The problem the client identified
The client (under NDA) was looking for someone to help them fix their sagging stock price, which was lagging behind their peers despite several quarters of beating consensus estimates.
Their stock was an industry laggard despite several quarters of strong performance.
The problem we identified
Management’s “story” was simply a regurgitation of the recent results rather than a description of their “mantra” or “special sauce” that has driven (and will continue to drive) their differentiation and, ultimately, their results to be better than the market’s growth.
They needed to boil their very complicated and intricate story that has historically been highly cyclical down to a few salient points of differentiation and then repeat those to investors over and over again until people begin to understand and start to see them as a “growth cyclical.”
The work we did
We worked with the client for 1 year, and we interviewed all members of their management team to understand the key drivers of the business and then sat with the FP&A team to see how these drivers impacted the models and the precision with which they were able to forecast the future business.
We then worked with the IR, CFO, and CEO to distill their message down to three key points that they could use to tell and retell their story to investors so that they understood that the company was on a path to “chart their own course,” rather than simply being subject to overall market conditions. We also set their guidance in a way that gave them room to execute their plan, while also having a chance to beat and raise the consensus estimates consistently.
The solution
Investors had been burned by this company numerous times in previous years and had largely given up on paying attention to them. After a major restructuring in which they refocused the business on core areas of differentiation and strength, the company enjoyed several quarters of strong financial performance. However, the Street didn’t really take notice, as they considered the company’s results to be entirely a function of the strong cyclical environment and gave them no credit for the structural advantages that were actually driving their results and forward-looking guidance.
We helped management change the way they talked about the company (through scripting their earnings calls to preparing them for Q&A, to properly setting guidance and helping build their analyst day program) to show investors how their differentiation and core intellectual property were driving results and why that gave them confidence in their lofty forward outlook.
The result
When we started working with the company, their forward P/E was 27% below the average of their closest peers. Now, the company’s forward P/E is 14% above the average of their closest peers.
The feedback from the client
CEO “What was most valuable for me was how Jason showed me how my and our CFO’s comments were interpreted by the Street. We’d been saying the same thing for so long, but nobody was listening and we weren’t getting credit for many of the things happening at the Company. Jason showed us why and changed how we told the story. His insights into how investors think is something we can’t get anywhere else - and we looked around a lot of other providers.”
CFO - “I’d recommend Jason to any company facing challenging waters - be it a rough patch in the financials, a business transformation, a leadership change, or an activist situation. The traditional IR consultants didn’t really impress us, but the instant we started working with Jason, we knew we’d made the right choice. He got to work digging into our story at a level I’ve never seen before and was able to surface insights nobody else had done before. He really coached us through a difficult time and that has been invaluable.”
IR “Jason brought "the mindset of an investor" into all our discussions and it was really helpful to have this additional perspective. He helped us streamline the story we told the Street and it was very helpful to have his investor perspective as we prepared for our investor day, our quarterly earnings, and sell-side conferences”
