investor relations best practices

Investor Relations Best Practices: Taking a Deep Dive into IR Myths

Investor relations (IR) is one of the best-kept secrets of the corporate world. Perhaps because of its relative obscurity, there are a lot of myths about IR floating around out there. Let’s dispel a few of the most prominent myths and consider investor relations best practices.

Before we dive into the misperceptions, it’s a good idea to define our area of inquiry. Although it’s not a well-known specialty (I can’t think of a single bachelor’s degree program in IR), most medium-to-large public companies have an investor relations department. IR professionals are often recruited from Finance, Communications, or Strategy (or all three).

The main purpose of IR is to ensure a company’s publicly traded stock is fairly valued by disseminating key information that investors use to make smart buying and selling decisions. IR departments communicate with investors (obviously), research analysts, government organizations, and the broader financial community.

Now that we’re clear on the basics, let’s do some mythbusting:

IR Myth #1: Investor relations is all about pumping up the share price.

Dear lord, no. Investor relations is about attaining a fair valuation of the company. Although many firms have internal IR departments, it’s important to understand that IR professionals are legally obligated not to “massage” the data in the company’s favor. Investor relations best practices strictly prohibit trying to influence the market or push a particular stock.

To be effective in their role, investor relations officials are required to work closely with the accounting department, the legal department, and the c-suite (CEO, COO, CFO). In addition, IR professionals are tasked with communicating with sell side analysts (i.e., research analysts at brokerage firms). Analysts’ individual opinions taken together become known as “consensus.” Consensus metrics can influence the public’s perception of whether a company is a worthy investment.

Investor relations best practices include effectively communicating the company’s strategy, financial performance, market position, and critical inflection points so that potential and current investors arrive at an accurate valuation.

This fair valuation should be reflected in a company’s share price. BUT share prices are affected by many things outside of IR or the company’s control: black swan events, foreign exchange rates, competitor performance, interest rates, foreign trade deals, legislation and policy changes, etc.

IR Myth #2: Investor relations is just “glorified public relations.”

First, this just makes my head hurt. There are so many dedicated public relations professionals who work incredibly hard to be strategic partners in “influencing, engaging, and building a relationship with key stakeholders to contribute to the way an organization is perceived.” To group IR with PR really demonstrates a lack of understanding of both.

Second, although investor relations does work closely with our communications counterparts, including public relations, IR professionals have a different role to play. Investor relations is responsible for working internally to establish metrics to support a fair valuation (see above).

Beyond establishing these benchmarks, the IR department comes up with an outreach strategy for effectively communicating via multiple channels, across an array of financial stakeholders: from investors to analysts to debt holders to credit agencies and many more.

In addition, IR departments keep close tabs on changing regulatory requirements and provide companies with recommendations about what can and cannot be done from a PR perspective. For example, IR departments advise companies about investor relations best practices during quiet periods, when it is illegal to discuss certain aspects of a company and its performance.

IR Myth #3: Investor relations is all about schmoozing.

If only this were true. Ask your IR professional how much they “schmooze” while preparing quarterly or annual earnings reports and coordinating shareholder meetings. Investor relations is about developing relationships and maintaining open, effective lines of communication.

To someone completely unfamiliar with how work gets done on Wall Street, this might seem like schmoozing. But in reality, investor relations best practices mirror general business best practices. Like all successful business professionals, IR professionals must develop, care, and nurture relationships. It’s not schmoozing; it’s positioning.

Smart IR officials know that maintaining relationships with the right people can be the difference between being stonewalled by receptionists and getting the portfolio manager’s direct line. The right relationship can open the door to your next large shareholder or help you gain insight into why an investor is selling their position in your stock.

Ultimately, investor relations best practices are all about maintaining that “ready stance.” We all know that we can’t control the market, but we can control how we develop and deliver our best investment case.

So now that I’ve put an end to some common IR misperceptions, it’s your turn. What are the best IR “myths” that you’ve heard?

Have other questions about communicating more effectively with stakeholders? Or how Audacia Strategies can help you stand out to investors? Give us a shout to schedule a consultation!

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crisis management

5 Steps to Crisis Management and Surviving the Trump Effect

In the weeks leading up to the US presidential election last year, there was a lot of speculation about how the stock market would react. Uncertainty does not inspire confidence among investors. That speculation sparked discussion among those of us in corporate communications and investor relations about maintaining situational awareness and crisis management.

Now here we are almost a month into the Trump presidency and there is still a great deal of uncertainty in the air. Regardless of your politics, questions remain. How will Trump’s policies influence stocks, bond markets, commodities, the flow of trade, and economies around the world? Will the intelligence community and the administration find a way to cooperate? How will all of this effect global perceptions of risk and market uncertainty?

Perhaps most important for communicators is that the President has singled out individual corporations and executives via social media and in his public statements. Consider some recent headlines:

When the President speaks—and tweets—markets listen. How can firms manage their reputation (and associated stock volatility) in an era of 3:00 a.m. Twitter-storms?

1. Have a clear story. Test your story.

First, make sure you have a clear corporate narrative already in place. Your narrative should reflect your company’s strategy and decision-making criteria. That is, your words and your actions should align and convey credibility. This is true whether communicating to Wall Street, Main Street or Capitol Hill. When a crisis strikes, credibility can be the determining factor in successfully weathering the storm.

