that one. I guess we're looking at it on an opportunistic basis here. It's atypical for us to be able to source significant quantities of IO.
It's coming sort of as a function of the huge demand for strip down bond that's happening today. The spreads on the asset are a little bit tighter than what we're seeing on servicing by maybe a couple of hundred basis points, but there's an advantage in CUSIP dial in the funding aspect of things where the haircuts are lower and the funding rates are significantly lower. In terms of the liquidity of them, I mean, there are certainly far more liquid than servicing, right? So they're -- like I said, they're CUSIPs. They trade on a T+2, if you want to sell servicing, that's a long drawn-out process.
So it's an improvement in liquidity. And I think, overall, the thing to keep in mind is the addition of the CUSIP dial really is just an extension of the portfolio construction. They really provide the same exposure as servicing does when we're looking at that. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
89ae2dd41858c887e50c378f020d49e9 | Hey. Good morning, guys. Good to hear from you. A couple of questions here.
Can you talk about where subservicing costs are right now? And how they may have changed over the last, call it, a few months? And then on the funding and hedging side, are you seeing opportunities to take advantage of a flatter term structure by adding longer-term repo? And then on the hedging, where along the yield curve, do you think it makes the most sense to add hedges right now? | Good morning, Eric. Good to hear from you too, and thanks for joining us. I'll take the first question, then I'll let Matt talk about the repo question. Subservicing costs have been stable.
When we enter into our subservicing agreements, we have a pre-determined cost to service schedule that sets out what the costs are for performing loans and nonperforming loans and so forth. And so that really hasn't changed at all in recent months. Our cost of service for performing loans is still in the -- in, call it, the $6 to $7 per loan per month area. And there was some activity around the cost in terms of the CARES Act and the forbearances as that came online.
But as we discussed before, that's been very benign and lower than expected. And I'll let Matt talk about the term structure of repo rates now.
Thanks, Bill. Morning, Eric. Yes, the repo market has been terrific, like you noted, it is very flat. The term structure is very flat with rates in the 20 to 25 basis point zone at the higher end for longer term.
I think we typically have a pretty termed out repo book. I think we'll -- I think it was down around 60 days weighted average at the end of Q4. I think you'd expect to see that stretch out sort of more typical ranges for us, which is more like in the 70 to 80 days weighted average. We -- I think we've seen -- since last year, we think we've seen term markets sort of fully redeveloped.
We're seeing one year repo at attractive rates from multiple counterparties. So I think we'll continue to ladder our maturities as we typically do. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
bbba1972b53bade73c2cd5338b15489c | Great. That was really helpful color. And then on the four bulk transactions over the quarter, can you give us some sense or just some kind of market color, if you will, around the competition in the market for those transactions? And really, what, in your opinion, would catalyze potential additional bulk sales to take place going forward? | Yes. I think as we've said in the past, we find signed the pricing in bulk transactions to be situational. There are some packages that we think are pretty tight and some that are attractive. The competition for bulk package is pretty good right now.
I mean, it's competitive. There's, I would say, that market has peeled where there's probably as many market participants trading in the bulk market as there was precrisis. Competition probably is, if anything, continuing to increase a little bit. That's one reason why we prefer the flow market.
These are relationships that we have built over time and have in place with approximately two dozen sellers that sell to us on a daily basis and that's -- and environments like this can be more stable and constant stream of flow products. Throughout this whole episode, what we've seen is with primary secondary spreads being so wide, the need to sell in bulk for servicers has been diminished in general. And so I think you won't see more packages come to market until you see a significant rate rises, my belief. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
b02c49cc8c9dc541665446c77b3abfdf | Yes. Hey. Good morning. I just wanted to go back to the IO versus the MSR.
It seems like one benefit that IO would just be, I guess, less operational risk that you don't have to do a service event. But obviously, so I guess net-net, do you -- is that the preferred place to capital exposing versus MSR until something changes? | I think it's certainly true. You don't need the operations in order to manage the IO position, but the financial risks are certainly similar to the MSR position in terms of managing the interest rates, the prepay risk, the transactions risk that we have. As Matt said, we view this as really an opportunistic sort of environment where the demand from banks and other participants for more strip down coupons leaves behind an attractive looking IO. This doesn't always happen.
There's normally not this much IO in the market. The amount of the strip down CMOs being created is historically very high. And so they're attracted today. They give us the portfolio characteristics that we like.
They have good financing characteristics. They're pretty liquid. And so for those reasons, we like them. But I wouldn't call it a strategic change in what we're doing at all. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
10c7aaed69101c7d4df6031995aab736 | OK. Great. That's helpful. Thanks.
And then just on the roll specialness, you guys noted it's down in January. Can you just talk about where it stands now relative to year end? And then just what do you expect that to continue to be active, etc.? Do you think you could see improvement in specialness in the near term? | Sure. Bose, it's Matt. I'll take that one. I mean, it has come off significantly.
I think the main thing that's caused that is that the vendors really changed their purchasing activity. They've pushed their purchases out into the back months, which more matches the origination sales. So for example, we talked about this in Q3 earnings, at the time, we were seeing, for example, the advantage for TBA 2s, for example, as being about 100 basis points through repo rates at the time. And I think that where the roll rates for that coupon today are indicating something only like 20 or 25 basis points through.
So it's off dramatically and I mean that table that level will certainly be a function of the Fed's activity and they're buying, right? They've modified their activity a little bit. I guess I would expect a continuation kind of the levels that we're seeing today in the near-term unless they change something, but it's probably reasonable to expect something similar to what we're seeing today. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
db14e59cf287fb31f71c75e43defd5b2 | OK. Good. Thanks. So just one last one.
The issue with Pine River, the litigation, is there any time line for when there's a resolution on that? | I'm sorry. I was on mute there. Excuse me. As you know, the situation is active.
As I'm sure you can appreciate, I can't really say much more than that. The Board continues to believe this is without merit, and we're in early stages of this process. And again, I'm sure you can appreciate, I can't really say much more than that. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
a6982e5ab1e0c2367a40a299fc9f4bbe | Hey. Thanks. You guys briefly talked about primary secondary spread in the opening remarks. I was curious, a couple of things: first, with respect to where MSR valuations are today, do you think that significant compression of primary secondary spreads is already reflected in those valuations and so more generally sort of how we should think about the overall impact to the portfolio, if that spread does continue to trend fast over the course of the year? Thanks. | Trevor, thanks very much for the question and thanks for joining us. Yes. So certainly, a compression in primary secondary spread is baked into current MSR pricing. That's one reason why we've said in the past that while optically servicing prices might seem lower today than they did pre crisis, most of that reason is because the primary secondary is so wide and valuations are building in that compression.
And so from -- if you look at yields or spreads or things of that nature that incorporate that mean reverting of that spread, you would find that the pricing is similar to what it was precrisis. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
1dc00540e0514b9bd07ed1ab2cedb32a | OK. Got it. And then one more question, looking at Slide 13 and 14 on spread exposure and the level of spreads today versus historical levels. And I think generally, they've continued to tighten in January.
Do you guys continue to find opportunities to add more either through MSR or IO, in light of where spreads are today, would you consider taking sort of the net spread exposure to kind of the overall short position or is that something you guys trying to keep in a pretty tight band around zero-ish? Thanks. | Yeah. That's a good question. Again, we don't have a target for that number. We think, like when we talk about our other interest rate exposures, we think the net exposure to mortgage spreads is already low.
We are finding the ability to sell these strip-down CMOs at low to negative option adjusted spreads, which allow us to retain the attractive IOs, the MSR that, as you point out, that we're creating, especially on a flow basis, is very attractive. Which serves to reduce that more. So again, we don't have a target for that number, it's driven entirely by the opportunities. But I think the idea, and as you know, the thesis of our strategy is to maintain a portfolio where that exposure is low.
