Ever since pharmaceutical services company Quintiles went public two years ago, it has without fail issued its quarterly earnings news release at 6 a.m. and followed up two hours later with a conference call to discuss the results.
That consistency, said spokesman Phil Bridges, is designed so that “both the market and the analysts know when (during the course of the day) to expect the Quintiles earnings press release and the earnings call.”
Indeed, most publicly traded companies in the Triangle and elsewhere follow a consistent routine from quarter to quarter. But the routines themselves vary considerably.
Some companies follow Quintiles’ pattern. Others issue their quarterly earnings news release, and conduct their earnings call, after the markets close at the end of the day. Some issue their press releases before the markets open but conduct their conference calls after trading begins. Still others spread the sequence over two days – press release one day, conference call the next.
“I think everybody has their own opinion” of the most effective protocol, said Dave Mossberg, founder and CEO of Three Part Advisors, a Texas-based consulting firm whose services include investor relations.
It’s not a trivial issue for publicly traded companies because each quarterly earnings report acts as a report card that Wall Street analysts pore over to make recommendations on a stock – and which investors themselves use to determine whether to buy, sell or hold
So it’s crucial for companies to make sure that analysts and investors have all the data – and all the context – to make informed decisions in a timely fashion.
Although companies must file quarterly reports with the Securities and Exchange Commission that are available to the public, they’re not required to issue news releases about the results or conduct conference calls. Still, that’s clearly the norm.
The National Investor Relations Institute doesn’t have data on earnings news releases, but its 2014 survey of publicly traded companies found that 97 percent conduct conference calls to discuss their quarterly results.
“Companies want to share information with investors,” said NIRI CEO Jim Cudahy. “They want to tell their story.”
One sizable, well-known Triangle company that issues an earning release each quarter but doesn’t conduct conference calls is Raleigh-based First Citizens Bank. First Citizens is the nation’s largest family-controlled bank with more than 560 branches in 18 states and the District of Columbia.
Spokeswoman Barbara Thompson noted the company has an annual “investor’s day” in which investors and analysts have the opportunity to pose questions to the company’s leaders. About 20 people attended the latest event in person; remote access wasn’t available.
“We believe that event, along with the news releases and our financial reporting (to the SEC) adequately convey our performance and strategies,” Thompson said.
NIRI’s survey also found that 46 percent of companies hold conference calls during market hours. Twenty-nine percent hold their calls before the market opens, while 24 percent hold their calls after the market closes.
Companies that hold conference calls during market hours need to be careful not to disclose significant new information.
“If a company releases new, material information during the confines of the trading day – that is, between the hours of 9:30 a.m. and 4 p.m. – it can cause some volatility one way or another for the stock,” Cudahy said. “That’s something you probably want to avoid.”
One of the driving factors behind when companies conduct their conference calls, Cudahy said, is the schedules followed by other companies in the same sector.
“Nothing annoys investors and analysts more than having companies have earnings calls at the same time, or even in very close proximity to each other,” he said.
Durham-based Argos Therapeutics, a small biotechnology company without any products on the market, adopted its routine when it went public last year. It issues its earnings release shortly after the market closes and holds a conference call a half-hour later.
Conducting the conference call just 30 minutes later minimizes the amount of time investors and analysts have to “jump to their own conclusions,” said CEO Jeff Abbey. “Obviously, you get into more detail in the conference call. ... There is no way you can cover everything in the release.”
Argos is banking that releasing its earnings release and holding its call after trading has ended for the day is more likely to gain notice.
“The feeling is that investors have a little bit of a chance to catch their breath after the market closes and might potentially pay more attention,” Abbey said.
That’s important to a small company such as Argos.
“We’re not Amgen or Biogen, where people are waiting for our release,” Abbey said. “We’re trying to do whatever we can to get more attention.”
He added: “I don’t have any tangible evidence that it works or not, but that’s our strategy.”
Time to digest
Raleigh-based PRA Health Sciences, which went public in November, chose a different tack. It releases its earnings after the market closes, but waits until the following morning to have a conference call.
The thinking is that the interim period gives investors and analysts ample time to digest – and crunch – the numbers and formulate questions they may want to ask during the conference call, said Tim McClain, vice president of legal affairs. (Unlike some companies that only permit analysts to quiz company executives during conference calls, PRA allows all participants to pose questions.)
PRA typically conducts its conference call at 9 a.m., but last month it held its call an hour earlier. The alteration was made, said McClain, after analysts notified the company that they had a conflict – another company they covered had scheduled a call for the same time slot.
Raleigh-investment firm Triangle Capital also issues its earnings releases after the market closes but waits until the following day to conduct its conference call. But it recently decided to supplement the earnings release with a podcast, issued that same afternoon.
Steven Lilly, the company’s chief financial officer, said last month when the company announced it would make a podcast available on its website that analysts and journalists “need more information than just the press release” to analyze the results prior to the conference call.
The podcast Triangle Capital issued earlier this month highlighted, among other things, data not mentioned in the news release but available in the quarterly update, called a 10-Q, that it files with the SEC.
Some companies, such as Raleigh real estate investment trust Highwoods Properties, also issue supplemental data available on their website when they issue press releases. Highwoods’ supplemental data includes information on trends in areas such as leasing, occupancy, acquisitions and dispositions.
One rule of thumb, said Mossberg, is that companies should avoid issuing quarterly news releases and conducting conference calls after the markets close on Friday.
“It creates a perception you’re trying to hide something,” he said.