Test your narrative via with a broad team. I recommend having at a minimum investor relations, communications, legal, government relations, operations, and sales at the table. The goal is to have as many perspectives as possible around the table to put your messaging through its paces. If your budget allows for including an unbiased third-party, that perspective can be incredibly helpful to get the group out of its conventional thinking.

During this session, poke all the holes in your message; ask all the uncomfortable questions; ask irrational questions. Nothing is out of bounds. Then, development a plan for countering each line of attack.

Develop holding statements (which deserve an entire post of their own). Consider what you will want to say to investors, the media, and your internal team. Your messages should be concise, accurate, and informative. Test your potential responses if possible.

2. Have a crisis management plan.

Make sure that you have a solid plan in place for dealing with a crisis when it happens. Have a crisis team in place and make sure its participants meet regularly. Have a system in place for notifying stakeholders.

At one time, our only option for a notification system was a “phone tree” and team of callers. Today’s technology makes triggering a crisis management plan as simple as sending a single email, text message or making a single phone call.

Here, it’s a good idea to consider using multiple communications channels and establishing preferences ahead of a crisis situation. Some constantly check email, others are more likely to receive a text message or a tweet. So ensure that information is prepared for a variety of communication channels.

Have an answer to the following questions:

  • How will you notify your team that you are in crisis mode?
  • How will you disseminate information as it becomes available?
  • Who is responsible for putting the plan in motion and seeing it through?

3. Define team member roles.

Be sure crisis management roles are well-defined and documented. Ensure that all team members understand their roles, responsibilities and interdependencies. It’s crucial for everyone to be on the same page and operating efficiently.

Do what you can to prevent untrained representatives from speaking with the media. And make sure that, like a well-tuned orchestra, your whole team understands their specific function.

4. Talk to your board of directors.

Before a crisis hits, discuss with your board of directors the crisis management plan you have put into place. Explain the details of your plan: how you arrived at the strategy, what protocols you are following, your team’s special expertise, etc.

Assure your board that you are preparing for all contingencies. Ask for their input. Often Board Members have been through challenging situations and will have good suggestions that may add perspective to your plan.

Perhaps most important, reassure your Board that all strategic moves will be made with transparency and in accordance with the processes outlined in the crisis plan.

5. Talk to your c-suite.

Engage your c-suite executives early on. Ideally, they should be visible champions of the planning process.

Make sure that your executives are strategically aligned and prepared in the face of a crisis as well. There’s little worse than watching your executive get caught off guard by a question from the media. So train your executives in crisis communications.

Even if your CEO has done an admirable job as the spokesperson for your corporation, there’s a critical difference between promoting a company in good times and preserving a company in bad times.

Dealing with a market crisis is one of the toughest scenarios that organizations face, but if you maintain a clear plan, you will be ready to face the crisis head on. Our team at Audacia Strategies has firsthand experience in crisis management and dealing with some of the most sensitive crisis areas that corporations must oversee.

Are you ready to develop your crisis communications strategy and in need of someone to help you steer through? Contact us to schedule your consultation.

 

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earnings

Surprise! Your Earnings Suck. Now What?

Having to announce disappointing earnings to investors is a unique challenge. No one likes to be the bearer of bad news, but bad quarters happen to all companies. That said, Wall Street doesn’t like surprises (positive or negative, but especially negative).

Surprises damage corporate credibility and can have long-lasting effects beyond just a challenging quarter or two. So it’s crucial to find the right strategy for dealing with these types of surprises.

Maybe the quarterly earnings looked decent until an auditor discovered a previously overlooked error in revenue reporting. Or maybe raw materials costs suddenly spiked. Or perhaps that big anticipated contract evaporated. Whatever the reason, as you see the numbers coming in and it dawns on you that your earnings suck, you may be tempted to run and hide.

There is a better solution though. I promise!

First, don’t forget about situational awareness.

You might recall that I’m a big believer in situational awareness. No, it’s not a magic wand you can wave to turn lead into gold. Still, reporting quarterly earnings in the context of your company, your competitors, and the market is important. If nothing else, it shows analysts, traders, and investors that you have your eye on the right metrics.

Also, if a market shift due to a materials shortage, for example, affected your competitors’  earnings as much as your own earnings, that is relevant information to note during an earnings call with investors.

Your number one priority, though, should be ensuring the clarity of your message and maintaining transparency with investors. While it can be challenging (okay, downright painful) in the short-run, it will pay dividends over the long-term as it can stabilize challenges to credibility.

Let’s discuss the best strategies for revealing less than stellar earnings:  

Now that you’ve done your homework to place your earnings in context, it’s time to face the music. While you cannot soften the blow, you can take steps to maintain credibility and goodwill moving forward.

1. Don’t sugar-coat.

It does no good to play up the good news and ignore the elephant in the room, so don’t sugar-coat or whitewash unequivocally bad news. If mistakes were made, own up to them. Talk about what you plan to do to respond and recover over the course of the next quarter or longer.

Be prepared to discuss the ways in which this challenge has made you reevaluate your business strategy and/or structure. Be tangible. Be candid. And, whenever possible, be quantitative. Don’t take a blow to the chin unnecessarily, but be clear about whether the impact is indicative of an ongoing strategic or structural challenge.