And that's what we're trying to do. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
d68548653ecc74738c81d711f1bf80bf | Hey, thanks a lot. Just a couple of questions. The first one, Steve, maybe just comment on in past experience, how long some of these auto cycles have taken to sort of trough and rebound. And you mentioned that nine of the top 20 grew by over 50% year over year, which is pretty astounding given the overall environment. I'm just wondering if you could comment on like was there a common thread for those carriers? Were these the ones who were already more fully embracing DTC? Or is there any common thread to those carriers that had heavy spending persist? | Hey, Michael. Thanks. Great questions. With regard to our past experiences, I mean, we have been through this before, right? What we saw in the last cycle, that was back in 2015 and '16, that cycle was driven by three big things: lower-than-expected gas prices, higher-than-expected employment, increase in distracted driving, all which led to higher-than-expected frequency. What you saw unfold there was a hard market cycle that lasted about a little over two years. I think this time around, there's still a lot of uncertainty. The market dynamics are still fluid. But I think what we're hearing from most of our carrier partners is that this underwriting cycle is going to unfold much more quickly. And it makes sense when you think about what the reasons are behind this cycle, right, because it's related to post-pandemic driving patterns, pandemic-related supply chain issues that's leading to severity issues and then losses from major cat events like Hurricane Ida, right? The one thing that we know about the duration of this cycle is that as many large carriers have announced, we do expect them to continue to take rate well into the first half of '22. And having been through these cycles before, for us, it is hard to foresee the market coming back in full until they're done with this rate-taking process. Now, as the profitability is addressed, again, having been through this before, we fully expect to know that the industry is going to revert back to growth mode pretty quickly, particularly in our ecosystem, because of the overall efficiency and how quickly they can scale back in our ecosystem. And so what we're focused on in this period is really about laying the foundation and the groundwork to accelerate out of this profitability cycle. What the current carrier focused on profitability and efficiency enables us to do is to make additional progress with initiatives and integrations to boost efficiency that honestly gets overlooked sometimes when carriers are just trying to grow. And what this means is more granular conversion tracking integrations, better data-passing integrations, I think the -- and enhanced interest -- increased interest in carriers working with us as a supply partner to generate revenue from non-converting shoppers and focusing all of these during a hard market cycle like this is one of the ways that we put distance on our competitors coming out of the last cycle and we expect to be able to do that this time around as well. Now Michael, your second question about nine out of 20 carrier partners in the P&C vertical growing by over 50% quarter over quarter in Q3 -- or year over year in Q3, I think the common thread is that these are all carriers that were still relatively early in the adoption of direct-to-consumer marketing. And so we talk about the secular shift a lot. I would say that if there's one common theme connecting those nine carriers, it's that they're in inning two or three of this adoption curve and not in inning six or seven. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
1d5b1821d7e203e2766804941337aac9 | Noting that they're increasing certainty on Medicare Advantage advertising, requiring all Medicare Advantage marketing materials to be submitted to CMS prior to use, just wondering if you guys have seen any slowdown in lead generations from your supply partners or your own interest assets in this? | Yeah, understood. And sorry, you broke up a little bit, but I think you're asking about whether the CMS pre-approval requirement for Medicare Advantage advertisement has led to any kind of slowdown in our ecosystem. Yeah, it hasn't. We actually we're having a very strong enrollment period and we haven't seen any material impact from these new CMS guidelines. I think first is our owned and operated websites aren't subject to the CMS pre-approval requirements. And then we do work with demand and supply partners who are subject to those requirements, those partners haven't pulled back with us in any way. And in fact, some of those partners are the ones increasing their budgets two to three times what they were in the last enrollment period. And I think the overall feedback that they're giving us is that getting the pre-approval for digital advertising copy has been a lot quicker than for offline ad copies, such as TV ad copy and radio ad copy. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
3ff7b20100c2400c672e855e360658ba | Got you. OK, thank you. That's helpful. And then as a follow-up, we saw that the conversion in P&C was pretty different than we had expected. So just wondering what the private market dynamics were in P&C this quarter? | Yes, that's a great question. So what we saw in Q3 is that we had some large supply partners who scaled this tremendously over the years to establish direct relationships with a couple of larger P&C carriers. That resulted in this shift. But as you know, we don't provide guidance related to the mix of open and private marketplace transaction. And I think this is exactly right, like we don't -- because there can be near-term fluctuations that are largely partnership-driven. So the thing to keep in mind though and the point I want to emphasize is that the growth of our private marketplaces is fundamentally a good thing for our business and, we think, for the industry as well. This product was designed for at-scale supply partners who, just in broad strokes, need more of a technology platform solution than a full service marketplace solution. And so the growth in our private marketplace partnerships, well, first and foremost, means that we've succeeded in helping these supply partners scale through our open exchange to levels that were really hard to imagine just a few years ago and we see the growing adoption of our private marketplace product by many of these at-scale supply partners. We take that to mean that we've been able to actually evolve our offerings to meet their changing needs. Because these are very important partners, their needs are going to be different when they're a midsized partner or a smaller partner in the open exchange and when they're an at-scale partner. And so for these larger partners, keep in mind that our private marketplace is a strongly differentiated platform offering that no other company has been able to offer in any credible way. We have nine to 10 such partnerships. No one else has even won and believe it's not for lack of trying. I think for us, it also leads to far more deeply integrated partnerships. And these are some of the largest supply partners in the industry who then enter into a multiyear exclusive partnership with us to become a private marketplace partner. Now, keep in mind the dynamics here that will shift more to the open exchange. It will be the growth of new demand partners because new demand partners or midsized demand partners typically can't support as many direct relationships as large demand partners can. And then it's going to be the growth of newer supply partners as well, smaller partners, midsized partners as they scale and then the increase in carrier partners because regardless of scale of our carrier supply partners, the private marketplace product really isn't a product that's designed for them. And so over the long run, for us, it's just really about maintaining a healthy balance of both of these models because it tells me that we're doing a pretty good job of serving the needs of both our small and midsized supply partners as well as our largest ones. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
b9bbaf0b9e853c68bf0a530b44551b74 | Great. Thanks. Two basic questions, if I can. First, within P&C, are you getting any -- are you seeing any signs of concern about insurance companies wanting to raise rates but having some regulatory friction? | I could answer that pretty quickly. That is something that we're seeing mostly, quite honestly, just in the trade press and not any specific feedback that our partners are giving us. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
ccd54214e8cd9b5f98f62df0e3c45b04 | OK, perfect. And then I don't know whether this is manifesting itself at all, but a number of the, I guess, senior health brokers are struggling with retention. I was hoping you could walk us through what impact that has to MediaAlpha, if any? | Well, those brokers are both demand and supply partners of ours. And again, to the extent that they're going to struggle with retention, that would lead them to actually sign potentially a lower expected lifetime value to the customers that they require. And so that would lead them to pull back on the bids that they have in our ecosystem. And so for us, in our channel, we're not seeing that. In fact, we're seeing actually some of the biggest budget increases coming from these brokers in our ecosystem. And then keep in mind, the vast majority of the demand is also directly from the carriers themselves and not from these types of brokers. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
38e1fd79aabdbfa0f0ee3cd57b004a95 | Good afternoon. So it sounds like, in terms of the cycle itself on the P&C side, that '23 is the year where, hopefully, things get back to normal. Is there a lag from the time the underwriting improves and where marketing spend goes up? Or is it pretty much simultaneous with the improvement in the underwriting margins. What would be your experience from past cycles on that? | Yeah. Hey, Frank. So I would not characterize the market coming back in 2023, I would characterize it as we don't know exactly when it will, right? And so I mean, we do have some partners calling us that they expected back in early part of this year, again and then we have other partners calling us they'll be back later. And then we also see the rate filings and the pace of the approvals that are happening and we see that companies announcing that these rate takings will continue well into '22, right? Now, when it does come back, we tend to see little to no lag from taking rate to coming back to marketing. Honestly, that's like a partner just told us that yesterday, there may be some differences this time around because there is a bit of uncertainty around what the severity is going to look like. Because keep in mind the underlying issue here, right, which is that we're emerging from a once-in-a-lifetime pandemic and a lot of the patterns that people are seeing, both in terms of frequency and severity, are kind of once-in-a-lifetime events that have been hard to predict. And so -- but what the carriers are telling us, they'll be back very quickly after the rates are taking effect simultaneously with the rates being taken. But keep in mind that other factor is that this industry is dealing with something that's an uncertainty that is new to a lot of people. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
3f306f5c33956d8ecfa50d26f17473a6 | Understand. And just one more on this topic. I think last quarter, you called out two of the large -- of your top carriers, were you saying that more than two that, that number has increased since last quarter in terms of those who are either contemplating or have cut budgets? | Yeah, Frank, that's right. That's right. I think we started to see the early signs, right? And those are early signs that we were seeing in Q3, right? And there is one aspect of this cycle that I alluded to, which is different from the last one, which is it did unfold quickly and more uniformly across all carriers -- or most carriers than in the last cycle. And again, it's really because there's a multitude of factors, but really the unexpected severity stemming from supply chain issues that are pandemic-related that a lot of carriers weren't foreseeing. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
6cfae518d5c890e18f839a7e43a11e68 | Got you. Well, I guess having diversity is a good thing now with the strength you're seeing on the health side of the business. So maybe just one question there, you had earlier question on churn. But I'm just curious, as we listen to the DTC brokers report this season, there does seem to be a bigger focus on quality of new business that they add. So I'm just curious, does that maybe even drive more demand for you if the desire to have quality members come on board, so to reduce churn, does the consumption of leads go up or what would you -- how do you think that would affect the business? | Well, I think it would affect the business positively. And I think that that's part of why we're seeing very high levels of demand from some of those broker partners that you're referring to. We're seeing demand at levels of two to three times previous periods from those demand partners. And so as they focus on quality, to the extent that their budgets with us and their investment with us is going up, I think that's exactly what you're alluding to. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
e673b7e4de93ec87dad49078360ff0a1 | Can you please comment on what has changed for 2022 in regards to the wind market dynamics? I believe you had mentioned previously that 2022 was looking very strong but now you expect the market to be flat in 2022. So any comments there would be very helpful. | Yes. Laura, thanks for the question. I think we did comment on first quarter that volumes looked pretty good for us early on as it relates to 2022. That has not changed. I take our -- those comments about the market being flat, mostly from comments and discussions with our customers and our customers' customers. I think we've been pretty consistent with what the bulk of the market or the rest of the market has talked about for 2022 and potentially 2023 as being relatively flat compared to 2020, which was a big year. And then once some of the uncertainty around long-term policy, whether that be in the U.S. or how it's implemented in the EU is clarified, then I think we see some significant changes in volumes. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
49325a4e71e264a02a59d560590f5548 | And just to clarify, flat versus 2021, that would be right, not 2020? | Yes. I'm sorry. I misspoke. That's correct. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
1459435521fff8cc7a210e00b47a2196 | And then on the dedicated manufacturing lines, I see that now you have 54 lines for the end of the year versus 50 in the prior guidance. Can you help us understand a little bit the moving pieces? I know you have the four lines with Siemens Gamesa going away and four lines with Nordex being added. So what's causing that increase? | Yes. So it's a little bit of a technicality here. It is technically 54 at the end of the period. And so that would be at the end of the year and then because the contracts that expire, expire on 12/31 at the end of the year. So there are a number of contracts that are expiring at the end of this year. So going into 2022, we will have fewer than 54 lines under contract. We don't have a final number as of this point yet, but it will be less than 54. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
