The conference call gives the investment community an opportunity to interact with the management team to learn about the latest quarterly results and hear any guidance updates for future projections. It is best to schedule conference calls to be held immediately after the latest 10K or 10Q filing, so there should be at least four conference calls per year.
The investor relations officer (IRO) should prepare an extensive set of written remarks for every conference call. If the management team instead delivers off-the-cuff remarks from a short outline of topics, then listeners will not think that the management team is taking the conference call seriously. Also, using a script gives the IRO plenty of time to develop a thoroughly clear presentation, so that no information is missed that would be left to interpretation by analysts.
When constructing the formal remarks for a conference call, pay particular attention to the informal rule of keeping them under 30 minutes. If the formal remarks extend even longer, then listeners will have less time to ask questions, since most IRO’s prefer to limit the total length of a conference call to one hour. The trend for the duration of formal remarks is dropping below the 30 minute mark, so that remarks lasting as little as 20 minutes are increasingly common.
If a company faces a difficult issue, such as a decline in sales or the departure of a key employee, always address the issue within the conference call script. By doing so, the IRO can formulate a considered answer to the issue, and present it in the best possible light. Otherwise, someone may ask about it during the question and answer (Q&A) section of the call, and then the management team will have to answer it without a script.
In addition to the scripted remarks, the IRO is also responsible for compiling an extensive set of answers to every question that can possibly be asked during the Q&A portion of the conference call, which reduces the risk that the management team will appear to listeners to be unprepared. An excellent source of questions is the conference calls conducted by peer companies; listen to them to determine what questions are being asked of those companies, and be prepared to respond to the same questions. Also, review analyst reports to determine the areas in which they have concerns about the company. An excellent way to organize the questions and answers is to post them around the meeting room on white boards or sheets of paper; this makes it easier to quickly find and read off an answer without any shuffling of paperwork that would be apparent to anyone listening over the phone. The team needs to show a very high level of operational knowledge during conference calls, since this gives investors a higher level of confidence in their ability to run the company.
When scheduling the conference call, it helps to place it immediately after those of peer companies (based on either their historical or scheduled release dates and times), since the IRO can listen to their conference calls and see what questions are being asked, as well as to learn their results. However, if the company will impart bad news during its conference call, then it may be better to schedule before the calls of peer companies, so that analysts will badger them during their conference calls about the issue that impacted the company. Also, it is better to schedule both the earnings press release and conference call for after the markets have closed. Otherwise, the market might improperly react to the earnings release before hearing what the company has to say during its conference call.
Company employees attending the conference call should be the CEO, CFO, and IRO. It may occasionally be necessary to bring in an expert, such as the manufacturing manager, to answer any anticipated questions that call for a deep level of expertise. However, use additional people infrequently, because listeners may think it is now acceptable to call the new person directly for additional information. Also, have a staff person on hand who writes down questions from listeners on a white board. By using this extra staff assistance, the main meeting participants can concentrate on answering questions.
When the conference call begins, the IRO should introduce everyone from the company who will be participating in the call, and then read a safe harbor statement. She then introduces the CEO, who is the main speaker, and who should speak exclusively from the scripted remarks. The CEO may hand off to the CFO to discuss numerical results, or present the entire scripted comments by himself. After 20-30 minutes of prepared remarks, the CEO turns the meeting back over to the IRO, who accepts questions from callers and moderates the discussion until the conference call concludes after about one hour. The IRO may sometimes call back some of the conference call participants for feedback on how the call was conducted.
Once a conference call is complete, have a post-meeting review to determine which elements of the call can be improved. The IRO should chair this meeting, since she is not presenting during the bulk of the call, and so is in the best position to evaluate it. This meeting should result in an improvement memo that is carried forward to the next conference call, and which is the foundation of an advance meeting to improve that call.