Orion Oyj (ORNBV) Earnings Call Transcript & Summary

[Foreign Language] Good afternoon, ladies and gentlemen, and welcome to Orion's Earnings Conference Call and Webcast for the financial period of January-June 2021. My name is Tuukka Hirvonen, and I'm the Head of IR here at Orion. In a few moments, our CEO,Timo Lappalainen, will present the results of the period, after which you will have the opportunity to ask questions from him and from our CFO, Jari Karlson. [Operator Instructions] And just before I let Timo to step in, I'd like to draw your attention to this safe harbor statement regarding forward-looking statements. But without any further delays, it's my pleasure to invite Timo on the podium. Timo, please.

Thank you, Tuukka. So if we take the highlights for the first half this year, certainly, one can say that, of course, the period was still plagued by the COVID. Orion was able to operate throughout the period without major disruptions from the COVID. In terms of the financials, we were missing a substantial milestones as we had booked those in the comparable period. Nubeqa, our proprietary product continued to show strong growth with our partnership with Bayer. Furthermore, Specialty Products, they had a good start for the year despite that we had the declined sale when we compare that to the comparison period because of the hoarding effect that we saw in the first half last year. Also, our Animal Health business developed very favorably, had good news despite that there were major distributionship arrangement that ended last year. And as many organizations, we are still hampered by the pandemic in terms of how well we can operate internationally and operating expenses were such lower than -- continue to be lower in the first half. The good news for the Animal Health is that European Medicine Agency have either recommended or approved our 2 new products for Animal Health, Bonqat for feline and Tessie for canine anxiety in certain conditions. We also reported positive results from our digital therapy study, which is studied for pain alleviation. And as mentioned, COVID, we were able to continue our operations throughout the period. We saw no material disruptions of availability of either intermediate products or workforce. But as -- of course, as the pandemic continues, we cannot out-rule such events. And securing the health and safety of employees, patients and many of our coworkers partners who work on the premises, is a key priority for the company. In terms of the headline numbers, so net sales north of EUR 0.5 billion shy of last year's numbers and when we had a very strong year for the first half. Also, operating profit, we came down. However, meeting our operating profit margin target of 25%, so surpassed that. And the cash flow per share was lower than last year, and there were a couple of reasons to that. Of course, one of the reasons is that we continue to prioritize our capability of delivering products, and that means higher inventories. Now if we look at the waterfall picture of how the net sales have evolved in the last 12 months with the comparable period. Certainly, the Dexdor sales, those were brought down, and that's something that we've indicated as a risk for this year. On the other hand, Nubeqa asset, of course, should continue plow ahead, showed strong growth. Also, Simdax has shown negative numbers here. The Simdax is going to experience generic competition, but that has been postponed a couple of months from what we earlier thought. Easyhaler had a rough start for the year, but now it seems like things are moving ahead, but still, for the first half, it was negative 5%. And then other human pharma, which includes pretty much everything else, we had showed a positive growth. Exchange rate had only a very small effect this time. But as said, the royalties and milestones, those were a major component. That continued also, of course, to reflect in the bottom line when we look at the operating profit. So product sales, product mix contributed about EUR 24 million downward from the last year comparable number, but the milestone and royalties, those were bulk of that. And then, of course, the fixed cost as the operations continued to be a little bit on the slower mode that then improved the profitability by EUR 15 million. Then the geographical breakdown of the sales. When we look at the overall numbers compared to the last year, of course, there were substantial changes. Especially we saw the hoarding effect, and now some of the governments, they are pushing back some of the inventories that they purchased last year. But then, overall, not the major change when we look at the geographical distribution. Then when we split the sales the other way around and look it from the product perspective, we see that the Specialty Products, those actually fared fairly well over the period. Proprietary products, the reasons that I mentioned were the key aspects are for the negative growth. And in terms of the Animal Health, it fared very well because the major contract that we lost last year, Animal Health was able to make up partly that. And then Fermion contract manufacturing, no material change, with the exception that Fermion is running at the full capacity at this time. Then when we look at the top league of the products. So Easyhaler, certainly, we showed a negative number there. Stalevo, Comtess, Comtan at par with last year and Simdax and Dexdor showing negative numbers. Nubeqa now reaching position #5 in the product table of Orion. And then a strong first half for the animal sedatives, this typically is that we may have shipments tilted on either half and this year, it is a little bit more tilted towards the first half than evenly spread out. Then when we move to the Proprietary Products business, so certainly, the Easyhaler, those had a rough start for the year. Parkinson's, about flat. And then the Simdax, Dexdor, as anticipated, we've seen there the negative growth. Nubeqa, strong continued growth. So here are the quarterly numbers. And you may recall that -- our discussion earlier that how these are calculated. So it's a royalty, including the product sales. So then the royalties are adjusted always in the following quarter depending how much material we have shipped to our partner, Bayer. That's why it's not a straight line curve, but you will see a little bit of volatility there depending on quarter. But a strong start for the first half. The Easyhaler here, you see that the -- if one wants to -- if one looks at the second quarter that was picking up the business in the first quarter was a tough one, that was across the board for the whole market. And we have fared with the market at least as well, in some cases, a little bit better. But the second quarter was an improvement in that business already. And then steady as she goes in Parkinson's franchise. And there, our own sales continue to contribute more. And as we may remember, that we have opened up, about a year ago, our operation in Southeast Asia where we market our own products, and also, of course, now throughout Europe. And