When many management teams contemplate the quarterly earnings cycle, they think primarily about compliance – dotting the “i”s and crossing the “t”s. But while compliance is a major driver of financial disclosure, it should not be the only one – if it were, companies would file the 10-Q or 10-K and leave it at that. Take a more strategic approach to your next earnings cycle with these five tips.
Our Blog: The Podium
Communicating That 1+1 = 3
By David Calusdian, Executive Vice President & Partner
A well-known portfolio manager once said to me that he loved diversified industrial companies “for their break-up value.” If you’re in the industrial space, this is the polar opposite of how you want investors to think about your company. For an industrial, it all comes down to ensuring that investors see your company as being more than a sum of its parts – not less. Here are four tips to ensure that investors believe your company is worth more than its breakup value.
Synergize! An industrial company’s collection of businesses can either be viewed as just that - a disparate group of autonomous operations individually contributing to the corporate P&L. Or they can be seen as interconnected, mutually supporting components of a single profit-generating machine. The first way to demonstrate that your company’s whole is indeed greater than the sum of its parts is to communicate how the portfolio management philosophy of the business fosters cross-selling throughout the organization, driving revenue growth. Also focus on how management realizes cost synergies across the enterprise, such as through lower fixed costs due to shared overhead or greater combined purchasing power.
This is Part II of our preannouncement series based on AlphaSense research. Today we focus on the qualitative discussion of the results in earnings preannouncements and the financial metrics used.
In my previous post, we focused on the factors that contribute to a company’s decision to preannounce its financial results – that is, provide the Street with a preliminary, high-level understanding of what its quarterly performance will be. Using AlphaSense, a unique search engine that offers an advanced level of information discovery, we looked at 59 preannouncement releases that were issued in the U.S. through the first six weeks of 2016. We examined the rationale for preannouncing and some of the issues at play when providing advance insight to investors.
To preannounce or not to preannounce: Surely that is the question that stumps many management teams during the quarterly earnings cycle.
There are several reasons for a company to preannounce its financial results – that is, provide the Street with a preliminary, high-level understanding of what the company’s quarterly performance will be. Typically, a preannouncement is made in the weeks preceding the full earnings release and conference call. Management also may decide to update investors with preliminary results ahead of investor days, investment conferences and major acquisitions, so that it may speak about the most current financials and not violate Regulation Fair Disclosure.
By Dennis Walsh, Vice President
The Shareholder on a Shelf is a new tradition that has become the holiday gift of choice for IROs to their executive management teams. The story of the Shareholder on a Shelf is as follows:
“Have you ever wondered how the SEC could know;
If you’re naughty or nice in making your reported revenues and margins grow;
For 79 years it’s been a big secret;
Which now can be shared, if you promise to keep it.
At reporting time the SEC sends me to you;
I sit in the shadows to watch and report on all that you do;
My job is an assignment from Ms. Mary Jo White herself;
I am her helper, a friendly scout shareholder that sits on a shelf.
Holiday, Investor Relations Blog, Reg FD, Sharon Merrill Associates, Investor Relations Agency, Guidance, IRO, Shareholder Communications, Earnings Call, Investor Relations, Earnings, Investor Relations Firm, Activist Investors
By Dennis Walsh, Vice President & Director of Social Media
And the Award for Best Quarterly Earnings Results Conference Call goes to….
Giving awards to recognize production of an earnings call may be a little premature, but several companies are spicing up what is generally considered an uneventful quarterly ritual by the investment community. It is encouraging to see companies embracing the use of new technologies and social media for investor relations. Before you follow their lead, we can’t forget what is truly important to our key stakeholders about the process: transparency and access to management.
So what is all the fuss about?
By Dennis Walsh, Vice President & Director of Social Media
The SEC finally has provided guidance on the use of social media for investor relations. The guidance came in a report on its investigation to determine whether Netflix CEO Reed Hasting had violated Reg FD. In a Facebook status update on his personal account, Hastings said Netflix had streamed 1 billion hours of content in June 2012, calling into question whether the post was selective disclosure of material information.
In its report, the SEC clarified that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Reg FD. It’s the moment we’ve all been waiting for, but with some key caveats.
IR Program Planning, Reg FD, Investor Relations Agency, SEC, IR Website, Disclosure Policy, Shareholder Communications, Earnings Call, Social Media, Small-cap IR, Investor Relations, Socialize IR, Earnings, Investor Relations Firm
By Dennis Walsh, Senior Consultant & Director of Social Media
It’s that time of year again: Back to School! For my first job out of college I worked as an educator. This year, for “Back to School” season, I thought I’d step back into my teaching shoes. The following is a quick lesson on social media for investor relations for the marketing and public relations professional.
Technology is constantly changing the way we engage with our audience, so professional communicators must never stop learning new techniques. As a seasoned marketing or public relations professional, you’ve likely got social media covered. But how fluent are you in investor relations best practices? If you work for a public company, you might want to rethink your social media engagement strategy.
IR Program Planning, Reg FD, Crisis Communications, Public Relations, Disclosure Policy, IRO, Shareholder Communications, Social Media, Investor Relations, Socialize IR, Earnings, Investor Relations Firm
By Maureen Wolff, President and Partner
Three years ago, on the heels of the greatest collapse U.S. financial markets have experienced in decades, in conjunction with IntelliBusiness/eventVestor, we published a study, “The Guidance Effect: Improving Valuation” (PDF 875 KB), that evaluated the impact of increased transparency on equity valuation during the turbulent first quarter of 2009.
The findings supported the thesis that issuing quantitative financial guidance contributes to improved stock performance. Given the climate of fear and uncertainty that permeated Wall Street during the study period, we hypothesized that providing guidance – and thereby increasing transparency for investors – likely had an unusually pronounced affect on stock price behavior at the time.
By Jim Buckley
One of the investor relations issues that companies often struggle with is the “quiet period.” Here I’m not talking about the SEC mandated quiet period related to IPOs, other public offerings or around the release of lock-up agreements. Those all have defined legal parameters and lines drawn around what companies can and can’t do. I’m referring to the quarterly quiet period – where individual companies determine if, when and how they want to stop talking to the investment community as they approach the end of the quarter.
The quarterly quiet period is one of those gray areas that investor relations is famous for, and there is certainly no one-size-fits-all approach for companies. The fundamental principle behind the quarterly quiet period (or QQP) is straightforward. At some point around quarter end, management has knowledge of the company’s quarterly performance. So investors start calling in the last two weeks of every quarter and asking “How are things going?” They want to get a read on upcoming results through tone and demeanor. As a result, over time, companies began to institute a quiet period with the Street to avoid taking these calls. Makes sense, right? But how does each company handle its QQP? That’s where things start to get a little fuzzy.