Make the most of your earnings call in a broader strategy
Given their regulatory necessity in many markets and their established-event status, earnings calls are likely here to stay, albeit with some modern twists, as we’ve seen in the form of social media sharing, virtual-only meetings, prerecorded video sharing and the use of new IT materials.
When all’s said and done, earnings calls remain a valued communications conduit between a company and the financial community. There aren’t many occasions in the IR calendar that have the potential to garner such regular interest, and IROs need to ensure they capitalize on opportunities with interesting and relevant content that connects with the financial community across the board.
‘Sharing results provides an opportunity to engage with existing investors and new potential investors, both to explain recent performance and also, importantly, guide on future direction,’ says Renewi’s Adam Richford. ‘It is also an opportunity to explain what is most important and to put appropriate context around headwinds and tailwinds.’
Adding his outlook on the benefits of earnings calls, FedEx’s Mickey Foster says: ‘Earnings calls are an opportunity to provide transparency regarding how the company is performing both on a quantitative and a qualitative basis.
‘Stock prices are determined by future earnings and cash flow so the market can determine the appropriate share valuation after earnings are announced. Management credibility is another major part of valuation, and this can be aided by answers on earnings calls to questions from the financial community.
‘Ultimately, earnings and earnings calls assist investors in calculating the proper valuation of a company.’
If you approach each earnings call as a discrete event, you are missing the forest for the trees
But as easy as it can be to regard earnings calls as stand-alone financial information events, it’s important to keep an eye on the bigger picture too, advises Lynna Antipas Tyson of Ford. ‘I think if you approach each earnings call as a discrete event – with a beginning and an ending – you are missing the forest for the trees,’ she says. ‘Earnings should be treated as a proof point, or milestone, for your broader long-term strategy, part of a continuum of communications that build upon one another.’
Spend a little time beforehand familiarizing yourself with your provider’s platform, as functionality – such as how to prioritize key questions – often gets upgraded or changed and you won’t have time on results day.
Agree key messages with the board at the beginning of the process to ensure everyone remains focused.
The time between the 7.00 am release and the 8.30 am call is for speaking to your sell-side analysts: do not assume you will be able to fit in anything else!
After the earnings call, IROs should thoroughly review the list of investors participating on the conference call and webcast. You can identify potential targets that should own your stock, and then follow up with them.
Preparation is key! The IR team needs to prepare excellent remarks with speakers and robust answers to potential questions.
Every quarter is a learning experience. We improve and enhance the process after every event.
The event should not be a weather report: it should be highly curated and designed to help investors understand the progress you are making against your strategy.
Your audience is your investors – they are who you are speaking to, not the sell-side community.
We do our call-downs with the buy side the following day and we’ll typically do a two or three-day non-deal roadshow right after earnings.
Agree defined roles and responsibilities, and be clear on the need for early planning, preparation and milestones.
Ensure you have good engagement with your advisers to shape your messaging.
Tone of voice should be a key consideration in the context of the results and setting the right tone in the market.