4531b9c8ca92725bce38831b7aa7f395 | The average selling price is going up for the year. Wondering if this is purely driven by the new lines with Nordex or that in a combination of you being able to raise prices given supply chain constraints? | No. The primary driver of that is the raw material input costs going up. So that's causing the increase in the ASP just based on how our contracts operate. And then yes, a portion of it is the Nordex lines, but the larger piece is the raw material. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
2cbd4fd20d52728729a5566f4c6186b3 | With the infrastructure bill and the potential reconciliation bill that would come at the end of the year, are you guys seeing anything -- when we talk about infrastructure, we tend to think about things like roads and bridges and railroads. But I also think -- it occurred to me that buses could be a direct spend. It's a huge part of -- I think it's actually the biggest source of public transportation. And so is there -- are you aware of any money or anything that was flagged or could be flagged just for municipalities or governments to purchase buses and it actually benefits the second quarter? | Yes. There's a pretty significant amount of it that was aimed at transit and school buses in the bipartisan deal. So that -- and that's outlined in the deal. So there's a fair amount for that. From our -- that's great news for us and for our customers, clearly. But the biggest part of the infrastructure bill from a wind standpoint is transmission. And there is upwards of -- depending on how you score it, anywhere from $60 billion to $70 billion that has been allocated for some -- or for grid enhancement over a period of time. So we're pretty excited about the fact that infrastructure does take a -- or transmission takes a front seat here because again, we need to get the electrons to where people are from where it's generated and transmission is key to that. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
20102a779ab02cc1329a8c00e1d11811 | You -- in the deck, you gave $460 million between Proterra and Nordex for the incremental for the contracts that you have. Can you give us just a sense of the split between the two and over what time frame you're contemplating? | No, we can't give you the direct split between the two, but the Nordex deal is a three-year deal. The Proterra deal is a two-year deal, a two-year extension. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
a73a18f0073f2d850c0400c5b0a6585a | We're tracking through all the companies that we follow what's going on in terms of shipping and logistics. And it just occurs to me that you guys -- at least I know your customers are the ones who pay for the blade to ship them, but that will impact their level of demand and so on and so forth. So if we're looking at shipping costs and freight generally and trying to follow those trends, looking at indexes and such, is that a good proxy for moving a blade? Or is -- are moving blades something meaningfully different where there could be a lag with other freight indexes or will this generally go with container shipment cost bottlenecks? | Yes. Very different from a blade standpoint. So there are specialized ships, and then there's obviously specialized rail fixtures as well as specialized truck fixtures. So it's really hard to compare it to a container. However, with that said, I mean we are impacted by container pricing as well, right, as we bring raw materials from different parts of the world to our manufacturing facilities. That gets added into the overall cost of the product, and a portion of that passed on to our customers just like the raw material price it would -- itself would be. So yes, I mean, if you look at the overall impact, logistics is a smaller piece of the overall increase that we're seeing this year, but it is meaningful as it relates to raw materials as opposed to blade. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
117714f21065cf3241ef187ee4c63098 | Maybe just on the raw materials, can you remind us when -- or how the contracts are set up when they maybe reset based on price. And then I know you've kind of got the shared pain/gain setup that you've talked about. Maybe just talk about the current situation in that context. | Yes. So we have -- one of our customers is 100% responsible for raw material price increases. So that -- 100% of that goes to the customer. That just happens real time. As pricing goes up -- or as raw material input costs go up, price goes up. With our other 50% of our customers, if you will, it varies, but our average is 70-30. So 70% of that cost would get passed to our customer. We would absorb 30% of that generally. Most of our contracts today reset quarterly. So you could have inter-quarter price increases, and then they would get passed. You would reset at the end of a quarter. In one instance, we had set -- we set price at the beginning of the year. So we happen -- in that case, we happen to absorb 100% of the raw material increase. So that's kind of across the board. So some of it, 100% of our customer absorbs it, other at 70-30 and that's reset quarterly. And in one case, it's a -- we absorb 100% of that on an annual basis. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
861fb8f14cd218ec92e3bce98dcbf533 | Maybe last one from me. Just on the launch in China, I know working to fill those. And this has kind of been a question ongoing for some time, but any traction -- well, first of all, just traction in potentially filling those, but then secondly, traction with some of the local OEMs in China. I mean is there any interest or any possibility that they might sell some of those lines? | Yes. We're -- I mean, we're still actively working those lines, if you will. It's a little bit tougher with the Chinese OEMs from a cost standpoint. We have had many conversations with them, and those continue. Nothing to report as of today. And then with our other -- with the Western OEMs, we're still working on different scenarios with them in different combinations in our facility. So nothing specific to report but continuing to work it. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
e28d7a46c319d1950d7aae384c2cb93d | You referenced your expectations for the market in 2022, just curious, when you think about your business, your contracts, your market position, should you kind of mimic the market? And maybe alongside of that, given what's gone on this year, can you expand margins in a flattish market next year? | Yes. It's a good question. I think in response to Laura's question earlier about lines under contract. So we'll have fewer lines under contract next year. We expect to have better utilization next year. So even though we expect a relatively flat year, we do expect better utilization. And with better utilization generally comes better margins. Along those lines, we've been working really hard over the last few years on reducing our overheads, reducing -- making more cost variable than fixed. And so a combination of better utilization and continuing to drive cost and lean out our organization should begin to pay dividends next year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
dd5a3c7b8a074253475804abcc8e928b | You had a pretty sharp rise in transportation sales sequentially. It looks like that's kind of a seasonal thing or a timing thing because last year, the second quarter was similar. Is there -- can you just kind of speak to the trend there on the non-wind blade side? And how -- because I see your full year guidance, but I was just trying to think about how it progresses throughout the year. | Yes. As you think about the non-wind blade sales, it's made up of, one, the transportation side, the field service side and some other revenue in there. So all of those are kind of contributing. I mean -- so you do have some seasonality with field services as we continue to ramp, especially you'll see some of that. So that's all going into those numbers right now. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
aa149cd0d435c22a945f1757f794d045 | And you did talk about the changes in wind blade average selling prices and with raw materials being a big piece of that. But the underlying trend there, given blade length, etc., that should still continue to sort of trend higher over the next couple of years, just driven by blade design and larger blades, correct? | Yes. Longer blades, more importantly, heavier blades, right, and then also the content of the blades. So as more blades go to carbon from pure glass, you'll see an increase in the ASP as well. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
cc601fc9284f90b20bbb856332482144 | Bryan, when it comes to the measures you've been taking to create a more resilient, flexible supply chain, could you give us an update on localization? Where are you at now in terms of what you've achieved? And then what do you still aspire to do when it comes to that initiative? | Hi, Tom. This is Bill. I'll take that one. It continues to be a very important initiative for us for a whole number of reasons. I mean going through COVID, us having localized a number of suppliers the way we had prior to that certainly benefited us during that period. And we will continue -- I can't give you a specific number as to the percentage that's local versus not. But I can tell you four key commodities. We're continuing to work on more and more localization or regionalization for the very reasons, it's security of supply as well as price. So we're going to continue to focus on that. I can't give you a specific number on that one at this point. But suffice it to say, that continues to be a priority for our team. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
bf3f8fdb0c1aeff09560b509ae0403b2 | And then when it comes to the four lines in Juarez that we'll be getting relinquished by SGRE, at this point, just based on your current OEM conversations and indications, would you expect those to most likely be absorbed by an existing customer or a new one? | I would say probably an existing one given that we've got the top five outside of China. I don't see a Chinese OEM coming in there. So I think it's more likely that it's one of our existing customers. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
04df74a56baee4656fd87946171c6797 | For field service, inspection and repair services, could you just update us on what your current customer mix is between turbine OEMs and then wind farm owners and operators and whether or not there's any notable changes occurring within that mix? | I would say it's probably 90-10, maybe 85-15, OEM versus asset owner. We're having -- we continue to have a lot of discussions, and it depends on the region, quite frankly. In the U.S., it's primarily OEMs; in Mexico, might be more asset owner; China, asset owner to some extent. So it just -- it varies by region, but it's still predominantly OEM. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
fcd2cf5b5fbed915cea151009d004922 | In the context of what's happened with COVID in India, specifically in the last 100 days or so, can you give an update on the status of your operations there and the personnel? | Yes. Actually, we managed through that very well, Pavel. Thanks for the question. It did impact us slightly from a production standpoint, more so from raw material availability because of suppliers, but again, managed it very well. We have a significant portion of our associates there are now vaccinated. And so it did not impact us material in any way at this point. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
910d39353cd49364efa6cad1054e0f59 | And across your global manufacturing footprint, all five countries, are there any operations where there is capacity constraint on either a regulatory basis or due to agreement with the union? | Yes. No, we -- no union constraints. And again, as you know, we're unionized in Turkey and in Matamoros, no constraints there. And I will tell you in China, and this is very recent, we were on a voluntary shutdown in one of our plants in China for a number of reasons. It's likely we'll be shut down an extra week there because of what China would call an outbreak. There's like 32 -- 128 cases in Yangzhou City, so relatively small for the numbers we're used to in the U.S. and elsewhere, but they tend to shut things down pretty quickly there with their zero tolerance. So I would expect we'll be shut down for an additional week unplanned but will not impact our overall volume for the quarter or for the year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
0a0d7c40e4e7f52c861bea40ce2b90e9 | I want to just focus on the investments in MIRROR for a minute. The 3% to 5% dilution, you're obviously above what you had initially expected and I think what we were all expecting. So in light of that, can you just maybe frame out your expectations for the long-term opportunities of the business that are getting you so excited about this -- the ability to invest now in the content? | Yes. Hi, Lorraine. It's Meghan. So as we mentioned, MIRROR sales in 2020 exceeded our initial expectations at approximately $170 million. And we did guide to $250 million to $275 million for 2021. They are still very early in their life cycle and the path to profitability there is very much within our control. That said, looking at the business, the value is really in the long term and the long-term value of the subscription revenue. So we've learned a lot since we purchased the business and COVID created an even greater opportunity than we saw at that time. And we're going to invest behind the momentum we see in that business to really drive that long-term value. And you heard Calvin talk a little bit about some of the key investment areas that include adding production studios, adding an instructor -- instructors to the base, launching new features and then expansion into Canada, as well as importantly, over 200 shop-in-shops in our North America lululemon stores. In terms of the long-term opportunity for the business, I think we'll continue to learn a lot in 2021. We're not going to put a time point on it right now, but we'll continue to share more as we create our plans for 2022 and beyond. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
f04b49b0854b233ff306e1636d7a7d81 | So with respect to the 2021 guide, I think it implies kind of EBIT margins that are a couple hundred basis points below 2019. Maybe just break that down for us a little bit more. I guess, how much of that compression is the MIRROR investments versus your outlook for the core? And then just bigger picture with respect to the Power of Three and the longer-term goals. Obviously, well ahead when it comes to digital, but just maybe give us a sense of what, if anything, has changed in terms of the longer-term ambitions and how that might flow through the P&L over the next couple of years? | Yup. Hi, Mark. It's Meghan. So if you take into consideration the color I offered on guidance, lululemon operating margin is slightly above 2019. So on track, essentially for our Power of Three growth plans. And that dilution really is driven by the MIRROR investment that I just outlined and really geared toward investing into that business to drive the long-term value. In terms of Power of Three, you're right, we're further along, as Calvin mentioned, than we anticipated in terms of digital strength. We aren't revising our plan right now. But as you can see, we're in good shape to meet that plan. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