In preparing for these conversations, I find it helpful to think like an analyst and ask hard questions of yourself and your team during your earnings preparation process:

  • Hold up the magnifying glass and go over every line item if necessary, until you are confident you understand what went wrong.
  • Ask the hard questions about the quality of your business forecasting process.
  • Get an understanding of the “early warning” indicators that might have helped or might help in the future.
  • Be ready to answer uncomfortable questions from emotional investors like, “How could you not have known about this sooner?” or “What else don’t you know about?” or “So, what will be the next shoe to drop?”

Now is not the time to be defensive. Now is a time to be clear, concise, and aware in your message to and interactions with your shareholders.

2. Engage the team.

You have probably already tapped into the resources of your audit team, legal team, and C-suite. But don’t forget about those running the operations and working directly with customers.

These folks working “on the ground” in your operations or interacting with customers on a daily basis may be able to shed some helpful color on the situation. Take the opportunity to sit down with those who have more direct contact with what’s driving the numbers on your spreadsheets. Consider how this color can inform your earnings release and any forward-looking discussion.

3. Consider a pre-announcement.

If you have a material miss of market expectations on your hands, you may want to consider pre-announcing prior to your full earnings release. A pre-announcement is exactly what it sounds like, an announcement of results (to the extent they are available) before the full earnings release. Generally, this release will occur 2 to 4 weeks prior to a scheduled earnings announcement.

To be clear, there is no SEC requirement to disclose. However, many on the Street believe that a company has an obligation to warn investors if it will fall materially short of expectations. This is true even if your company does not issue formal earnings guidance.

The benefit to a pre-announcement is that it sends a message to the Street that you are sharing information in a timely fashion and gives comfort that the company isn’t keeping material information from investors.

However, there are legal intricacies surrounding corporate guidance (or lack thereof) and acknowledgement of consensus numbers. Pre-announcement can be a controversial issue for many companies and should be thoughtfully considered beforehand.

Look, an earnings surprise is hard and managing the disclosure isn’t easy. Your stock price will likely take a hit and you and your management team will need to have some challenging conversations.

At the end of the day, markets trade on future value and the reality is that future value takes a hit when earnings come in at less than expected. Your goal during this process is to maintain effective dialogue with the Street to communicate your firm’s future prospects and that requires credibility, transparency, and candor. You’ve got this.

We’ve got a great team at Audacia Strategies and we’ve helped companies navigate corporate crises like this before. We can’t make bad earnings disappear, but we can come up with a strategy for maintaining credibility and moving past the temporary crisis. Contact us today to schedule a complimentary consultation.

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professional development reading list

Before You Unplug, Read This! —My Professional Development Reading List

We’re awash in news and information these days. It can be so tempting to just unplug from it all. But when your work requires you to remain “in the know,” it’s not that simple. How do you keep your head above water AND stay informed? My strategy is to focus my professional development reading list around a few key resources.

I realized that I use this strategy about a year ago, when I was giving a guest lecture at my undergraduate alma mater, American University in Washington, D.C. During our discussion about the role of investor relations and its intersection with Corporate Communications, one of the students asked a terrific question, “What do you read?”

It was a great question because it required me to really think about how I approach staying informed. It also kept me thinking long after I walked out of the classroom—Am I reading broadly enough? How do I stay informed without getting bogged down in information overload?

Today, I thought I’d share some of my favorite resources for staying up-to-date, entertained, and sane. (Don’t worry, I do not have a business relationship with any of the resources listed, nor do they know I’ve referenced them here. I just happen to find them helpful and enjoyable.)

My Professional Development Reading List:

News: I scan the Wall Street Journal, New York Times, and Financial Times each morning. I find the NYT Dealbook section, which specifically caters to investment news, to be particularly worthy. I also subscribe to multiple industry newsletters and scan the headlines for key updates each morning.

Business Strategy: McKinsey & Co’s strategy and corporate finance research provides good food for thought. As a global management consulting firm, they provide great insights into engaging with businesses, governments, and NGo’s. Also on my list of must-reads is the Harvard Business Review. I review these monthly (or while flying—airplane time is great for catching up on your professional development reading list).

Industry: The National Investor Relations Institute (NIRI) sends a weekly email newsletter to members. It is always a helpful roundup of the latest information in regulation, disclosure, and market movements. The “Strategist” publication from the Public Relations Society of America (PRSA) also provides thoughtful commentary on communications best practices and innovative ideas.

In my Feedly: VentureBeat, StrictlyVC, PEHub to stay informed on the Venture Capital and Private Equity fronts. Plus, Recode and TechMeme to keep up with my friends in all things Tech.

Books: I also try to keep up with some of the latest business books to see what’s new and popular. Some of my recent favorites include: Flash Boys: A Wall Street Revolt, by Michael Lewis (The Undoing Project is next on my professional development reading list – I can’t wait!), Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, by Jeff Gramm, and 10% Happier by Dan Harris.

Of course, I also spend plenty (too much?) time checking out Runner’s World, Food52, my local restaurant reviews, and Facebook (but not Snapchat…not yet.) We all need to take a break from the professional stuff once in awhile, right?

