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De-Stress Earnings Calls, Part 1: Four Crucial Preparation Steps

Posted on July 8th, 2015. Posted by

Earnings Calls Part 1

The day you report earnings is obviously crucial, and even veteran IR professionals frequently botch them — sometimes due to poor preparation or just nerves. This week and next, we’ll offer tips to help you de-stress the event and execute it flawlessly — beginning today with four pre-call tips to help you get ready.

1. Script your prepared remarks word for word and have key members of senior management review them.
Corporate executives delivering the oral report during the earnings-day call have a lot of territory to cover in a short amount of time. Don’t rely on simply writing down a few bullet points to speak from; that’s not sufficient. They can too easily result in imprecise storytelling, unintentional digressions, and — given the rules governing what you may and may not say — costly missteps. Even the best public speaker needs a script.

To get exactly what you want to say down on paper, start by reaching out to senior team members to get their input on such topics as:

  • Key drivers of performance during the quarter;
  • Updates on milestones and objectives stated during the previous earnings call; and
  • Significant events and developments expected during the next three to six months, such as the progress of clinical trials, the publication of clinical data, pending commercial launches of new products, and meetings where management, key opinion leaders, or technology will be featured.

Now that you have good content, the next step is composition and revision. You’ll need to involve senior management in this process, but be sure to apply careful “version control.” Having multiple parties weighing in on one document (your script) can result in wasted time and resources when some reviewers are unwittingly working off of an old version that’s already been updated.

If possible, appoint one person to manage the process of collecting and incorporating each team member’s edits.

2. Plan for the worst when it comes to services and technology.
Don’t assume that your service provider will be able to upload your press release as soon as you submit it. Your company, in all likelihood, is not the only one reporting earnings on your designated day. To avoid any delays, submit your files for review and uploading well in advance of your distribution date.

Another recommendation is to deliver financial tables to your provider even earlier than the full and final press release. Formatting those can be time consuming, and your vendor will likely appreciate the additional lead time.

As for the technology that will link you and your guests, first be sure to test your conference line in advance of the call and provide a backup number in case you are disconnected. Second, consider hiring different vendors to handle the telephone conference call and the webcast. That way an unexpected problem at one service provider will not wipe you out on both fronts.

3. Take 30 minutes to cool down before the call.
This may seem at first blush like a luxury, but it isn’t. Quite the opposite. Resist the temptation to prepare right up until the minute the conference call gets underway. Instead, take the 30 minutes immediately preceding the call to cool down and relax. That investment will pay off when it comes time to deliver your prepared remarks, respond to questions, and conduct follow-up conversations with analysts after the conference call.

4. Help news providers get it right.
News outlets and financial information providers such as Bloomberg, Factset and Thomson generally appreciate efforts by companies like yours to help them present accurate information. You can provide that assistance by preparing a one-page summary that enumerates quarterly highlights and briefly explains non-operating items that affected GAAP-reported results. You may want to pay special attention to organizations that have a history of posting incomplete and even inaccurate information.

Finally, just as you are an expert in your industry, we are expert in helping companies such as yours to better execute earnings-day conference calls, public offerings, and the like. Consider reaching out to our experienced team for a thought partner in this vitally important process.

Mike Piccinino

Mike Piccinino is a Managing Director on Westwicke's medical technology and diagnostics teams. He has extensive experience in the buy-side investment process. He has a BA from James Madison University.

View full bio   |   Other posts by Mike Piccinino, CFA

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