then the trend lines, especially for Dexdor, which is still a sedative that is used in case COVID patients are admitted in ICU. So we see there a very strong volatility, which is very, very difficult to anticipate and forecast. But I think the overall trend line is pretty clear. Now with the Simdax, we anticipate that we will see first generic launches in the third quarter that would have a material impact and probably 5 generic launches as we close the year. But of course, that's not in our hands. We don't have any privy to that information, but that's how we expect the things turn out. Then moving on to Specialty Products, so that's generics, OTC non-pharma. So even though it was a tough comparison, we had a good start for the year, and we are happy with the numbers given the circumstances and even seeing growth in some territories in Eastern Europe and Russia. And then the generic prescription products, a slight minus number there. And inside health care products, as we have reported earlier on, we are actually missing a good old flu season because we all take care washing our hands, keep social distancing, so that's a big question how that will evolve as we close the year. Will we see flu season in the Northern Hemisphere? In Finland, the largest country market, in the reference price products, we were able to fare better than the market. So the market declined by 6%, whereas the Orion's share, we increased the market by 2 percentage points. And then when we look at the overall market, we continue to command a roughly 25% in self-care products and in the overall market, 11% market share. In -- then when we look at the future research and development, so the RSNs, the timeline has been now updated, and we expect to see the headline results of the study later this year. ARANOTE, there is no update on that. So that will -- is actually recruiting as we speak. And then Orion's own, which we are doing by ourselves 208, 209, we've indicated earlier that we expect to make our decision on which compound to continue to Phase III by the end of this year, and that is still something that we shoot for. In Easyhaler, we are also continuing our development work for COPD product, tiotropium, and also evaluating a new product opportunity for Easyhaler platform. We also evaluated would it make sense for Orion to develop a new platform, and that work had continued for a few years. But then we decided against that because we still feel that Easyhaler is a very, very good device, a very competitive device and we have already numerous products, 6 products in the Easyhaler platform, so we continue to work on that. And by the way, Easyhaler is the first inhaler product that we understand dry powder inhaler, which is carbon free. Okay. Key business targets for this year as we have updated on the market every quarter. So our estimate for this year is that Nubeqa will continue doing well. We are very happy with the business, how that's going on in Europe. Of course, the ARASENS trial, how that will turn out, that's unknown. So we'll have to wait until we see the data. And also, we are having taken the ARANOTE trial further, that is proceeding as planned. Easyhaler, as said, had a rough start for the year. So we'll have to see how this year will pan out. We still are expecting growth, but let's see if that will be modest this year. Then as I mentioned, the 208, that decision whether to proceed with 208 or 209 that will be -- decision will be taken later this year. In Finland, we've been able to maintain and even strengthen our market position in prescription products. But as we saw, there is work still to be done in the OTC products. And in Scandinavia, we continue to push for the generic prescription products, still work underway. There is a large program in in-licensing new products, and that's bread and butter that we do all the time for generic products, OTC products. We feel very strongly about also opportunities that would be fit for us in more proprietary side. But as we move forward and hopefully close those, then we'll obviously update the market also on those. Then the portfolio and real M&A, there the work -- systematic work that we've had initiated that continues, but there is nothing to report at this time. Then our corporate responsibility. These are 2020 numbers. So the availability of products, that's, of course, one of the prime reasons why we exist, we are happy to report that we had a satisfactory performance there, also ensuring patient safety. This includes this composite end point, also the potential withdrawals from the market, so that's why it's labeled yellow. And then in terms of the -- our share of the CO2, we are continuously investing in energy efficiency, and by that, reducing greenhouse emissions with substantial numbers and that work is well underway, including, of course, then the waste and all over. And then the -- our -- taking care of our own employees. The lost time injury rate is at the high end at our end, and that is something that we are working on. And then, of course, we work in an environment where the transparency is a code and code of conduct is something that we have been -- we trained every employee. So we did not change the outlook. So the outlook for the year is that we estimate the net sales to be slightly lower than in the previous year and the operating profit lower or clearly lower than 2020. And also when you look at the key assumptions that are behind this outlook, of course, in terms of the positives, it is Nubeqa, as we've shown. There are other growing products as well, but the milestones you've seen how those flow almost directly to the bottom line, that's an important part of that equation. Also, Dexdor and Simdax, we expect, especially with regard to Simdax, intensified competition as the year closes. Also, the loss of the Animal Health distributionship contract was something that we flagged late last year. Then the operating profit. Of course, Nubeqa is a positive sign, also that the amortization for the acquisition of Parkinson's franchise from our long-term partner, Novartis, here in Europe. Those are now absent in our P&L. So that helps us about EUR 12 million a year. As said, milestones Dexdor and Simdax, that will be pretty much the same as for the sales. And then the big question, of course, is that what will happen and how will the business activity pick up after the COVID? Or how we will see the remaining part of the year allow us to do activities vis-a-vis, as an example, customers? So then the next scheduled event is the interim report for the third quarter end of October 20. And then we've already announced today that we expect to release the full year numbers February 10 and expect to hold the AGM on 23rd of March next year. At this stage, I invite our CFO, Jari Karlson, to join me here to the podium. And we are happy to take your questions. And as Tuukka here said, we will entertain first the questions from the phone lines and then after we have exhausted those, should u have preferred to send your question via chat, then Tuukka will moderate those questions.