031d96e2d90f96b07104220843c94ff4 | Can you talk about your progress toward scaling the business in China? And just from a -- maybe from a margin perspective, where that sits relative to the company average and how you're planning that progression? | Hey, Mark. It's Calvin. Just quickly on the Power of Three initiatives, doubling men's, doubling digital, quadrupling international, and then I'll quickly jump into certain markets. We're on pace on men's, on pace on international and arriving early ahead on our digital, as we said. So as Meghan alluded to, we're in a very good position at this point in our commitments and excited about the momentum in the business and opportunities to keep investing in innovation, investing in growth. MIRROR is one of those areas that because the business is doing well, we're choosing to invest in a business that we know will add value through further guest relationships, building out that community and the value of the subscription model. So excited about those. And China is equal to those opportunities for us to invest in. We are very happy with our business and growth. We've shared multiple times last year, the growth in both our store-based business and international. As well, I mentioned that heading into '21, our plan is to open more stores in the market than we've ever opened in the 15 to 20 range. That would put us well over 50 stores at this point in time. And we're very pleased with both the top-line, bottom-line performance in that market, and we keep investing in that market local head office to empower the teams to drive relevancy. So I'm excited about our international business in all markets. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
8a3310f092fbfb2e1a201626fbfb2f54 | Calvin, you talked about gaining a point of share in 2020. I'm curious to how you think about your ability to continue to gain market share in 2021, particularly as several large global brands are doubling down on their women's business. And then maybe just a clarification on MIRROR. What have you seen in terms of the consumer appetite on some of the pricing that you've played around with? I think during the holiday season, if you were to buy it in store, there were different promotional opportunities to get it slightly cheaper. Are you pleased with the current price position of the MIRROR just before you scale it out to more doors this year? | OK. Thanks, Erinn. First, on market share, very optimistic with the product that Sun indicated that we will continue to grow share across both men's and women's. We did so in 2020. I believe we were the only of the major brands to do -- to achieve that goal. And we have a very strong business in women's. And I understand that others are identifying and seeing that as a growth potential. But we have a very strong commitment with our guests, very strong franchises, but equally, if not even more important, a very significant pipeline of newness that we're going to continue to build out and delight that guest with in terms of activities into yoga, further into train and run and introducing some new activities. So I'm very confident in our ability through innovation and knowing what we're bringing, that we're going to see growth and success both with men and women and then the men, the opportunity, as we've shared in the past, is really driving that awareness. And we have some exciting initiatives that we'll share, further plan this year to continue to engage, drive awareness and consideration for our male guests as we continue to build out and drive that relationship and success with our women's. Yoga and our female guests, we know are critical parts. And as we look to grow into other areas and opportunity, just know that the team is 100% focused on maintaining and growing that relationship in those segments as well. And in terms of MIRROR, we did do some interesting testing, and we continue to. The benefit of the business being new is that we're doing a lot with Brent and team on test and learn, on both how to acquire and drive the awareness, which remains a big opportunity and price, elasticity behind the product. And right now positioned at the retail price point with a free shipping offering resonates very well. The guest prefers that sort of combination. And then we pulse in a variety of promotional opportunities when it's either competitively appropriate to do so or we see an opportunity. We've tried a number from a discount of $200 to $300 being the peak. So the net price being $1,200. And as well as bundling opportunities. And feedback from the guest is very encouraging that a number of levers -- of registers with them. So it gives us the ability to not just sort of play one promotional lever in order to drive that opportunity to invest into the MIRROR. So we have a number of levers that we've tested and validated that we'll continue to do. We have a good price position in and around the $1,200 to $1,500 that they respond well to. And we'll continue to operate with that, as well as we look to expansion in the Canadian market price accordingly. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
0cbf96cc8c87b7a29ac222045575155b | Just wanted to ask about what you're seeing today in terms of store traffic and productivity? And how are you thinking about the cadence of store productivity over the course of the year? And then second, you did mention that air freight, higher markdowns and distribution expenses were headwinds in this current period, offsetting some of the occupancy leverage and other savings. Just speak to the extent that when these headwinds may continue. | Hi, Paul. It's Meghan. So in terms of productivity, we saw productivity in stores of 71% in Q4, which was in line with our expectations. We do now, in Q1, have more stores open at 96% and we are not in our peak traffic period. So the constrained impact is lessening. We do expect that to improve as we move throughout the year, but we are planning as we did in 2021 -- or in 2020 for multiple scenarios so that we're able to meet our omni-guest demand. So we'll continue to iterate on that as we move throughout 2021. In terms of margin rates, we offered that we see expansion on a year of 100 to 150 basis points. Included in that is 50 basis points of pressure related to airfreight. We don't see that as a barrier to revenue upside. We'll continue to strategically leverage airfreight to drive revenue and continue to closely monitor that throughout the year. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
d2b961e9c9dec097d726ee0ab9b0672a | Calvin, maybe as we think about recovery post pandemic, so do you anticipate -- or maybe are you seeing signs of pent-up demand for technical innovation on the sweat side of the business as in-person or maybe people begin to think about in-person fitness again? And then I'm curious how you see lulu's lifestyle assortment positioned to take market share if casualization is, in fact, greater post pandemic? | Great. Thanks, Matthew. As I indicated, our technical performance of our product all through 2020 was the drivers of our growth predominantly. And I don't see that diminishing in any way. I think people are finding ways to sweat, they've adopted new ways to sweat. And when the world opens up, and they'll be able to go back to their gyms and their studios, they'll just have a balance of ways in which they're engaging. And we have a lot more new guests or existing guests using a lot more of our technical product. That is going to just drive an appreciation for and loyalty to the uniqueness of how it performs. So from a recovery standpoint, I feel all the momentum in the business behind driving even more adoption and success of our technical performance as we saw in 2020, and I think it's only going to be more pronounced moving forward. From an OTM perspective, we're early in our development of OTM in our women's category. The team has been building that for the last few years and adding assortment, and we test and launched a key product next year, we will add more to the assortment this year and in the years to come. So we're very early that we're well-positioned through our technical apparel to build that business as guests look to shift, but when they shift back to more other casual wear, they're going to be looking for something that I believe is unique and different in the technical apparel fashion, and some of the team are creating and building that. And men's -- that's been one of our strengths in men's. Women's is going to catch up to our men's offering. And we have full confidence in our success and strength in men's in that OTM business and the work and the product that's following that is going to keep fueling the OTM. At the heart and the core, the technical performance gear did perform, is performing, and I think it's only going to perform more moving forward. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
162cc7c12b8db7b43fcc71215586b8cb | Meghan, so outside of MIRROR and the pull forward that you've cited of the DTC investments, I guess my question is on an underlying basis, is there any change to the annual plan, I think that you laid out at the Analyst Day, for modest SG&A leverage on low teens revenues this year? And then as you see it today, is there any reason the model doesn't return to that plan on a reported basis after this year? | Yeah. Thanks, Matt. So as I mentioned, if you consider the color I provided, from an operating income perspective, lululemon is essentially in line with Analyst Day. And we have a bit more expansion in margin and a bit more pressure on SG&A, and that's because of the shift in investment profile between channels. So pulling back somewhat on store openings and investing behind digital, the store expenses show up in gross margin and the digital expenses show up in SG&A. So I'd say a little bit of a near-term impact, and we continue to monitor that for the long term, and we're really focused on optimizing the bottom line of our business. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
073526b69729b84b25a0a09100fc60ac | So I just wanted to talk about men's versus women's. Men's seem to be underperforming through the year. And just because your women's business was just so much stronger. I think you kind of leveled out in 4Q. I'm just trying to look at the filing now, but can you kind of explain what was going on between the two genders in your business? And is there anything that's changed as you come into 2021? And again, I don't know if that's just behavior or if that's just product or innovation. Just anything you could elaborate on, Calvin, would be great. | Yeah. No, for sure. Thanks, Ike. We've -- I would tell you, our assessment is 100% behavior. Looking at his behavior at the beginning of the pandemic and shifts of where he was purchasing, how he was purchasing drove a lot of the declines in apparel that the industry saw in the men's categories. And that started to pick up throughout the year. Our impact was less in the industry at the beginning, and it picked up quicker at the tail end. In our fourth quarter, our men's business trailed our women's business, but it was the narrowest gap from the entire year that we saw. And as Meghan indicated, the start of this year has been very, very strong for us, and the men's business continues that road to recovery. So it -- in my opinion, was 100% behavior and as stores come online and we're seeing that shift back into apparel, that it will come back to where we were in terms of performance and growth driving. Even with that, we are on pace to double our men's business per our commitment in our five-year and seeing very good results and strength back to the men's business already to start this year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
4d57fc194acaa66e988bc7ddb4a0d1aa | I'd love to get actually based on what you presented on the Battery Day. In the last six, seven months, I want -- I was wondering how much progress you've made on that front, first, in terms of process development. So how are things coming together on your pilot line? Are you getting to the kind of production throughput you were aiming for? And second and actually on your production ramp. So I was wondering in which sites you're ramping production capacity for the 4680 cell and where you stand on ramping up that capacity as well. | Well, so we have the -- and Drew can add to this. But we have the -- a small sort of pilot plant, which is still big by normal standards, expected to have like a 10-gigawatt hour per year capability in Fremont, California. And we made quite a few cells. We're not quite yet at the point where we think the cells are reliable enough to be shipped in cars, but we're getting close to that point.
And then we've already ordered most of the equipment for battery production in Berlin and then much of it for Austin as well. So we really don't flick the nitty-gritty elements. But overall, I think we still feel quite optimistic about this achieving volume production of the 4680 next year. What do you think?
Yes, thanks. Just one thing I would add is there's been a lot of questions about yields. Actually, I noticed people asking about that. The yield progress has been really strong every day, and we were really still in commissioning phase.
We were really still in commissioning phase with most of the tools to the point where we're confident that the yield trajectory aligns with our internal cost projections. We did talk about yield also at Battery Day, which is one of the reasons why it's useful to check in on that. It takes a while, as Elon just mentioned, to go from prototype to production. And it's not just parts.
It's processes, it's equipment. But as we've matured the process equipment, we've gotten to where we need to be on the yield side.
Yeah. And basically, this is just a guess because we don't know for sure, but it appears as though we're about 12 -- probably not more than 18 months away from volume production of the 4680. Now at the same time, we are actually trying to have our cell supply of partners ramp up their supply as much as possible. So this is not something that is to the exclusion of suppliers.
It is in conjunction with suppliers. So we want to be super clear about that. This is not about replacing suppliers. It is about supplementing the suppliers.
So -- and we have a very strong partnership with CATL, with Panasonic and LG. And we would -- our request to our strategic partners for cell supply is please make us -- please supply us with as much as you possibly can. Provided the price is affordable, we will buy everything that they can make.
Yeah. Yeah. And specific to that, we're on track to more than double the supplier capacity over the next l3.