It’s so easy to lose ourselves in the narrow confines of our industries. Keeping a professional development reading list that includes articles and information that is outside of your comfort zone can really open you up to possibilities, you wouldn’t have otherwise considered.

Reading is one of my favorite way to get unstuck when I’m feeling especially siloed. I’m always on the lookout for new ideas to broaden my worldview. And Audacia Strategies gives me a platform for helping other professionals break out of stale patterns to truly engage their stakeholders. If you’re ready to look at investor relations in a bold, new way, contact me today!

In the meantime, let’s keep the conversation going. I’d love to see your comment below! What’s on your professional development reading list? What are your must-reads each day? Best book or article you’ve read recently?

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annual reports

Boring No More! Turn Your Annual Reports into Your Best Asset

Annual reports are a company’s most-requested and most-read communications but they have a bad reputation for being dry and boooring. They can be full of jargon and legal speak. But while the proxy rules require all publicly traded companies file annual reports with the SEC, they do not require the information be delivered in the same sleepy fashion year after year.

I have been thinking a lot of about how to better leverage the annual report as a vehicle to share the vision, strategy and culture of a firm. Of course, I turned to corporate reporting expert, Barbara Koontz, Senior VP of Customer Experience, at Curran & Connors, who is a veritable wizard when it comes to helping companies design annual reports that stakeholders actually want to read.*

Because I have learned so much from Barbara myself, I asked her to share some of her insights with you. And she graciously agreed to answer my questions here (edited for length).

Q. Annual reports can be a strong tool to communicate past results, as well as future vision. What do you see as best practices to help the annual report tell an organization’s story?

A. There are several steps that a company can take here to convey its unique vision and values:

1. Use the CEO letter to your advantage: The opening letter to shareholders is still the most widely read section of the annual report. Companies use it to communicate vision, strategy, values, and thought leadership. The letter often focuses attention on recent initiatives that helped achieve corporate goals. Easy-to-read graphics or pull quotes ensure accomplishments stand out. The letter also is an opportunity to reinforce long-term, future goals and demonstrate industry standing.

2. Use video to convey personality: For online annual reports, the use of video is becoming more prevalent. A well-produced, short video is a great complement to the letter and conveys a CEO’s excitement and passion. To increase effectiveness and maximize return on investment, report videos are often directed to all stakeholders so they can also be used for other marketing endeavors.

3. Relate company performance to market trends: In general, it is important to balance company activities against 5 to 10 year market trends. This helps to justify investment in those key growth areas.

Q. Do you see organizations changing their approach to the annual report to express their corporate culture?

A. One of the biggest changes and most successful ways I see companies reflecting their culture is by showcasing employees. Companies incorporate stories, case studies, and photography that emphasizes the efforts of staff in helping the organization realize corporate goals.

We see video playing a key role here as well. A compelling video celebrating the passion and success of staff shows that the company values the contributions of its people, which in turn, results in employees wanting to work harder for their employer.

What may seem like a minor detail at first, the photo of the CEO, also can say a lot about the company’s culture. A suit says “traditional” “established,” and “leader,” while a shirt and slacks says “approachable,” “entrepreneurial,” and “partner.”

Q. Many different stakeholders use an organization’s annual report (investors/donors, media, regulators, customers). What advice do you give to companies to help them make their annual report accessible across multiple stakeholder sets?

A. It is important to design and develop content with all audiences in mind, as well as other communications vehicles that may be used to repurpose and more widely distribute elements from the annual report. When Curran & Connors develops a reporting solution, we consider the different ways the report or aspects of the report will be used as well as the target audiences.

Having said that, no document or reporting vehicle can be all things to all people. So, understanding your primary audience is important. Let’s say the main audience is the institutional investor. In this case, the report should be designed to ensure transparency and clearly communicate data, results, and a pathway to success.

Potential business partners, employees, and community members will also be interested in these metrics, but to effectively reach those groups the information may need to be presented differently. So, you will want to make the information more reader-friendly by applying relevant techniques such as infographics.

In addition, making the information available online is a sure way to make it more accessible to a larger audience. The content can connect to and be connected from a number of digital channels.

Q. An annual report can be a significant expense for many organizations, how do you recommend that companies increase their ROI and extend the reach of their annual reports beyond posting online and sending to shareholders/donors?

A. The two best ways to leverage the investment of your annual report are:

1. Think of the annual report as your “financial brand” for the year: Repurpose the look and feel into other communications documents such as fact sheets, the proxy, quarterly reports, the investor deck, and the IR website. This increases the value of the report and shows a professional and consistent approach to your overall communications.

2. Design the annual report to be easily segmented: Design the annual report in such a way that the segments of the book or online reporting vehicle can be shared via other marketing channels, such as social media. A unique graphic, custom photo or video, and/or case study that ideally conveys a key value driver can satisfy the never ending need for content for your social platform.

Q. As you look ahead, what are you most excited about for the future of annual reports?

A. Annual reports are one of the few documents that tell a company’s overarching story. What’s exciting is how these stories evolve to tell much more than how to reach a targeted bottom line. There is significant interest, for example, in learning about a company’s environmental, social, and governance (ESG) practices and how these impact the sustainability of the business.

