March 20, 2020
It’s been another whirlwind week of news and updates across the nation amid the coronavirus (COVID-19) crisis, and we are experiencing a significant impact on our financial markets, businesses, communities, schools and healthcare system. The only thing certain is uncertainty, so how do investor relations teams stay connected to investors and manage their expectations?
The right financial communications strategy for your company when discussing the impact of an unpredictable event like COVID-19 will vary based on industry, geography, size, etc. While there is no one size fits all approach, here are a few considerations as you prepare for what is sure to be an interesting earnings season:
- Talk about the actions you are taking to help mitigate the crisis. Health and safety are priority number one. It’s important to share what you are doing to keep your employees safe, how you are supporting your communities and if applicable, how your products are helping the greater good. You should also consider talking about business continuity planning and share measures you are taking to manage your liquidity and maintain the overall health of your business.
- Be transparent about challenges your business is facing. In talking with investor relations teams across different industries, companies are concerned as they look at the remainder of 2020 – potential supply chain disruption, commodity price declines, pressure on demand, delayed projects, tighter management of liquidity – the list goes on. While companies may not have all the answers right now, it is important to maintain a transparent dialogue to help investors understand your views on the current environment and the potential impact to your business. If you cannot quantify the expected impact at this time, consider sharing what economic indicators you are monitoring along with insight you are gleaning from conversations with customers and suppliers to give some perspective.
- Carefully consider updates to guidance. In recent days, companies like Expedia, Hilton, Estee Lauder and L Brands, that are in some of the industries hit hardest by measures taken to curtail the spread of the COVID-19 have withdrawn their financial guidance. Time will tell if this becomes a broader trend and what level of revisions will be provided in the next earnings cycle as companies may rethink their guidance policies. With hundreds of companies warning of an impact on profitability amid COVID-19, transparency is important to maintain your credibility, but speculating and providing updated guidance too soon could do more harm than good.
- Monitor peers. Understanding the evolving communications landscape is critical as you formulate your disclosures. Keep a close watch on what your peer group and what companies you admire are sharing with their key stakeholders.
- Adopt new ways to connect. As face-to-face meetings are no longer advised, consider alternative means of communication. The ability to stay connected with investors remains important. According to a recent article in IR Magazine, investors are jumping on this bandwagon and are praising companies using video conferencing as a great alternative for meetings with management teams. The SEC has also provided updated guidance for companies looking to move to a virtual annual meeting format. Before taking that step, talk with external legal counsel about what options are available for your company.
- Remember – this too shall pass. As the world manages through this health crisis, investors will have short-term worries, but hopefully they will also see an opportunity to invest in a great value or growth story. Keep reinforcing your solid track record, long-term strategy and prospects for future success. This too shall pass and reminding investors that your business and your people are resilient is as important as ever.
As you continue to navigate these new circumstances, remember we are available to talk as you prepare for the upcoming earnings cycle. You can contact me at kfriery@dix-eaton.com and my colleague Angela Rodenhauser at arodenhauser@dix-eaton.com.
Need immediate crisis management help? Contact Matt Barkett 24/7 through email or at 216.780.7800. Call our COVID-19 hotline for communications leaders any day from 11:00am to 1:00pm EST at 216.937.8902.
