Insights: Drafting a Playbook in Real Time

COVID-19 & INVESTOR COMMUNICATIONS

COVID-19 has given rise to a new strategic messaging challenge without precedent for all investor relations professionals.  We have been closely tracking how companies have been communicating the broad impacts of the virus to business to ensure we are best positioned to help our clients deliver the thoughtful and nuanced messages we believe are essential.  Communications related to the pandemic have been broad, ranging from simple updates on approaches to workplace safety to guidance suspensions to comprehensive operational updates outlining business disruptions and rollout of mitigations measures.  We provide excerpts of communications from an array of industries, which we hope you will find to be a useful resource, particularly as earnings season preparations begin.  We have summarized our key takeaways below.

Operational & Guidance Updates

Updated March 30, 2020
View PDF

In additional to helping our clients craft their narratives, we are actively focused on ensuring that communication channels between companies and institutional investors remain open.  In times of uncertainty (and at most times), it is important for management teams to remain available to their existing and potential investors. This is no simple task in times like these, and we are coming up with new approaches daily based on what we are learning from the buy side.  Our broad network of institutional investors is divided into two camps – those that are laser focused on managing risk in their portfolios and those who are working to identify companies that display sufficient strength and flexibility in their business operations.  The constituents in each camp is changing at a fast pace, and targeting, outreach and engagement has therefore become a bit more relationship-driven.  Our goal of ensuring that our client’s core messages are communicated to the right people at the right time through precise targeted outreach and engagement is unchanged.

TAKEAWAYS FROM CORPORATE COMMUNICATIONS RELATED TO COVID-19

The Human Element
Not unlike in ESG reporting, there is a clear trend towards demonstrating awareness and optics around the human impact of the pandemic. Most companies include quotes from leadership that directly address the welfare of their staff and teams as well as and what the company is doing to mitigate the spread of the virus. Although redundancies and furloughing will be inevitable in some industries, maintaining a clear narrative around the people that keep the company moving will demonstrate an ‘aware’ management that is more likely to maintain stakeholder respect in the coming quarters.
Impacts to Operations
Every sector is experiencing different operational challenges, ranging from full facility shut-ins or store closures, to activity reductions and comprehensive mitigation plans. Setting aside the substance of the various press releases and filings, updating investors on the business impact, changes to financial plans and so forth is critical.  Even if the takeaway is inevitably negative in the short term (the likely scenario), keeping your stakeholders informed with a clear message backed by sufficient details will reinforce management credibility over the long term and inspire confidence.  Not providing investors with sufficient information may have negative consequences.
Financial Strength and Longevity
Similar to the above, communicating balance sheet strength and flexibility is critical.  Whether the economy goes through a ‘V,’ ‘U’ or ‘W’ shaped recovery, investors are actively focused on those companies that will remain standing on the other side of this alphabet soup. In the short term, longevity and survival is a more important story to tell than growth. However a company positions itself with regards to fiscal stability during the pandemic, clearly communicating an ability to move the levers and manage through unprecedented business challenges will reassure investors that the requisite steps have been taken to mitigate the long-term impact.
Guidance Takes Backseat to the Narrative
Many companies have also made the decision to withdraw published guidance. The common refrain is that business has been disrupted, there is uncertainty about the duration of this disruption, and that prior guidance can no longer be relied upon.  As we imply above, not only has prior guidance become unreliable; it has been rendered entirely irrelevant.  What is relevant is to ensure that the narrative around operations, financial flexibility, and decision making is communicated clearly.  Cliché as it may sound, helping investors get comfortable that you are controlling those factors that are controllable is what matters most.  The optics of a proactive management will position companies better for the inevitable recovery.

Operational & Guidance Updates

Updated March 30, 2020
View PDF