Millennials are driving companies to be more involved in their communities and to report on these activities. Social media is forcing companies to be more transparent and have more conversations than monologues. Leaders of companies are taking more of an interest in the narrative too, which leads to more engagement across all platforms. As stories evolve, so do their formats.

Thanks for these words of wisdom, Barbara!

As you prepare your company’s 2017 annual report, rather than looking at it as just another federally mandated hoop to jump through, why not seize the opportunity to turn your annual report into a valuable messaging tool?

Audacia Strategies can guide you through creating a comprehensive communications strategy… including annual report messaging! Let’s talk!

*NOTE: This is not a sponsored post. I just happen to think that Barbara has great perspective on this topic!

 

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non-GAAP metrics

Credibility and Non-GAAP Metrics: Good, Bad, or Ugly?

Investors and the Securities and Exchange Commission (SEC) have a love-hate relationship with non-GAAP (Generally Accepted Accounting Principles) metrics. On the one hand, they love information that could help them better determine where to invest capital. On the other hand, they have a hard time gauging the reliability of non-GAAP metrics.

So where does this leave those of us developing a transparent and accurate strategic message for our company? And how do non-GAAP metrics help shape credible investor, analyst, and financial media relationships?

It all comes down to the credibility factor. Non-GAAP metrics can be a critical component of your company’s strategic message, but they shouldn’t be abused. The goal should be transparency and easing investor understanding—not obfuscation.

What is a non-GAAP metric?

Before we discuss how these measurements can increase your company’s credibility and play a key role in both your investor and media strategy, let’s define a non-GAAP metric.

According to the SEC, a non-GAAP metric is “a numerical measure of a registrant’s historical or future financial performance, financial position, or cash flows that:

(i) Excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or

(ii) Includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.”

Essentially, a non-GAAP financial measure is intended to depict a measure of performance or liquidity that is different from those presented in audited financial statements (e.g., sales, net income, cash flow from operations).

To make it even clearer, let’s say your company anticipates conducting a sizeable restructuring this year. If this will have a material impact on net income, you may wish to report net income with restructuring charges (GAAP) and without restructuring charges (non-GAAP). The non-GAAP measure, then, would be: GAAP net income less restructuring charges = Adjusted Net Income.

The non-GAAP challenge.

Over the years, the use of non-GAAP metrics and their prominence in financial discussions has been on the rise. In 2015, just 12% of S&P 500 companies reported only GAAP (audited) numbers in their public filings. That was down from 25% in 2006. Non-GAAP metrics have become a common way for companies to share more about how they view company operations and performance (see the example above).

To be sure, there is value in using appropriate non-GAAP metrics as a supplement to audited GAAP reporting. What we want to avoid are misleading metrics. Unfortunately, over time we have seen that some companies’ non-GAAP metrics veered away from the original intent and may have been used to paint an overly optimistic picture of business operations.

As non-GAAP metrics have increased in usage, so have concerns that such measures might not be as rigorously tested and maintained as their GAAP counterparts. As a result, the SEC updated its guidelines to clarify what might be considered misleading non-GAAP presentations and how to avoid giving non-GAAP measures greater prominence than comparable GAAP measures.

Since updating its guidance on non-GAAP metrics in May, SEC officials have sent significantly more comment letters to companies regarding non-GAAP use and they have cracked down on potentially misleading non-GAAP disclosures.

As we head into quarterly (and annual) reporting, it’s a good time to revisit your disclosure strategy and consider how to communicate your company’s strategic direction and associated metrics.

Guidelines for using non-GAAP in your investor relations strategy.

1. Give GAAP prominence. When presenting a non-GAAP measure it must be presented with the most directly comparable GAAP measure given equal or greater prominence. For example, an earnings press release should cite GAAP net income before a non-GAAP “adjusted net income”.

2. Ensure non-GAAP measures aren’t misleading. Some adjustments specifically called out by the SEC (although not explicitly prohibited) include non-GAAP metrics that

  • exclude normal, recurring, cash operating expenses necessary to operate the business;
  • are adjusted and presented inconsistently between periods;
  • accelerate revenue recognition;
  • include nonrecurring charges, but not nonrecurring gains; and
  • do not show current and deferred income tax expense commensurate with the non-GAAP measure of profitability and note the income tax effects of the adjustments as a separate item (i.e., rather than showing net income “net of tax” adjustments should show income taxes as a separate adjustment that is clearly explained).

3. Return to the fundamentals of your message. Ask: What is our corporate strategy? What goals and objectives are we (or should we) be discussing in our disclosures to demonstrate progress? What are our milestones?

4. Ensure the non-GAAP metrics you use fit with your strategic message. When considering a non-GAAP metric ask the following questions:

  • What is the intent of the metric? Does it help to paint a more complete picture of the company’s performance and/or market opportunity?
  • Is this metric meaningful? Is this a metric that your management team uses to discuss the company with employees? Are managers held accountable for this metric?
  • What are the measures used by the company to assess progress against annual/long-term strategy?
  • What are key metrics in our industry? In my peer group? Are they helpful or outdated?
  • If I was a shareholder, would this metric better help me understand my company’s performance against stated strategy and goals?