Yeah, exactly. We do expect from suppliers willing to receive double the cell output next year versus this year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
eb2669e2fb7b99ca784e1bad880fa665 | OK. And I had a quick follow-up on maybe, Zach, for you on your energy business. So I understand like the negative gross margin with solar roof ran. But I was wondering what do gross margin look like there when you look at the storage business and where you -- what's your ambition in terms of gross margin in that business as, I guess, it's going to grow in the mix in coming years. So it's important for long-term modeling. | We're aiming for comparable margins in storage as in vehicle. But it is important to bear in mind that vehicle is more mature than the storage. So -- we're already are at margins with the Powerwall. But some additional work is needed for the Megapack to achieve good margins.
Yes, Drew, what do you think?
Yes. Sorry, just jumping in, Elon. Absolutely agree. Powerwall is mature.
We've been producing Powerwall 2 for three years now and we're at good margins there. But Megapack has more room to go to achieve our targets.
We have a clear runway for improving the cost per the megawatt hour of the Megapack.
Absolutely. Yes, we do. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
c7f337ac64738787e2cacecee47afa9c | Hi, everybody. I was hoping maybe just, first, you could talk a little bit about how you're thinking about the rollout of version 9 of FSD and the transition to the subscription model. It sounds like some of this is about to roll out next month. I'm not sure if that's the subscription model, but maybe you could just spend a little time talking about how impactful you expect that to be. | Yeah. We're working on getting FSD subscription out. There's a couple of internal technical dependencies, but from a business model perspective, that's aligned, and we're hoping to roll that out soon. The key thing that I say here, there's a lot of potential for recurring revenue based on FSD subscription.
If you look at the size of our fleet and you look at the number of customers who did not purchase FSD upfront or on a lease and maybe want to experiment with FSD, this is a great option for them. One of the things we'll need to keep an eye on is a potential transition from cash purchases of FSD subscription over to -- or cash purchases of FSD who may move over to FSD subscription. And so there could be a period of time in which cash reduces in the near term and then as the portfolio of subscription customers builds up, then that becomes a pretty strong business for us over time. But we're hoping to get this launched pretty soon and see what the response is to it. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
06a7b191fd881cf38e3a9c6f5bb7fa52 | OK. Great. And I was hoping, Zach, maybe you can just talk a little bit about opex. There was a noticeable increase, even excluding SBC. Obviously, a lot going on this quarter, but can you maybe just talk a little bit about how we should be thinking about that going forward? | Sure. On the R&D side, what we're seeing, as I mentioned in my opening remarks, is kind of a convergence of a series of programs that are happening. And our R&D opex spend kind of correlates to where we are in the product life cycle on different programs. And so we're kind of at the tail end of investments in, what we call internally Palladium, which is the new Model S and Model X.
And so we expect that to decrease over time, but it was high in Q1 for a lot of the reasons that Elon had mentioned. We're also getting very heavy into 4680 development that Drew and team are working on and the associated structural battery pack that goes along with that. And so these are new technologies, not only new to Tesla, but new to the industry. And so we're investing heavily there on an R&D side to work out those kinks.
And spend along in those areas should continue over time as we continue to work through the development cycle of those. And then I also mentioned Elon talked a bit about Dojo and the potential there. So from neural net investments and custom silicon investments, these continue to be areas that we spend on and make investments in. On the SG&A side, the business is pivoting very quickly to be global.
And China is ramping quite quickly. And we're trying to make sure that we are staying ahead of the volume so that we have the right sales capacity, store capacity there, local investments and IT and others to manage the growth, such that as the growth comes, the execution challenges are smaller than maybe in similar periods of growth that we've seen in the past. And so we're making investments there ahead of the growth. And overall, as we looked at opex as a percentage of revenue over the course of the year, we do expect to see a substantial drop from 2020 to 2021 as the volumes in the latter part of the year pick up. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
b723445242104cede7d62d8414702a47 | Hi. good evening. Thanks. Two questions. One is on COGS. I think we've gotten from Battery Day a pretty good feel about the potential for COGS reduction related to powertrain. But I'd like to get a sense of the path to reducing COGS, ex powertrain, as you'd still need a meaningful reduction on that front to make the math work on a $25,000 vehicle. So what levers do you have to reducing your cost, ex powertrain? Is it just more scale, better supplier pricing or is it just based on ongoing cost reduction? | I mean, I think all of the above.
Yes, I mean on the vehicle side, there's plenty of opportunity as well. Obviously, building a car like a Model S lot is quite complex and has various moving parts. Model 3 and Model Y were steps of improvement in that. But when you look at some of the other advancements that we're including in the Model Y, factories into Austin and Berlin, we've reduced the body count by as much as 60%, and the park cost money. So we continue to find optimizations there as well as we get the economies of scale when we start to talk about the volumes we're considering worldwide with four factories building the same vehicle. So both of those things on the vehicle side will improve our COGS as well, and powertrain continues to be integrated into that. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
d3e9b3f19838c3f1ce9c0e2541b583e1 | Great. And then just related. As you see Berlin and Austin ramp, I'd like to just get a sense on the comparison of Fremont versus the new capacity. Obviously, Fremont non-optimized because you bought the old NUMMI facility. You had to retrofit that to your need. So maybe you can give us a sense of how your new capacity is going to differ versus Fremont, what are the areas that you have efficiencies that you previously didn't have and maybe how much does that add up to improved COGS over time to help you achieve that $25,000 vehicle. | Yes. I think we don't want to talk too much about future product development. The earnings call is not the right place for -- to make major product announcement. So yes. We'll get there, but we'll talk about it later. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
5165e4a0bb73b99f56a5c1465d661137 | Jim, regarding the interactions with the FDA for potential accelerated pathway approval for cirm plus ibrutinib for MCL, is that something that you think might be possible that we'd see this year? Or would that be more of a 2022 potential event? | Thank you for the question, Carl. As you know, the FDA is difficult to predict. But if we can complete our discussions and negotiations with them relatively quickly, we might be in a position to announce a regulatory path forward during this calendar year. Time will tell, though. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
672acffd142426c1735840da7b862cd2 | I was thinking, assuming that the data that we expect -- or you expect to present in the second quarter is compelling, that would certainly help with those conversations, I would imagine. Just, and then, a follow-up, unrelated, do you have any feel, and this is more of a question for Richard, with respect to the timing of the CIRM grant recognition throughout 2021 and what the total R&D spend may be for the year? | Thanks, Carl. As you know, we have not been historically providing and don't plan to provide any specific quarterly or annual guidance on our spend or on the grant revenue on an annual basis. I would state that with the $14 million in total sub-award proceeds, we have about five quarters left under that sub-award. We expect these studies -- the study portion to be completed relative to the grant requirements by March of 2022. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
296b0e704d5b0f64a9be5695609349fb | Now given the initial results with solid cancers with cirmtuzumab, are you planning to further explore the drug for liquid hematologic malignancies? | Thank you for the question, Shivendu. The answer is yes. And so we are -- one of the compelling things about ROR1 is it's expressed on both hematological malignancies and solid tumors. Diffuse large B-cell lymphoma, or DLBCL, is one cancer that we haven't started working on yet, and we are interested in it and are doing some preclinical work. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
0017192de66000f091a7e0546ffa3e9d | Just one more general question regarding enrollment for the ongoing trials, as well as these expansion cohorts that are planned. Could you just give a flavor of how that is going? Given the pandemic, are there any difficulties? Or it's all, like, it's all OK, it's going well? | Yes. So of course, like every biotech company, we were -- we wanted to make sure that our clinical programs remained robust despite the COVID pandemic, and I'm happy to say that they have. In particular, enrollment of Ewing sarcoma patients remained quite strong. And in fact, enrollment during the pandemic was higher than it was prior to the pandemic.
We believe that has been driven by these strong results that we were pleased to announce, including the complete responses. Mantle cell lymphoma enrollment has slowed down a bit. And it's easy to imagine that because patients with MCL are older. They have comorbid diseases, and they're exactly those patients that might be at risk of developing severe COVID if they did catch it.
And so the -- there is a certain reluctance to travel to the medical center for MCL patients. However, we have continued to enroll, and we will be announcing results on additional patients above those that we last updated you on at the ASH meeting. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
46693e21c55f52f019e266cf80a01c74 | With regards to the exciting collaboration with Karolinska Institute, I was just wondering if there are any more recent updates on that front? | So what I can say is that that collaboration is active. We're doing work together, exchanging information and materials. And I think, as you know, that Karolinska has particular depth in the natural killer space. In fact, NK cells were discovered there.
And they have developed very deep experience and expertise with both T cell and NK-based cellular immunotherapy. So it is active and moving along. We look forward to finding opportunities to keep you updated about our CAR-T program over the course of the year because we think that it's really one of the most important things that we are doing right now, and we're emphasizing accelerating that program. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
004dd951abca47b4012dc350e0f622d4 | I want to ask first just a little bit about the comps as we look at this quarter versus a year ago. Comps are obviously, very strong right now through the first two months. Can you walk us through last year in the March quarter kind of how the sequential comps moved month to month last year? | Yeah. Through the comps. Well, we had a difficult start last year, because we essentially had no winter weather in January and February. So we were comping down --
Minus 7.4% in January. Minus 13% even in February.
In February. Then our business start -- rebounded as weather sort of normalized. We finally saw I think the first snowflake last year. In early March, our team business was responding positively.
Then we entered into a period really probably the second week of March that I would call the pre-pandemic phase when there was a surge of buying not that different than people hoarding toilet paper in the grocery stores when people were buying wildly, I guess in anticipation of the pandemic and potential store closures or whatever they saw coming. And then around the sort of the back half of March -- around March 20, roughly half of our stores were closed overnight in California, and then over the subsequent -- the remainder of the quarter, a number of those stores were able to reopen. As we were designated essential, while other stores closed, and so we round up the quarter with approximately 200 of our stores are slightly less than -- half of our stores closed at the end of the quarter. So, there were a lot of moving parts last year and certainly, there's a lot of moving parts to this year, as we think about what's in front of us over the balance of the quarter.
Bottom line, we were, I think, for the March period last year, we were down about 10%.
Yeah, we were down 11.5% last year.
11.5% | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
2868bc05d2dc1ca08d3849894b9fc460 | And then, you gave us some guidance on new openings in 2021. Any guidance you can give us on kind of the timing of these? I think you said potentially five stores that will open. | Yeah. None -- Q1 we think could be evenly distributed through the remainder of the quarter could be well, one or two in the second and similarly in the third and the fourth. At this time, it would be our best call. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
d6463f8708b9319bf7a139d5a1e55cfd | Ok. And then Steve, you talked about it a little bit in your commentary, but just walks through your comfort today on inventory, it sounds like you've cleared through pretty well on the winter inventory if you just kind of confirm that, and how much of that was really apparel and soft goods driven? And then kind of how you feel about inventory and shipments that you're getting into stores today for in some of these high-demand categories? | Sure. Sure. In terms of the winter, we've had an extraordinary sell-through of our, of our winter product. And our winter product, I mean, apparel is the largest component of winter, but there's a footwear component, and as well as a hard goods component and the sell-through has been significant in all those categories.
