Over the last 25 years, I have listened to hundreds of earnings calls. As a sell-side analyst, they were a routine and not-much-fun part of the job. Four times a year, you lock yourself in your office and listen to call after call of management teams highlighting their achievements or trying to sugar coat the not-so-positive news.
Most of the calls were pretty standard, and came off as well thought-out and comprehensive. But every so often you would hear that call where the sell-side analysts were unforgiving in their questions and the tone was so negative you almost feel bad for the management team. In my role here at ICR Westwicke, I’ve learned what really goes on behind the scenes to make those effective earnings calls appear effortless: a lot of hard work and practice starting about a month ahead of time. Who would have ever thought?
Especially during times of volatile market conditions, we receive many calls from companies asking for our help. When a company’s stock is underwater, there is no magic bullet to getting a company’s stock price back up without execution. However, putting in the extra effort on the investor relations front does make a big difference. This includes prepping management teams for earnings calls. In a poor market environment, this may be one of your few opportunities to gain visibility with investors, so having a smooth call with no mistakes can go a long way.
At ICR Westwicke, we believe in over-preparing for the call. Below, find our proven process that begins five weeks ahead of the call date and incorporates not just drafting a script, but also strategizing over Q&A, peer intelligence, and prepping a concise and consistent message.
Five weeks prior to the call:
Set your calendar to include the following dates and deadlines:
- 4 weeks prior to the earnings call: schedule a one-hour discussion to determine the three to four major themes of the quarter
- 2 weeks prior to the earnings release: draft and review press release, draft and review script, draft and review Q&A, finalize quote
- 1 week prior to the earnings release: finalize press release, script and Q&A, read through script and Q&A
- 1 day prior to the earnings release: hold final script read-through and mock Q&A
Four weeks prior to the call:
- Review the key themes for the quarter
- Confirm the date and time for the earnings call
- Schedule the conference call with the service provider
- Ensure that the call date/time is on the calendars of everyone involved
- Look at results compared to both guidance and consensus estimates
- Begin to compile Q&A topics
- Prepare updated guidance/metrics
Two to three weeks prior to the call:
- Draft the call script highlighting the key themes for the quarter
- Edit the earnings press release and draft management quote for the release
- Draft and issue the press release with call date and details
- Begin to review Q&A items
One week prior to the call:
- Finalize the press release
- Conduct script read-through and edits
- Review Q&A with bullet-point response items
- Delegate NASDAQ/NYSE notification, EDGAR and Web page update
One to two days prior to the call:
- Final script read-through and Q&A session
- Prepare conference call area/telecom
- Review competitive conference call topics
- Lock down release and upload/notify exchange
While earnings calls seem like a tedious part of the job that just have to get done, there is definitely a right way and a wrong way to do them. The hour you spend on the phone directly impacts your stock. Use it to your advantage to make a favorable impression. For more tips, download our checklist, “8 Best Practices of an Effective Earnings Call.”