But don’t overreach. Many investors will only consider GAAP in their models so be honest with investors (and yourself!) about those GAAP numbers and be ready to discuss them. All businesses have challenges, operational quirks, and unique investment and value-creating strategies. Stick to the truth of your operations and your company’s plan to achieve strategic goals.

At Audacia Strategies, credibility is king (and our #1 value). Credibility is all in the way you present and conduct yourself. If your aim is to help your stakeholders make smart investment decisions, you can’t go wrong. Treat your investors the way you would want to be treated.

How do you think about using non-GAAP measures? Do you discuss them with media? Employees? Have you received feedback from shareholders or analysts?

Financial disclosure is a critical component of a comprehensive communications strategy. We can help tighten up your investor relations strategy and integrate your messaging across your stakeholder sets. Let’s talk!

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maintaining strong business relationships

Maintaining Strong Business Relationships: Do You Have a Strategy for Checking In?

Maintenance is key if you want to preserve your assets. You take your car in for a tune-up every few months. You pay someone to secure and update your website. You even do yoga to maintain a healthy body. But are you maintaining strong business relationships?

In corporate communications, maintaining strong business relationships is a crucial asset. The right relationship can be the difference between getting constantly stonewalled by receptionists and getting the CEO’s direct line. The right relationship can open the door to your next large shareholder or help you gain insight into a potential client leading to a new contract.

Building Better Business Relationships.

Before we talk about maintaining strong business relationships, though, it’s important to consider how to build better relationships in the first place. Regardless of industry, the most successful people in business are relationship builders.

This can sound initially daunting, especially to introverts. But keep in mind that building relationships in business is not rocket science; so don’t overthink it. If you remember what your Kindergarten teacher taught you, you already know how to create strong relationships:

  • Be proactive, not pushy.
  • Listen more than you speak.
  • Don’t be afraid to be vulnerable.
  • Meet face-to-face whenever practical.
  • Be honest and encourage honesty in others.

Establishing business relationships can take time, however, so once you have the ear of influencers in your industry, be sure to continue cultivating these connections.

Don’t simply call people when you need something. You want them to be happy to pick up the phone when you call. Once you have built those core business relationships, it’s time to develop good habits for maintaining and nurturing them.

Is it Time for a Relationship Tune Up?

Don’t worry, I’m not about to suggest that you take a Buzzfeed quiz (as fun as that might be). But I am suggesting that you create systems to guarantee that you take time to check-in with your most important business relationships regularly. I even schedule time in my calendar for what I call relationship tune ups.

Starting the conversation is as easy as stepping away from our desks, inviting one of your connections to have coffee, and asking her what industry trends she’s seeing or what she did last year that worked really well. We often get so busy in our own projects that we lose track of other important initiatives in our organization—and the people that are working hard to make them happen. This can make us forget how nice it feels to be heard. So just ask.

Who Should I Connect With?

I intentionally cultivate relationships with anyone who knows my industry, including (gasp) my competitors; anyone who understands business; and anyone who makes me feel like the best version of myself.

It’s important to build relationships across all segments. If you focus only on building and maintaining strong business relationships with customers, you are ignoring potentially game-changing resources. So, avoid the temptation to write off suppliers and manufacturers just because you’re going after the “big fish” in your industry.

You might be surprised who can help you get to the next level and meet some amazing people along the way!

In 2017, to meet your goals and accelerate growth, keep the following partners on your radar:

1. Business Enablers – Set meetings with departments such as finance, human resources, and legal to help anticipate any big changes that could affect your investors’ bottom line in 2017.

2. Operations – The better you understand the business, the more effective you’ll be at communicating with investors and advising leadership. So talk to the heads of operations to find out what new products or services will be released or what new clients and contracts they are most excited about. Offer to host a town hall meeting sharing your expertise (give us a call if you need ideas here—we have lots of suggestions!) in exchange for getting the chance to see a product demo.

3. Media – Communicate with your media contacts of course, but rather than telling them what you think they should know, ask them what changes they would like to see and what information their audiences would appreciate most.

4. C-Suite Executives – This relationship can be bound by formality. Still, it doesn’t hurt to ask about your working relationship and processes. Is meeting on a quarterly basis working for you? What else could we be doing to help you feel prepared before an investor meeting/town hall/CNBC interview? Is 80 pages of earnings Q&A sufficient? Would you prefer more or less?

5. Peers and Colleagues – Have coffee and ask them what they’re working on or ask for advice. Many people have innovative ideas they keep to themselves until someone asks the right question.

6. Professional Groups – What are the most important resources you need to move your company forward? Rather than trying to reverse engineer everything yourself, pick the brains of those who have already plowed the way ahead of you.

7. Personal and Life – It’s those who are closest to us who can give us the most crucial information about ourselves. Our spouses, friends, children, family often know us better than we even know ourselves. So, ask, “how am I communicating?” “How am I handling stress?” Consider that whatever you are doing at home is probably spilling over somewhere else.

At Audacia Strategies, we specialize in maintaining strong business relationships. We love to help clients solve communications issues. Call us today to schedule a free consultation and we can meet for coffee!

What business relationships will you be working to maintain this year? Let’s continue the conversation in the comments below.

Photo credit: gaudilab / 123RF Stock Photo

corporate communications

In Corporate Communications, Timing is Everything

You might be surprised to hear that corporate communications and standup comedy have something in common—timing is key. Whether you are announcing a corporate merger or delivering a killer punchline, if your timing is off, your message will fall flat.