[Operator Instructions] We have a question from the line of Peter Smith from Bank of America.

[indiscernible] What are your kind of base assumptions on the COVID situation and relaxation that we are in today? And then second question, on the halting of development of the new dry powder inhaler, what changed in the market or your market view that drove this? What was the new information that caused you to halt that [ process since you were ] developing it for years.

For the COVID, our expectation is today, that we'd anticipate that starting from the end of third quarter, fourth quarter, the things would start to resume back to normal, normal-ish. But having said that, we do not expect that any society would fully open and remain open. But the -- as an example, the visits to physicians, hospitals, pharmacies, et cetera, would probably continue to be a hybrid model. Also, if we look at medical conferences, we'd expect, at least this year still to continue to be pretty much either remote or max hybrid model. The one bigger question is that would we assume the recruitment having still been curtailed by various hospitals. And that situation seems to be improving. So the hospitals are not anymore burdened by COVID patients. Of course, one has to respect that there is actually a patient pool that did not get the normal treatment during COVID time. So there's a little back stop of that, but more or less towards the end of the year, that's our planning assumption in terms of the financials. In terms of the inhaler, that was actually -- so we had worked on the new platform already several years. And we were quite advanced with that. But then when we started to put the numbers all together, looked at the market, we felt that either converting the entire Easyhaler business to the new platform, that would be quite an exercise and probably would not pay off. Also, when we look at the new opportunities in the business, we felt more comfortable also from the risk management perspective that we'd continue to use well defined, well serving and robust Easyhaler technology.

Our next question comes from the line of Jo Walton from Crédit Suisse.

A few quick ones, please. Firstly, on the Easyhaler, I wonder if you could tell us a little bit more about how you think you're developing in the market? I know that you've said that you think that the respiratory market is very weak, but the innovative companies seem to be much more optimistic about the performance of the respiratory market in Europe. Is it that there's been a move to a new generation of products, maybe offered at not much more than a generic price, and therefore, there's been less demand for some of the older generic products that you've been able to put in the Easyhaler? Or if you could just tell us a little bit more about how you think your share is developed? My second question is really on costs. You've emphasized your caution on the supply chain a number of times, and you say that you're not seeing much disruption now. When you forecast your sort of gross margin for the year, I assume that you were expecting slightly higher costs, which appear not to be coming through. So I'm just wondering where you might be spending extra if you're not spending it there? Certainly doesn't look like, at the moment, you're spending it on SG&A. And my final question, just you've said that you're going to make a decision about taking a partner on 208 or -- sorry, not taking a partner, on moving 208 or 209 forwards. How far do you think you'll take those yourself versus bringing a global partner on board?

