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Quarterly Reporting in the Age of COVID-19

Posted April 27, 2020 By Guest Author


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This post was contributed by Mary Conway of Conway Communications.

As we move through the public company quarterly reporting season, many processes that ensure accurate, timely, and effective disclosure are being challenged by the coronavirus pandemic. While there is no universal COVID-19 reporting playbook, we suggest companies consider carefully the recommendations offered in the SEC’s recent statement on quarterly reporting and focus more on the go-forward period than the historical record.  Your goal as a communications executive is to ensure your company emerges from this time with both its business and credibility intact.  

We advise companies to be concise rather than verbose; be candid and share insights specific to your business. Remember, investors are flying blind, so even if your visibility is lower than usual, it’s better than what external parties have.

Key Content to Cover

First and foremost, be sure to provide clear guidance on your organization’s plans and any significant changes ahead. Many companies are planning to provide (or already have offered) a COVID-19 update. They’re also considering withdrawing annual and/or quarterly guidance, pre-announcing quarterly results, updating credit facilities, and/or sharing cost control measures. For those companies, much of the quarter’s news is already out, and the bigger decisions reflect how to position their ongoing business.  

Reporting should also include: 

  • Tangible business, operational, and financial impacts associated with COVID-19.
  • The business’s underlying strength: its customer base, market leadership, online engagement, and continued R&D focus.
  • The company’s balance sheet, cash burn, debt, and leverage ratio; its access to credit and any covenants that come into play; and plans around share repurchases and/or dividends as well as M&A. Including these points are critical. The goal is to portray cash control actions as preserving optionality and enhancing flexibility and agility.

Be Flexible With New Best Practices

The impact of COVID-19 has transformed the entire business landscape for many organizations, completely changing processes that have long been in place. This shift will likely bring about some new reporting best practices you’ll need to keep in mind as you you prepare your quarterly earnings: 

  • If you’re deploying cost control measures, make sure the pain is shared. Layoffs and furloughs should be matched with executive and board compensation reductions. Otherwise, commentary about serving the greater community may ring hollow.
  • Except at a high level, we would posit that scenario planning on a live call with investors could do more harm than good for most companies. Be clear that you’ve evaluated your business position thoroughly and that your revised strategic plan capitalizes best on your situation.
  • Last but not least, reshare the company’s focus and strategy. While most game plans have been adjusted, there’s great value in reminding investors about your direction now and why you have confidence your team will carry the company there.  We remain believers that the goal of enhancing long-term shareholder value has importance to all companies and investors.

It’s also worth noting that not everything is about COVID-19, so don’t contort yourself to hone into that narrative.

Be Prepared for New Reporting Challenges

COVID-19 has also created new challenges for organizations across the board, and that will certainly include your reporting process. Getting ahead of these new hurdles will be key in overcoming them:   

  • With everyone in different places, staying focused on developing consistency in messaging and materials — SEC filings, press releases, scripts, presentations, Q&As — is much more challenging, even with document management tools. 
  • Securing approvals from auditors and legal counsel working remotely presents timing challenges. Be sure to work that into your schedule.
  • Management teams depend on physical presence to manage Q&A during the call; schedule additional prep time to ensure it goes smoothly. 
  • More companies may consider issuing prepared remarks ahead of the call to preserve time for Q&A. Recognize that doing so may establish a precedent that is expected going forward.
  • Touch base with conference call providers to make sure they can handle multiple speakers from different locations efficiently. More companies may pre-record prepared remarks, so reach out to your vendor quickly to schedule the recording, and make sure your materials are finalized early enough to allow for it. 

During this time, companies can demonstrate foresight, planning, and agile implementation. If you need help, let us know. We can step in and manage the many important details. Note too, as one of the few IR firms that’s not retainer-based, Conway Communications brings our high value, flexible approach to support your efforts.  

 

About Mary Conway

MaryConway

Mary T. Conway, principal of Conway Communications, founded the firm in 1998 following wide-ranging experience as a consultant and in-house practitioner.  Ms. Conway brings more than 25 years of diversified investor relations and strategic communications capabilities to the challenges organizations face in communicating effectively with important stakeholders.

 

 

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