When corporations have a big announcement to make, a lot of time and energy goes into figuring out precisely how to state the message. What should the press release say or what language should the CEO use when discussing changes with investors?

While it’s certainly important to get the messaging right, keep in mind too that good corporate communication has less to do with what you say, than how you say it.

Let’s consider some important questions to ask when dropping big announcements.

 1. Is your announcement subject to regulatory restrictions?

First, you must consider the federal regulatory rules of your industry. There are most likely rules regarding what you can communicate, to whom, when, and how. So make sure you brush up on the SEC disclosure requirements and corporate communications law relevant to your industry.

Example: Material Announcements

Speaking of regulatory restrictions, Regulation Fair Disclosure (Reg FD) requires all publicly traded companies to release material information to all investors at the same time.

This hasn’t always been the case. In the 1990’s, financial services companies routinely held conference calls with market analysts and some institutional investors giving them in-depth information about the company. Recognizing that this gave institutional investors an unfair advantage over individual investors, the SEC ratified Regulation Fair Disclosure (Reg FD) in 1999.

As a result, companies are required to simultaneously make material announcements to all shareholders. Ideally, leadership would communicate the changes during a scheduled conference call with investors or town hall meeting.

However, if word of a material event or material information is inadvertently leaked to some investors or analysts (i.e., an “unintentional selective disclosure”), as soon as a senior company official learns of the disclosure, she is required to disclose the information publicly. Companies must make the announcement either (a) within 24 hours or (b) by the start of the next day’s trading on the New York Stock Exchange.

2. What are your competitors doing?

How much of a splash your announcement makes, at least partially depends on the behavior of your competition. If you have good news to share, you want to capture as much attention as possible. With bad news, you want to be as transparent and complete as possible in your initial communications to avoid continually referencing the issue and detracting from your broader corporate strategy.

Example: Product Launch

Let’s say you are ready to roll out a new product that will take your industry by storm. Sure, you are excited about the product. But if you rush to make the announcement without a strategy, you risk being overshadowed.

For example, if you know your competition always releases new products on the Tuesday before Christmas, it might seem that you could steal their thunder by announcing on the same day. But you also risk having to share the spotlight with a close competitor. And unless you are confident that your corporate communications team can outshine your competitor, it’s probably best to steer clear of this kind of shouting match.

While there’s no crystal ball to predict what opportunities are on the horizon, waiting a bit before releasing big news can pay off.

3. Does your corporate communications policy respect your staff?

Some announcements affect your internal staff more than shareholders or the general public. For instance, corporate reorganization could mean layoffs for staff members, while individual shareholders see a moderate increase in their returns.

Example: Corporate Restructuring

When making an announcement like a corporate restructuring, it’s important not to take your staff for granted. Relationships internal to your company are as important, or even more important, than external partnerships.

So, put as much thought into announcing corporate restructuring as you would into announcing a corporate acquisition. Just as you wouldn’t want investors to hear through the grapevine about a planned restructuring, you wouldn’t want your staff to hear about potential layoffs on the news.

As with any external message, be mindful of how your internal announcement will affect your audience. Don’t let emotions get in the way. If you are the head of a division, the corporate restructuring might be bad news for you as well. But when you make the announcement to your team, be considerate of their feelings in hearing the news for the first time.

Having the right overall strategy for timing corporate communications takes a blend of planning, finding the right words, and practicing authentic human engagement. At Audacia Strategies, we don’t do standup comedy, but we have helped many companies like yours find the right timing strategy for big announcements. Schedule a Free consultation to discuss your specific needs.

Photo credit: progressman / 123RF Stock Photo

Reg FD

Reg FD: How to Avoid Holiday Legal Headaches

‘Tis the season for company holiday parties. A party can be a great way to blow off steam during an especially stressful time of year in the financial world. While it’s a good idea to unwind in an informal environment, you don’t want Reg FD (Regulation Fair Disclosure) spoiling your fun.

Holiday mixers can bring together a variety of stakeholders like CEO’s, financial advisors, brokers, analysts, and investors. Add in a generous supply of alcohol and you have a recipe for failure to comply with Reg FD.

The good news is that with minimal prior planning, you can easily avoid having the SEC slap an individual or your company with an injunctive relief, such as a cease-and-desist order, monetary fine, and required disclosure of the violation.

First things first: What’s the rule?

The SEC Reg FD rule reads as follows: “Whenever an issuer, or any person acting on its behalf, discloses any material nonpublic information regarding that issuer or its securities to [certain enumerated persons], the issuer shall make public disclosure of that information… simultaneously, in the case of an intentional disclosure; and… promptly, in the case of a non-intentional disclosure.”

The key phrase here is “material nonpublic information.” Material information is anything that a reasonable shareholder would consider important for deciding whether to take some action with respect to a company’s securities.

According to the US Supreme Court, material information includes, among other examples, anything relevant to earnings, mergers, acquisitions, joint ventures or tender offers, new products, and developments regarding customers or suppliers.