Okay. If I'll take the first and the last one, and I'll start with the Easyhaler. So I think the comment is a very good one. And the way we see that the innovative compounds, as those are launched to the market, they tend to be for a very narrow patient audience, and for the ones whose COPD or asthma cannot be controlled by the existing products, and thus warranting a more expensive treatment. And that certainly is when we look at the -- how the business is evolving. I think the volume still continues to be with the compounds that we already know and are typically generic. However, the value shift is certainly something that we are seeing as well. And of course, many of the innovative companies use marketing tactics, pricing generics at the low end and then converting business to the innovative products. So that is certainly something that we are seeing. But in terms of the volume, I think the volume growth -- underlying volume growth there, especially for products that have been developed over some 60 years ago, still continue to plow ahead. But we saw the -- about 6 months' period of time, or 9 months when even the volumes came down. But now we are seeing the reverse of that, and the market seems to be picking up. But I think the notion of the value shift to innovative products, I think that's quite correct. Jari, you want to address the cost question?

Yes. I mean, if we think of the cost of goods side, I don't really think we have seen much difference in the actual cost compared to what we were expecting at the beginning of the year. And even if there are some changes, their role in the overall cost structure is fairly limited, for the worry has been more about the availability of the materials and any availability of logistics transportation and so forth. So I don't really see that there is that much difference in the cost of goods -- cost structure, at least from the material point of view. And then, of course, one needs to remember that a fairly large part of the cost structure is the fixed cost and the cost of running the plants even though cost materials are also major component. But like I said, I mean, no major differences which would really have had a material impact on our numbers so far.

Then the last question on the 208, 209 and the potential partnering there, and how we would take forward the development, we are now -- as we speak, we are developing the plans already, of course, for the Phase III and how we would go about that. And we are prepared to make the decision and enter the Phase III. We did the similar type of exercise when we look at the Nubeqa. So we initiated the Phase III and only then partnered up the product with Bayer. And here, really, the big question from our perspective is that, what type of position or view we would take towards the U.S. market. So that's really the driver there. Would we be prepared -- what's the internal situation prepared to invest not only in the development of the product, but also the market access and later commercializing the product in the U.S. market? Or would we like to see somebody to share that with us? And we don't have any specific schedule for that. We are -- currently, we are not looking for a partner. But as a public company, you never say never. So no decisions with that regard have been taken.

And could I just go back on the costs, the SG&A. Most companies, last year, their SG&A was really held back in the second quarter because you were in the absolute teeth of the COVID pandemic. And most companies have indicated that they are being a little bit more relaxed on their SG&A costs as they move into 2Q because they're seeing more opportunity for promotion, and yet you managed to lower your SG&A from 2Q last year to 2Q this year. So just a little bit on the outlook there. And I do apologize, a very quick housekeeping, is there any other product left in your portfolio that has a material royalty? Or is the royalty number that we see now essentially all Nubeqa?

No, I mean, no, it's not only Nubeqa. We have still several products. I mean, Precedex is probably the largest of the other ones. But in addition to Precedex, we have a large number of smaller products, which generate royalty income for us. But definitely Nubeqa currently is the largest one. And then, I mean, the SG&A last year, we actually -- if we look at our cost structure, the first and second half from the SG&A point of view, were fairly similar. So it was a relatively flat. Now we have seen a little bit of decline. But when looking at those numbers, one needs to remember that last year, we had EUR 12 million of the amortization of the acquisition of the Stalevo and Comtess [ rise in year ] couple of years back from Novartis. And now that is gone. So that is, in our numbers, a relatively large variable. And that probably explains, to some extent, why the costs were down from last year during the first half of the year. So if you add -- or deduct EUR 6 million from our last year, of course, that gives a better comparison. So I guess that explains it a little bit. And then when it comes to the other side, outside of sales and marketing, the administration, that's, in our case, is pretty much salary and personnel costs. So that's why there is -- the COVID hasn't had that much impact on that part of the cost structure.