So, we're coming out, I think as clean as a -- from winter as we perhaps ever have and, of course, that bodes well for next season when we can bring all new products into play. In terms of the other categories, we're still chasing inventory in some of the hot categories. There's certainly I think, it's been widely reported significant supply chain disruptions. So, we're -- obviously, we're getting lots of inventory, we couldn't be generating the positive sales without inventory.
But it's been a rather uneven flow in a number of categories, issues from whether its factory issues with raw materials shortages or vessel issues or certainly significant issues, getting products through the port. We're seeing a number of deliveries that are later than ideal. So, we're working hard with our vendors and managing through this, and certainly optimistic that conditions will improve over the coming months. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
cd2f29d2cf88f1e5cd0c971679355de5 | Ok. And then the last one for me. Just curious, your views as we look at the potential for another round of stimulus checks coming out, how much you feel like maybe you benefited and got any bump in prior stimulus packages that were given out checks to consumers? | Honestly, Mark, it's hard to quantify. I mean, it certainly can't hurt, but it's as strong as our sales have been, and so many strong categories, certainly we have positive weather at the start of the first quarter. It's very difficult to parse out how much of that is related to stimulus, but yet, obviously, it can't hurt. It's got to be helping us somewhat. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
51c3e284bb0b5413d841252dcd9befaf | On gross margins for the Americas business, I know there was a weak cold/cough and that impacted results, but just want to get my hands around what a normalized gross margin looks like for that business and just thoughts for the rest of the year? And I guess more specifically, I think we've been seeing margins in like a 33% range or so over the past three quarters, and I'm wondering if that's a decent proxy going forward or could margins remain a bit depressed here in the near-term? | Well, as we said last year and the beginning of the year, you had a lot of pain and lower margin and gross margin was a priority, the simple answer is I think it will progress back toward the 33% as the year goes on. Yeah, yeah, we really prioritize lower margin products based on societal needs rather than profits last year and then you're seeing some of that in comp to last year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
6c93264c35bb577cefcdfd08760641e7 | Okay. So the number bounces back going forward as we think about the percent this year. | Yeah, because we have -- we sold existing inventory. The spike last year started in mid-March and we sold existing inventory in the first couple of weeks of the spike, which had a very solid effect on our first quarter, but then, as we made product to replace the inventories that we drew down at the end of March that was when we changed our pattern of manufacturing, as I mentioned, and that's why I think we're going to see that margins were hurt by that, but they're going to bounce back this year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
ab8fc036573359a4881cfcbc03336ceb | Okay. And then at least talk a little bit about on the balance sheet, just some priorities as we think about capital deployment post the Rx divestitures, I guess you said a little bit of time since the deal was announced. Should we just be thinking about kind of this being potentially larger deals, or maybe just a faster cadence of small transactions? And I guess as part of you think -- you're thinking about capital deployment, do the current settlement discussions, I guess, impact your capacity or scope of what you're thinking about in BD? | Yeah, I mean, the answer to the last part is no. I mean, we have significant cash, we're generating cash and we will generate a lot more cash, and we have a large revolver. So -- and I'm not thinking about deals of that kind of magnitude. Having said that, I think you are focusing in on a difference of how I think about it versus a year ago. So good for you. We did a big one with Ranir and then we got to some smaller ones, in my ideal world, yeah, I'd love another Ranir within the realm of the five focus categories. There is now -- I'm not going to just go out there and buy anything, so we are going through a disciplined approach and there are targets out there and we've evaluated a number. First, I got to get the money, so we got to close the Rx deal and that's proceeding on track. But, yeah, I'm thinking a bit bigger, but we will remain very disciplined and hopefully keep up the good track record we've demonstrated. If anything gets in the way that, we would then consider some of the other balance sheet activities, but our first priority is disciplined M&A, probably second after that would be producing some debt. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
aba4adefb1c4a46101a4bfaf82800d87 | On the US private label market, for which categories would you say that private label products still have the most share growth potential? | I mean in the categories that we have products and I'm assuming, right. So, our market shares and depending on where we are vary, we have in oral care and in nutrition, we have half the level of market share or penetration that we do in OTC. Within OTC, there are segments that are -- we're under penetrated and versus others, and you've heard me say this before and our team are very highly, a very high share and many of the traditional categories, the digestive products, the allergy products were all solid, pain products were solid, cough/cold work were solid, but there are forms that we are under-developed in like gel tabs and things like that, gel caps that represent significant opportunities. So, I mean, when you think over the long-term, those segments, even in OTC, they'll continue to grow. I think I'd have to get Brad to point you back to a presentation I did not, trying to remember which conference that I did which I outlined sort of what the value of each share point in each of those segments was worth, but as I recall, if you went after it carefully and methodically, there was a couple of billion dollars of revenue opportunity across all of our portfolios by building an increasing penetration. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
8af864dd209dc536dc59df73106585a3 | On the Irish tax situation, I understand you're not commenting on specifics, but I just want to make sure that I heard correctly that you submitted a settlement proposal to Irish Revenue? And then just a quick one for Ray, when do you plan to issue prior year results for the quarters and years, so folks have credit models for continuing ops? | Yeah, we don't have plans to do that right now, but they have to be audited and by our auditors in each quarter as we go forward. So -- but we -- I think that they are going to stabilize in the second quarter. Our first quarter last year was was impacted by not only by COVID, sales of albuterol, you might recall we got permission to launch albuterol in early -- in mid-February and we started in the end of the month and beginning of March. So we had a -- what this did was it gave a lot of the income in the first quarter last year was Rx related. So that's causing us so some problems as we try and lay out the tax for each quarter. But I would expect it to stabilize in the second quarter and you will be able to use that second quarter number to see forward into the rest of the year from last year. And the answer to the other question is yes. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
a0e98f7fa4505c0fb4a12bf9a12a3b61 | First on cough/cold, you're obviously betting on a better year in the fall and I was just curious, the IQVIA FAN forecast that obviously could not have forecast this past year, but in previous years, how close to the mark was their forecast? And then, I think, you said you're expecting sort of the lower end of the range for the outlook, I guess how confident can you be in that outlook given your outlooks in the past since the rebound is so important? Secondly, are you seeing any increased presence from OTC manufacturers like Dr. Reddy's in the smoking cessation or other categories, where they've launched products are conversely less competition? And then finally, could you just discuss the e-commerce trends you've been seeing, I know you've had some recent momentum in that area and you up to close to 10% of aggregate sales now in e-commerce? | Sure. Let me do them one at a time. Cough/cold, I think we're being conservative, but just to be clear, IQVIA and their estimates of flu have historically been very accurate and it sort of the trusted source. The FAN data is a methodology is patient level data, which is HIPAA-compliant and that's the largest longitudinal data set available and tracks over 306 million people in the US. The FAN program captures a live feed from healthcare providers on patient business, on actual physician diagnosed symptoms and the data is projected using the current census data to each DMA region. Total US by adult and pediatric down to the symptom. So it's our best source and in the year, I've only been in this business on this side of consumer packaged goods into the healthcare self-care over the past few years, but it's been right on as far as I've seen, I'm predicting the strong 2019 cold/cough seasons, the allergy seasons. So I think it's pretty predictive and they're not the only ones, there was a article I saw come out over the weekend from NBC predicting a very high flu season in the upcoming year, because with all of the lockdown, people's immunity levels are down. So some are forecasting not even just a normal season, but a very strong one, but to be clear what Perrigo did, right, like, OK, so we know we can be -- we can't be any worse than zero, there was 99% decline. There were no flu basically around the world this year. So everything has got to be upside. I think you would agree to that. Going all the way to normal would be a big bet, so we have been more conservative that and I don't remember the exact number, but we're roughly halfway between what -- where it was and what normal would be. So to me, the way we forecasted it that's an upside to our plan, not a downside to our plan. The e-commerce numbers and while I'm answering the next one, Brad, if you have the actual growth numbers for e-commerce, but I do believe it's, right now, it's still in that same 10% to 11%. It slowed somewhat, you've had a resurgence of people in store, which for us in a private label business is a good thing, where a lot of the price value comparisons are, the reality is, I think we've done better than any of our competitors because we invested early in e-comm and we're a leader, but our shares are still lower there versus the national brand than they are in-store and we'll build that over time. And I think it's logical, right, because you make the in-store comparison, you see that price right away and people switch and we're trying to get that done online. But given that it's, I think, it's still a comparable number, probably at 10% to 12% range. Murray, you're right. Overall cost in the entire business, e-comm grew about 52% compared to last year, a little bit higher in Americas and a little bit lower in I, but about 52% overall. Good, thanks. I'm not, I know the question was on e-comm, but I do think it's worth noting and I elaborating a little more than you even asked in the question, but I personally believe that though at least in the US, the program of vaccinating in drug stores and in supermarkets and and in Walmarts and to all of that has probably been the single biggest factor and bringing people back in stores and recreating in-store traffic, it sort of forced people back into the stores where they look around, I guess it's OK, I can come in here and start shopping again. So there is -- I'm pretty upbeat on the business. I know the first quarter was a challenge, but I look at the second half of cough/cold upside and people starting to live their normal lives again, as they get vaccinated and a lot of pent-up money and their tracking accounts and all that, I think you're going to see a roaring second half, not for just Perrigo but for the entire economy. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
23b94c1c4db373fd85d4335b64401461 | Just wanted to get some clarification around the gross margin -- excuse me, gross margin profile of the cough/cold line, outside of, I guess, some of the Mucinex products, I would assume that's a much lower margin line and then overall average for the consumer segment, maybe that's an incorrect assumption, but just some clarification on how that may have impacted margin performance in the quarter? And then just a couple of follow-up financial questions for Ray, specifically on operating cash flow. Could you just give us a sense of what the Rx business contributed to the result in the quarter and I don't know if you have the number in front of you, but if there's any way to break out separately depreciation for that business so that we can model consumer on more of an EBITDA basis going forward? | Well, Ray is doing that. Just to be clear, gross margins, we're up versus a year ago and in the first quarter and relative to Chris' question in the beginning, I think you'll see them continue to progress and grow from here, but cough/cold, I think you're right. In general, I think there are a little bit lower of... Commented in my prepared remarks, we saw some mix favorability because we had lower sales of lower margin products in some of our Ibuprofen and the acetaminophen products have quite low margins on them, especially those large bottles and so forth. So that's the fact, I mean, we saw it, but it is ironically, we saw favorability from that in the first quarter. Yeah. So it's really a kind of a split answer. If you're listening on the call, as gross margin is good or it's bad. We think it's progressing. This is the first -- one of the first quarters where across the Board, we saw gross margins increase as a result of programs that we put in place on SKU rationalization, etc. And then as the mix progresses through the year, we think you'll see it grow back up and in the US to the levels that Chris had mentioned closer to the 33% range. On operating cash flow, you asked about Rx and I think the answer to the question is around $19.5 million, $20 million. Positive cash flow, yeah, which is obviously a lot lower than we would normally see and there were some specific reasons for that in the -- but we're not going to really get into discontinued operations at this point. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