That’s quite a list. Ensure that you stay off the SEC’s radar by following these rules:

1. SEC Reg FD applies to ALL company communications.

Don’t think that just because you are at a party and not on official company business, your offhand remark to a shareholder “doesn’t count” as a selective disclosure. A selective disclosure can be intentional or unintentional and Reg FD applies to all types of company communications.

For instance, a CEO’s spontaneous response to an unanticipated question posed during a dinner party with analysts present could reveal information to which all shareholders should have access. If there’s any question, put yourself in your investor’s shoes. If you could see yourself acting on the information provided, then it’s probably off limits.

Unintentional disclosures like the one above trigger an obligation on the part of the company to go public with the information within 24 hours or prior to the beginning of the next trading day. So, the best policy is always “better safe than sorry.”

2. Remind your expanded team of their responsibilities.

It’s not a bad idea this time of year to remind all employees and partners of their confidentiality agreements and other legal obligations. Send a friendly reminder email or call everyone together for a short meeting. Not knowing the law is no excuse, of course, but a lot of headaches can be avoided by taking this simple step.

Specifically, Reg FD rules apply to directors and executive officers; persons performing investor relations or public relations functions; and employees and agents who regularly communicate with securities market professionals and stakeholders. But any employee acting at the direction of senior management is also subject to the law.

3. If you have questions, consult with Finance and Legal.

What do you do if, despite your best efforts, something happens that you believe to be a violation? First, consult with Finance/Investor Relations and Legal internal to your company. The last thing you need is to intensify the problem by trying to sweep it under the rug. So, now is the time to own the problem and deal with it head on.

Your Finance and Legal departments will be able to tell you whether you need to take additional legal steps. Depending on the scope of the violation and whether it’s a fireable offense, you may also need to consult with HR.

Also, by consulting with the experts, you can avoid blowing out of proportion something that might require a simple solution. In many cases, issuing a press release or scheduling a public conference call to answer questions will bring you under compliance with the law.

In short, when it comes to Reg FD, prevention is always your best option. A lot of trouble can be avoided by simply communicating with employees and reminding them of their legal obligations. Let’s make this holiday season SEC free!

If you are looking for more great advice about corporate communications, Audacia Strategies is here for you. We can help you develop a corporate communications strategy that works for you and your whole team. Schedule your free consultation today.

Photo credit: pressmaster / 123RF Stock Photo

ROI

3 Reasons the Boldest Investments Have the Biggest ROI

Starting a business is an investment of cash, time, and self. When I launched Audacia Strategies last December, I wasn’t sure if I would see a positive ROI. Afterall, I thrived in the corporate world! I never, ever saw myself as an entrepreneur.

But after traveling around Nicaragua, I realized that there is an entrepreneur inside all of us. From the coconut stand owner on the corner in San Juan del Sur, to the owners of an amazing island restaurant in Lake Nicaragua, to the artisan working in his hammock workshop in Grenada, it seemed that everyone around me was boldly investing in themselves.

So, I took a chance on myself and on my passion for building this business. After a year, I can happily say, I have seen a positive ROI.

Here are my biggest realizations and returns from the past year:

1. Businesses don’t just happen.

In business, a positive ROI results from nurturing relationships, gaining trust, and building credibility. Landing clients requires hard work and innovative thinking…and closing the deal. One of biggest challenges for me has been putting myself out there. I mean, people sometimes say “no.” Can you imagine?

I realized that success does not simply arrive at your doorstep. Like a well choreographed dance, success is the result of planning, practicing, and making the right adjustments along the way. At times I feel out-of-step with the music, but I remind myself that this comes with the territory whenever you are learning something new.

2. I can’t be all things to all people.

In talking with both new and seasoned entrepreneurs, one of the toughest parts of owning a business is figuring out who to work with and gaining the confidence to act on that decision. It has been especially hard for me to turn down potential clients who are simply not a good fit.

Even though I would really love to help everyone who crosses my path, that’s just not realistic. If you are looking for someone to help you come up with a creative corporate team-building event, you really should ask someone else. Trust me!

I learned that even if it doesn’t make sense for me to help someone directly, I can often refer them to some very talented partners. There are so many ways to be helpful besides directly taking on every potential client.

3. It takes a village to build a business.

I couldn’t have done this all on my own. I have an amazing support team from my accountant who enforces rigor in my bookkeeping, to my website team who built a website that truly reflects Audacia’s unique style, to the friends and colleagues who have spent countless hours talking strategy, offering support, and connecting me with others. I am damn lucky to have found this incredible network of people!

I am paying it forward by talking strategy, offering support, and helping other new entrepreneurs make connections. I am proud to be part of a real community of people who are passionate about business and using their talents to make a difference in their corners of the universe.

So, happy first anniversary Audacia Strategies! And many thanks to my amazing clients who I have had the privilege of working with this year, from helping them better communicate with their stakeholders to surviving complex corporate transformations of all types.

During that exhilarating trip to Nicaragua, I also discovered there is no magic dust that makes someone an entrepreneur. You just have to want it and work at it. I wrote my initial business plan as I flew home from Nicaragua and officially launched Audacia Strategies on December 3, 2015.

If you would like to see for yourself why I’m so proud of Audacia Strategies, let’s talk! I would love to schedule a FREE consultation and discuss how I can help your organization take your next audacious step forward.

Photo credit: dinozzz