April 10, 2020
With most investor relations and management teams in the midst of earnings season and preparing for the uncertainty associated with the novel coronavirus (COVID-19) pandemic, this earnings cycle promises to be anything but routine. While no one has all the answers, you can focus on the things within your control – including how your organization is responding to the crisis and the strengths that will carry you through and forward.
The Dix & Eaton investor relations team offers the following considerations as you get ready for your company’s upcoming earnings announcement:
Carefully consider management’s commentary related to COVID-19. Investors are anxious to hear from management on everything related to COVID-19. You want your management team to be confident and avoid speculation, so it will be important to strike the right tone and level of disclosure as you discuss the many related issues: How are you protecting your employees? What are you doing to help fight the pandemic? What actions have you taken to minimize business disruptions? Do you have business contingency plans in place? How are you safeguarding your supply chain? Do you have access to capital and is your balance sheet strong enough to enable you to weather the storm?
The Securities and Exchange Commission has a strong voice on this too, which they published April 8, via a statement on The Importance of Disclosure – For Investors, Markets and Our Fight Against COVID-19. The agency is urging companies to provide as much information as practicable to demonstrate where your company is operationally and financially, how your efforts to respond and protect your stakeholders are progressing, and what changes you expect in your operations and financial condition as COVID-19 progresses.
Face into guidance concerns. The uncertainty stemming from COVID-19 is affecting earnings guidance, with over 245 companies withdrawing annual guidance since March 16 (IR Magazine is tracking this on a weekly basis). If you haven’t already withdrawn or revised guidance, be prepared to address it in your upcoming earnings announcement. The SEC and investors understand the uncertainty and complexity that companies are facing, and don’t necessarily expect a revised estimate; however, they do expect companies to be as transparent as possible with regard to forward-looking information. The SEC went as far to say that this type of information will benefit investors, will allow for fair valuation and contribute to our nation’s collective effort to fight and recover from COVID-19.
Remember that the devil is in the details. While significant time is spent focusing on the key messaging, don’t overlook the logistics of executing the conference call while working remotely. A few tips to consider to ensure a smooth call in this virtual environment include: master the technology you plan to use for the actual call; pre-record management’s prepared remarks; have the team join the call much earlier than usual (say 20 to 30 minutes); align on how to run a smooth Q&A; and set up a live chat or text chain so management can talk with one another “behind the scenes” during the call. And, plan for technology hiccups!
Continue to engage with investors post-earnings. In the last month, we’ve all had to adapt to new ways of communicating in this virtual environment and staying connected is important to building trust with investors. From the basics of making sure your IR website is a robust investor resource, to hosting virtual investor days and investor meetings via video conference, there are a variety of ways you can continue to engage with investors after the earnings cycle is behind you. Don’t let cancelled events and logistical challenges get in the way of adapting to our new reality.
As you manage your investor relations program in these unprecedented times, we are available to share trends, best practices and editorial guidance and help you navigate earnings or any other communications situation. You can contact me at firstname.lastname@example.org and my investor relations practice co-leader Kellie Friery at email@example.com. And be sure to visit D&E’s COVID-19 Communications Resource Center.