3a80ff5027ca1f6948628c7e4dea0565 | Can you please add more color on why the operating cash flow was weak in the first quarter and maybe talk about what the outlook is for the full year for cash flow? And also can you help us understand whether the $70 million of asset acquisitions in the quarter was revenue contributing? | So the answer to the second question is, no, not significantly, if at all. They were -- Rx acquisitions, they were pre -- they were basically -- they had been pre-approved, but they were related to -- yeah, we're going to get -- but we're going to get that cost of them back, but they had no significant impact on our results for the month apart from that factor. So the operating cash flow, I think I went through a little bit in my prepared remarks, some of the reasons why that we had an impact on the balance sheet. I mean, the biggest single item was that we grew our inventories and that was a lot of that was analgesics and that related to the poor cough/cold season and related lower sales. We expect to have push that through. Obviously, as we go forward in the year, we would hope that -- we'd hope to get those inventories down to... Yeah, we're expecting a normal... Pretty well normal cash year. I mean, this first quarter had a number of factors, but just to be clear on that one question you asked about Rx, that was when we describe the sale as a part that was cash and other considerations, that's because we knew the timing of these R&D activities at a third-party person that we had to pay were going to occur, we didn't know whether before or after we closed since its before we close, now the purchase price will be adjusted up for the bulk of those. It's not exactly, but it's -- I think it's back to the numbers we've talked about when we announced the sale. So, it's now going to be all cash at $15 million [Phonetic], $50 million [Phonetic] or whatever, something like that there probably be some other smaller adjustments. Yeah. And the other reason is that we -- that is our first quarter ended into April, I think 3rd of April, so we had some -- we had to fund our employee bonus program, which was a little over $20 million, so that was also our cash flow in the first quarter. So we get that back obviously in the balance of the year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
a39ff6189478440376bdb5683b9640ef | First, I want to start with just how do you see the contribution of metastatic revenues to overall NERLYNX picture evolving as you work to develop this indication? And so far, have you seen any off-label use of other HER2-driven cancers, given the solid benefit you've seen on brain mets? | Hi Samantha, thank you for the question. So I believe Jeff said in his presentation that somewhere between 8% to 10% of our usage is in the metastatic setting. So I think that's remained what we've continued to see. Now when they come in as a script for metastatic, we don't know whether or not it's a HER2-positive metastatic or HER2-mutated or they have brain mets or they don't have brain mets. I can definitely say, anecdotally, we certainly hear from physicians that they're using NERLYNX commercially in HER2-mutated breast cancer, and they're using it in HER2-positive metastatic breast cancer that has brain mets. I don't, unfortunately, have any breakdown of exactly the numbers that are behind that. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
9fdc40f45f6a9bd21104132fa2b84f62 | And then just on the guidance -- on the updated guidance, I wanted to confirm that, that is for both the adjuvant setting and the metastatic. Is that correct? | Yes. That is correct. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
c05f5deff557962fc0c6e6038fed3a29 | So first question is about an interesting research paper recently, like identifying neratinib as a potent COVID-19 environment produce inhibitor using computational approaches. The research kind of followed an earlier nature publication looking at four different [Indecipherable] that can delve [Phonetic] into the main produce functional side in which neratinib's chemical structure just look like kind of resemble the M3 class. So does this kind of research came into your awareness, too, and that will trigger your interest to do some like biochemical acids, there may be animal studies, there may be clinical trials. Thank you. | Yes. Thank you for the question. Yes, we are aware of that publication from that Russian group. And we have had investigators who have been doing work on neratinib in COVID-19. I don't want to say too much about that research. But it is suffice it to say, we have had many external researchers who have done some work with neratinib in COVID-19 coming up with similar types of conclusions. Once we get some more data on this under our belt, I think we will plan to, in some way, communicate that to investors, either by publishing it or in some way, getting it to be public information. But yes, it is something we have interest in, and it is something we have active research looking into. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
6fbbb2e5454e99f29b973c0b613712b2 | Then we have one follow-up on the HER2-mutant cervical cancer cohort update. So compared to the SGO data, there were five more patients data included for the safety analysis and one more patient data included for the efficacy analysis. Can we know like approximately how many patients have been enrolled into the cervical cancer cohort so far? And may you provide guidance on the timing and the size for the next data update? And more -- like how many like cervical cancer patients data are required by FDA for regulatory discussions? | Yeah. Thank you for the question on the HER2-mutated cervical cancer. I apologize I do not have the update on that in front of me. I know we do plan on presenting more data on that. I don't know the exact timing of that. So I'll need to get back to you on that. So I apologize for not having that in front of me. To your question, which is how many patients do we need to go to the FDA and discuss it with them, this would be an sNDA. And again, HER2-mutated cervical cancer, as I recall, is about 5% of the cervical cancer population. So it's not like 10,000 patients or something, it's obviously much smaller. And I'm aware of -- for instance, I know KEYTRUDA got approved in the PD-L1 high, and I don't think their end was a huge number. So I'm not imagining we're going to need like hundreds of patients here. But let me get back to you with a little more of an update on where that is and what our timing would be for expanding the label. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
0ea741b073ebe49bcc5da29a3d9ea56b | Just wanted to get your thoughts on NERLYNX pricing. Are you comfortable where NERLYNX is currently priced? Or should we expect the pace of increases to be similar to the four increases at 10% each that has occurred over the last 18 months? | Matthew, good question. I appreciate it. First of all, I would say we're not going to proactively comment on any future potential pricing strategies. We wouldn't do that. But what I will tell you the way you want to think about it is we are very, very committed to ensuring a very strong value proposition in this marketplace. We also want to ensure that there is very strong physician and patient access. And obviously, as part of our discussions, we continue to look at the competitive marketplace. So we've made some decisions in the past, but we won't -- we wouldn't comment at this point in any future potential pricing decisions. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
8f66c4f4abfeb0abda1eafa9f648407c | I believe there was new language added to the package in sort of NERLYNX recently as it relates to ExteNET trial, specifically in regard to no statistical difference in the OS after eight years of follow-up. So just wondering how you guys think this will impact sales moving forward? And then for the patients that are starting on the lower dose, do you know what dose these patients are typically starting on and the duration the average patient is on this lower dose until they reach the 240 milligrams? And given the small difference in benefit, whether it's the DFS or the OS, how confident are you that these lower doses aren't impacting results and potentially making them more equivalent to placebo patients? | Yes. So to answer your first question, Scott, as you know, the ExteNET trial rolled a wide range of patients. And in the ITT population, it was both hormone-receptor-positive and hormone-receptor-negative patients. As you know, the actual use of the drug clinically does not tend to be in the ITT population, it's not in all-comers. And the typical what you hear from physicians is they use it in the HR-positive patients and/or the HR-positive patients who are at a high risk. We plan on presenting the data from those cohorts, specifically the HR-positive group and the HR-positive, high-risk group at the San Antonio breast cancer meeting this year. Obviously, we can't comment on that. But clearly, if we were to see a positive impact in those subgroups where the drug is used commercially, we think that, yes, it could have a positive impact on our sales. Obviously, we have to wait for that data to be presented. And we can't comment on it until it is, but I think you can understand that logic. Can you repeat your second question, please?
Scott, I think it's a good question. Obviously, as we highlighted in this -- in our opening statements about the CONTROL data, we feel very good about the CONTROL data in that it does significantly change the tolerability of NERLYNX. And if you follow that paper and the data that was presented, what we're suggesting in that paper, at least on the dose-escalation arm, is to start patients on three pills for first week, four pills for the second week and then you're up to the full dose at the third week. So again, that's the data that we have out there. That's the protocol that many customers are beginning to adopt. So you do have some variability, but that is really the flow. And ultimately, the idea is to get patients up to the full dose. In the ExteNET study, the average dose was somewhere around 211-or-so milligrams. And ultimately, that's where we expect patients to get in the relatively near future. Given that when they dose-escalated, it happens relatively quickly, we do not expect to see a negative impact on efficacy. Now you asked a broader question about...
Yeah. So just a follow-up. In terms of the dosage, the three pills a day would be 120, the four pills would be 160 and the six pills would be 240 milligrams a day. In terms of your question do we expect it to impact efficacy, I can answer that in two ways. First of all, as Jeff just outlined, look, it's a 12-month course of therapy. And if they do the dose escalation the way it's in the CONTROL trial, you're talking about two weeks where they're getting a lower dose. I wouldn't imagine that two weeks of a lower dose compared to 50 weeks at full dose is going to have a negative impact on the efficacy. I will also note that we had looked at this in -- when we were first preparing for the ODAC back in 2017, I guess that was. And we had looked at it, I don't remember the number off the top of my head, but it was somewhere in the range of 30-plus percent of the patients in ExteNET had actually gone to a lower dose and stayed on that lower dose going forward. And if I remember correctly, the efficacy was not very much compromised to the patients that were on those lower doses. And again, a lot of those were -- they started at 240 milligrams, then went down to 200, 160, 120 or whatever milligrams, based on tolerability, and I don't remember that there was much, if any, compromise in the efficacy in that patient subgroup. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
6959f7ac69f5bd68f2ad84e8a67eaa59 | My first question is for Jeff, and just if you can maybe just comment on how you're seeing the sales force, particularly with regard to virtual interaction capabilities. Is the sales force rightsized? And just what sort of feedback, given the commercial dynamics in the market right now, you're seeing with regard to other competing metastatic agents out there? And then my second question is just as you go into your pre-NDA meeting for HER2-mutated breast cancer in the front half of next year, can you maybe just remind us any additional studies or analysis that you'll have to conduct ahead of your pre-NDA meeting? | Yeah, happy to. Thanks for the question, Paul. Yeah, obviously, a unique environment right now with the COVID pandemic that -- well, I guess, fortunately, none of us have been through before. Clearly, as you've seen, as we've highlighted, and I know many others have highlighted, the amount of direct access to customers have changed significantly. And ultimately, we're trying to pivot and adjust the field force to adapt to that new environment, which I wish I had a crystal ball, but is likely to go on at least for several additional months here. So what we've really tried to do, Paul, in this situation, is to pivot quickly to remote or virtual interactions with customers. There are still some live interactions going on. And we think about this as a very local or regional decision. And where localities or regions open up, we will pivot back to as much as we can live interactions. Given that that has not happened a lot, we've significantly increased non-face-to-face interactions, increased peer-to-peer programs, and ultimately, tried to maintain a strong share of voice through phone, video, Zoom, etc. And so we're all adapting to that, and we feel good about our ability to compete in that environment. But we will continue to evolve as best we can. We are also being very diligent and smart with our headcount, and we're making sure that our teams are rightsized. And as a role or position opens up, we evaluate that very closely and decide whether or not we're going to fill currently or whether we want to fill in the future. So we're being very smart with the utilization of resources given this time as well.
