Earnings Call Preparation: What Goes Into Must See TV

Capital Markets / Investor Relations in Two Minutes or Less
Earnings Call Preparation: What Goes into Creating Must See TV

The fundamental philosophical goal of an earnings call should be to create Must See TV!

A company should rightfully want and expect maximum engagement with its earnings call from both the Buy-Side and Sell-Side communities.

Creating a Must See TV earnings call requires significant time and preparation that often goes unappreciated by the investor community.

Six Fundamental Considerations About Earnings Calls

1. Earnings Is Not a Natural Function of the Company
2. Earnings Are Not Extemporaneous – Scripted; Not Off the Cuff
3. Reg FD requires significant preparation and development of commentary
4. Q&A is scripted and prepared in advance
5. Downside Risk: not acceptable to have an analyst blow up management w/ question

Best-in-class earnings preparation occurs over several weeks.

The most harrowing preparation is last minute and occurs over one or two days.

Preparation involves each of the following:

1. Writing a script for CEO and CFO
2. Editing the script with input from C-Suite
3. Multiple walk throughs of the script
4. Financial Guidance
5. Key industry data inputs / topics
6. Significant word smithing and message editing; tone and accentuation
7. Q&A preparation
8. Investor Presentation update
9. Quarterly Earnings Presentation update / creation

Earnings materials are a secondary or tertiary product for the company. The primary focus of employees is managing and running the underlying business.

A lot of time is spent tracking down information from different areas of the company.

Great IROs will create a list of questions in order to prepare management ahead of the earnings call.

Some executives prefer to have several read throughs of the earning script ahead of the call.

Some executives memorize their script. Others really like pre-recording their script.

The IRO might spend an hour with the CEO wordsmithing the tonality and single word choice in one part of the script.

Investors need to remember that most public company executives are operators of a business.

Many of these executives have not had the public speaking experience or the ability to always have a thoughtful sound bite quote when asked a question on the spot.

The best preparation shines through in the materials.

Think of the companies with investor decks, earnings scripts, and earnings releases that provide

1. Exciting future strategic vision
2. Financial modeling inputs
3. Thoughtful and transparent metrics about the performance of the underlying business

A Must See TV earnings call represents a lot of hard work focused on investors.

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