[Operator Instructions] We have a question from the line of Sami Sarkamies from Nordea Markets.

I have 2 questions. Firstly, starting from guidance. What are the main reservations for the second half of the year as you chose not to upgrade your guidance at this point?

Well, if I'll speak for the second half, I mean, typically, when you look at the history of Orion, the second half has always been weaker than the first half. And that varies from 20% to almost 40% in some cases. And 1 of the -- there are 2 main reasons there. One is that the -- we have the plant closures in the second half. They tend to be in July, typically, and then starting up the plant takes some time. So that's a seasonality effect. The other seasonality effects are really the summer time and also December as we see the [indiscernible] of the patient numbers being admitted to hospital wards and also running down the hospital capacity, in some cases, even physician capacity in the Continental Europe and also in Scandinavia, in some cases. So those 2 aspects are the main aspect why we see always this difference in the financial outcome of the first quarter -- 2 halves, sorry.

And this year, on top of those, we, of course, are expecting the competition to hit Dexdor and Simdax sales during the second half compared to the first one. But those are on top of that normal seasonality.

That's an excellent point. So the both Simdax and Dexdor, we do not expect that the 2 halves would have comparable numbers.

Okay. That's very helpful. And then my second question may have been asked already, but I mean, there were some technical difficulties earlier on in the call. But I mean just like to know your thoughts on the market normalization for Easyhaler and generics that are still suffering from COVID-19. So at which point would we expect sales to be at normal level? And in the meanwhile, do you anticipate a step-up from current run rate during the second half of the year?

Yes. When we look at the second quarter and compare that with the second quarter last year, there is certainly a pickup of the market. And that seems to be also the -- at least, in the last weeks, the message that we get from the market. So the market seems to be picking up. Whether that -- how that will pan out for the entire year, I think that's a big question. We expect that we would see growth there, but how much, can we barely go above the threshold, that is still to be seen. But the market seemed to be picking up as we speak now, and we expect stronger second half certainly. So that's our baseline assumption as we speak.

And in case of Easyhaler, we actually had the second ever -- second best-ever quarter again in the second quarter. So the first quarter last year was even better. But then when we look at this, it was actually, from Easyhaler business, one of the best 3-month period we ever had.

Yes. And maybe a follow-up. So did I understand right that you're expecting both generics and Easyhaler sales to grow on full year level?

I'm sorry. I mixed it generic. I was talking about the Easyhaler. Thank you for correcting that.

Okay.

On the generics side there, the big question there is actually, the -- how will the -- probably the fourth quarter turn out in terms of the upper respiratory infections in the Northern Hemisphere because we have a substantial business, not only in OTC, but also in antibiotics. And of course, last year, we didn't see that disease and all are in a very small numbers. So should that take place, then there's a good opportunity that we continue to grow. But when we compare then this year to last year in 12-month basis, the last year was in, overall, pretty much a normal one despite the first half was very exceptional, but then it leveled out. So there is a good opportunity that we would continue to grow in generics as well.

And in Finland, which, of course, is still the major part of that business, the volumes have already been growing, but prices continue to come down. So the volumes really need to continue increasing in order to also if we growing monetary values of the business. So the trend, which has been going on for many years, just seems to be continuing still this year as well.

Our next question comes from the line of KC Arikatla from Goldman Sachs.

On Simdax, you talked about generic competition starting in 3Q as opposed to 2Q previously. It's probably a bit unfair to ask you about the reasons for this delay, but are you aware of any potential reasons behind the delay in generic launch? Does it have to do with any API procurement issues, please? Just trying to understand if there is a chance for extending Simdax position in the market beyond 3Q?

No, we don't have any insight to the -- of the chains of our competition. So we cannot comment on that. We are only basing our information in the public domain, which is either the approvals and, in some countries, the pricing information. When you seek a pricing or get into the reimbursement system, that's public information. So in terms of the supply chain, we don't know that.

There are no telephone questions registered, so I hand back to the speakers.

Thank you, operator. We have a few questions from the chat. These are all from Anssi Raussi from OP Markets. And let's start with the question related to Animal Health. Could you quantify the decline we should expect in Animal Health in second half of this year compared to first half of this year as you -- as the decline in the first half was only 14% even though you have lost the Zoetis distribution agreement?