And then, Paul, on the second question regarding the HER2 mutant population. So in -- if I remember correctly, it was like September, October of last year, we had a meeting with the FDA to discuss what will be necessary for us to be able to file an NDA in the HER2-mutated breast indication. And we had shown them the data at that time on the neratinib plus Herceptin plus fulvestrant arm of the trial. And what they asked us to do was to help to better understand what neratinib's contribution was to that triplet. And therefore, to do the study -- the modification we've done, which is the Simon 2-stage, where one arm is the triplet, neratinib, Herceptin and fulvestrant, the other arm is Herceptin and fulvestrant, and the other one is fulvestrant alone. And the way the Simon 2-stage works is you [Technical Issues] in each one, and if you don't see a responder in the first seven patients, you shut down the arm. If you do see a responder, you expand it to 18 patients. So I think we need to wait for that data to know what further analyses we need to do. I would imagine that if we continue to see the same response rate in the triplet arm and we don't see any responses in the other two arms, then that's a pretty easy one to answer. If you end up seeing, for some reason, responses in the others, then that's going to be a different situation. But I think we have to wait for that data before we can know exactly what we're going to need to file the NDA. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
599efc65e5c3e77431aff5911be044db | Given we were in many ways far removed from the panic buying of the second quarter, I was hoping you can maybe go into a bit more detail on what the main drivers were of the strong Surfactant sales performance in the fourth quarter? | I think generally the increase in disinfection and hand wash has continued to change, consumer habits have changed. So we have -- that has sustained our growth in the Surfactant market. And as we look at our customer comments and we just finished our Annual Global Meeting, our American Chemistry -- our Cleaning Institute conventions and all the customers remain bullish about the long-term prospects that sort of sustained increased demand for their products. So we have -- so we fundamentally believe that we are going to continue to see increased demand in the Consumer Product segment. We've got better availability of our raw materials to support those growth in those end markets. We, as I've said, debottlenecked and are expanding our capacities both in the bio side and the amphoteric market. So we think overall it's -- the markets will continue to grow and we'll be able to support our customers. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0c13e0ee810f2f51421d63252091280d | And so with so many Tier 2, Tier 3 accounts added this year, how should we think about the ramp-up in dollar sales for those accounts? For example, maybe to be more clear, maybe you got in the door selling 10% of their total surfactants needs, but you believe you can service say 25%. Any color you would be willing to give around there and how much we could maybe expect to see that contribute over the next one to two years? | So, fundamentally, we think we can grow our share of their wallet. We do use metrics in terms the number of products that we're selling to each of these customers. And generally speaking, the penetration that we have varies around the world depending on the markets that we're in. For example, in Brazil, we're actually selling on average over probably 5,000 customers today in Brazil in the Tier 2, Tier 3 segment and we're selling on average less than two products per customer. And so we do fundamentally believe there is an opportunity to expand the number of products that we're selling to the smaller Tier 2, Tier 3 customers on a global basis. Now our penetration in the U.S. tends to be a little bit higher than it is in Brazil, but we still have an opportunity to expand the number of products we sell and continue to add more customers on a global basis.
Yeah, Vincent, if you remember what we have talked in the -- with the IR presentation, we believe there is an universe of around 20,000 customers out there today that we are not serving. And so as Quinn was mentioning, the strategy is two fence or actually three is acquiring more consumer, selling more products to the customers that we already have and improving the mix. So its the three legs that we are after with our Tier 2, Tier 3 and as you saw, we added almost, I mean, more than a 1,000 customers in 2020 which is the first part of the strategy. So -- and we will continue focusing on the three elements. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
e3f1cad18668d4e8e8d88318118e1d54 | As you look at the options for adding platforms for new surfactant chemistries, has this surge in, call it, traditional oleochemical feedstock prices kind of related to all this biodiesel demand? Has that changed your thoughts on potential M&A targets or would you say that you're largely feedstock agnostic? | So we are still somewhat feed stock agnostic. But the -- there is a strong demand for more bio-based surfactants in the consumer product industry in particular. So you will see a move over a period of time to more bio-based products and/or vegetable-based feedstocks, products derived from vegetable feedstocks over a period of time. You also have, in the vegetable space, though, you also have people that want to make sure that the rainforest are not being destroyed to supply those products. So it's a complex mix. We do think rhamnolipids and other biosurfactants will be a large part of our portfolio over a period of time. I fundamentally personally believe that in 10 to 20 years, biosurfactants will represent a very large percent of our portfolio. And as we look at making the acquisition of the plant in Louisiana, that helps position us to make large scale quantities for our customers. And I think in our meetings with them over the last couple weeks, I think they were enthusiastic about the size and scale that we were bringing to the marketplace eventually. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
7f8bc4f7152972f6886ea609d1332059 | Wanted to start up with a couple of questions on the INVISTA acquisition. I think if I do the math here around the EBITDA contribution, you said $100 million of revenue, 6.5 to 7.5 times EBITDA, it sounds like eventually expect about a $24 million a year type of EBITDA contribution. What can that contribution look like in 2021? I assume there's probably some initial investments and maybe some ramp-up costs, especially as you maybe do some debottlenecking. | Thanks Mike for the question. Look, we were very clear on providing guidance after full synergies as you can expect the first year is a transition year, but we're going to have one-time cost of integration, etc. So we don't want to provide any specific guidance for the short-term. However, as you see in the numbers, its a business that is accretive to our business. We actually, at this stage, believe that its going to be even accretive to EPS. As you know, the purchase price allocation work takes several months and up to a year in some cases. So we will see how that turns out. But fundamentally your $24 million in a few years and a couple of years is a very good number as you can see and we are committed to deliver that or more. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
61c106bca084fe34acbffb2971deb5fe | Wanted to also understand the impact of INVISTA and this acquisition on your phthalic anhydride business. Does the amount of merchant commodity phthalic that you're selling decline as you start to funnel some of that production out of Millsdale to be used as a raw material for the Wilmington location that INVISTA has? | Yeah. So the short answer is yes, a little bit, but in INVISTA is primarily based on an alternative asset. So most of their business is based on PTA versus PA. So PA derivatives are part of their portfolio. Relatively small in the big picture. But I will make a comment that last year was a difficult year for our phthalic anhydride business. This year we've been able to recapture some lost market share and we anticipate that that business will perform significantly better in 2021 than 2020. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
2df54a3d82934fae672e20306aec5e53 | Wanted to ask also on the capex front, your elevated number for 2021. I think you mentioned the 1,4-dioxane capacity addition, but maybe talk about what are some of the other key projects that are involved in your capex number and what would normalized capex look like I guess going forward after 2021? | Yeah. So let me say that there are kind of three different drivers for the increased capital expenditure. The investments in 1,4-dioxane are kind of the largest component of it today. And as we said in the script that we were looking or working with our customers to make sure that we get an adequate return on those investments and so -- but there is, in 2021 and 2022, there is a spike in terms of our capex associated with 1,4-dioxane reduction projects.
The second thing I would say is because of the increased demand that we have on a global basis, particularly for some of the specialty surfactants that we manufacture in the amphoteric and the bio side line, we have a additional growth projects that we are looking at implementing in the United States, in Mexico and potentially in France as well to support our higher margin specialty product lines. So we're excited about those opportunities.
And then the third category, I would say that there is an infrastructure spend that we're working on. And one of the things I wanted to comment on is that the Chicago area is been labeled as potential serious non-attainment zone for the country. And so as a result of that we are going to be spending some money to reduce our emissions at our Millsdale site and so there is a peak in some investments at our Millsdale site as we look to reduce emissions so we can continue to support that site with future growth projects as we go forward. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
88710221c833d639e1b4e66b2c16264d | Maybe some of your thoughts on what kind of inflation you could be seeing and some of the pricing dynamics as you look at each segment? It seems like the pricing is up pretty nicely in Surfactants at least in Q4 and still under some pressure in Polymers. So how should we think about raw material versus pricing progression during early 2021? | So what I'd like to do is answer two questions. One, prior to the freeze that we're experiencing down in the Gulf Coast region and specifically Texas and Louisiana, what we've seen with the increase in the oil prices, our raw -- key raw materials orthoxylene, diethylene glycol in our Polymer business, linear alkylbenzene and ethylene derivatives in our Surfactants business, we've seen an increase in those prices. We did announce a price increase in North America to try to recapture those in early January, mid-January and I would say that our objective in there is to maintain or increase our margins as we look at those raw material movements. We do -- we are experiencing, the country is experiencing a number of force measures as a result of the freeze that we currently are in.
We typically build inventories prior to the hurricane season. Every year we have a very disciplined process in which we build significant amount of inventories that are produced in the Gulf Coast in anticipation of a potential problem and that strategy over the years has benefited our business. We were not anticipating this freeze in Texas and nor was anybody else. So what we've seen is a number of our customers -- our suppliers have declared force measure. Not sure exactly how that's going to impact on our business yet in the quarter. We are also experiencing transportation delays throughout the country as a result of the freeze as well. So I feel very comfortable in terms of our ability to recover the raw material price increases in our base business. Not sure, currently, how the, the current situation is going to impact our business in February and March. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.