Maybe, Jari should respond...

Yes, I mean I cannot remember exact number, but it will definitely be more like Timo said in his presentation, the timing of the sedative deliveries to our partners where this year or I expected this year to be higher during the first half and during the second half. Last year, the Zoetis business was roughly 30% of our total Animal Health sales. And also during the second half of the year, the decline is expected to be less than that but higher than the decline before in the first quarter -- first half of the year.

Thanks, Jari. Then the second question from Anssi is, could you give us some kind of rough estimate about how much Easyhaler was still impacted by COVID in the second quarter this year?

Very difficult to say. As Jari said, the second quarter was a very good one. Whether there was a pent-up demand that patients have not renewed their prescription or they had depleted their inventory in their homes and they had to repurchase the product, maybe that's one factor, or are we back on the track. But as for the downside trend, I think all of this would speak for a positive. So I don't think we saw a negative trend of any material aspect.

Thanks, Timo. Then the last 1 from Anssi is that could you remind us, was there anything special or unusual why Q4 2020 EBIT was so weak? Anssi is just trying to figure out if they have to expect same kind of weaker margin this year?

I can take that.

Yes.

There are no individual major impact. But last year, for example, the R&D programs were running relatively smoothly during the fourth quarter and as a consequence of that the costs were higher. And then we had maybe some timing of the deliveries of products. And when these things just happen in this -- at the same time, it's almost like a coincidence that, with our numbers, you can very easily see it EUR 10 million, even EUR 15 million impact. So no specific explanation for -- really for the fourth quarter. It's just that many things happen to happen in the same direction. So I don't think you can really draw a specific conclusion. But of course, in many years, the fourth quarter has been a little bit weaker than maybe the beginning of the year. So that trend probably is likely to continue this year as well. But whether the fourth quarter -- how this year's fourth quarter really will compare to the last year's fourth quarter, it's, at this point, a little bit difficult still to say because there are so many timing questions between the quarters that can have impact on those numbers.

Then moving on, we have a couple of questions from James Vane-Tempest from Jefferies. And the first 1 is that, what were the driving factors behind your significant outperformance of the Finnish market?

I'd like to say hard work, and that's what it is. Especially when we look at the reference price product, I mean we've been working on that for years, we were able also to continue to supply the market. So our forecast accuracy in terms of sourcing, producing of the product, that was right on. So we were able to supply the market. And also, as the market in reference priced products, that's a reverse auction effectively that takes place. So we also managed in those auctions very well. So it's hard work. It's a competence of people. And of course, we have a scale benefit in the local market as well in supply in the market.

Then the second one is regarding Simdax and Dexdor. With Simdax and Dexdor generics, what levers do you have to manage fixed costs and the negative contribution margin impact?

Actually, if we look at the most markets, Simdax, Dexdor, there is very little any more SG&A that we are putting on those products. Of course, we continue to maintain the products, but the active promotion is in generalized markets that where it has converted actually to Nubeqa or Easyhaler or some other products, but the -- actually the sales and marketing effort when the product goes generic, then it becomes a normal tender type of products in hospitals. So then it's a very limited impact what you can do with marketing. We still, of course, continue to work on the product and do some things. But with the injectable products, of course, given that the initial margins are relatively high, there is no way you can compensate for the entire decline of the gross profit. So that's impossible.

And of course, generally speaking, when there are changes in the portfolio, of course, in long -- mid and longer run, we try to manage our overall operations to match the current portfolio we have in our hand, whether it's sales and marketing force or whether it's the manufacturing footprint and so forth. But those are, in many cases, operations which don't change overnight. So they -- to some extent, we have already started a long -- years back, and, to some extent, we will continue. But of course, we try to manage the costs so that they are the exact match with the existing portfolios we have.

Thanks, Timo and Jari. We have now exhausted all the chat questions, and I got the word that we don't have any follow-ups either in the conference call line. So I guess it's time to wrap up.

Well, thank you very much for joining the call. I appreciate. It's midst of the summer in most places, we hope all of you are safe, not only from the COVID, but also from the flooding. And we are happy to report that all the Orionese as far as we have received the information they are all safe. Have a great summer, and I hope that you can join us in our October earnings call.