An Initial View of Key Second Quarter Earnings Call Themes

With Mexico’s Q2 2020 reporting deadline behind us- one of the first in Latin America- and Brazilian issuers well into their reporting preparation, we took a look at some prevalent themes dominating earnings calls over the last two weeks.

It’s clear that analysts and investors are keenly interested in engaging with management during this period, with many earnings call question and answer sessions running over their allotted one-hour time slot and call and webcast attendance numbers often doubling those we’ve historically seen by InspIR’s diverse client base.  Additionally, in terms of logistics and delivery, several early-reporting Brazilian issuers have already introduced earnings calls incorporating live video.

To check in on buy-side expectations for the second half, see a replay of the latest InspIR Insights Webinar, Near Term Perspectives from the Buy Side in Latin America, featuring EM and LatAm Portfolio Managers as they share their expectations and suggestions ahead of second half reporting. Of note, they discuss their views on most effectively sharing your message in today’s virtual environment, as well as ESG’s influence on investing. Please click for compelling highlights: [HERE]

Key Q2 themes to date:

  • Topline: increased e-commerce for retailers, increasing digital banking transactions in the financial sector, more detail on contracts with tenants and minimum or fixed versus variable rent clauses for real estate issuers, and a strong focus on renegotiating contracts across the board (this applies to all contracts including M&A and concession agreements)
  • Working Capital: collecting on receivables, payment deferrals for clients
  • Cost Structure: delivering on lowering cash burn, meeting cost reduction goals, provisions for bad debt
  • Financial Trends/Other: discussion of monthly revenue trends, EBITDA, and calling out a month in which there was a meaningful inflection point. We note that guidance largely remains unclear, with discussions of longer-term initiatives and assumptions when possible
  • Environment in Mexico: a slow recovery, Peso devaluation impact, growing unemployment and the effect this will have on overall activity in the third and fourth quarters of 2020 and early 2021
  • COVID-19: update on related initiatives, changes to consumer demand patterns, manufacturing, near-shoring and next-shoring

During this and the prior reporting cycle, we counseled our client management teams to leverage platforms such as Teams, Webex and Zoom to mirror the prior conference room setting and ensure seamless live communication between management team speakers in their new work-from-home earnings conference call broadcast.  Chats on these platforms and the invaluable ability for non-verbal communication amongst speakers, investor relations teams and InspIR, smoothed the way for strong calls executed flawlessly.

While the second quarter 2020 was an exceptionally challenging quarter for all issuers, and for Latin America in particular, we noted that the current environment provides a unique opportunity for InspIR to guide clients’ focus on how these companies successfully differentiated themselves despite adversity- in the area of execution, ESG/service to their communities, and financial foresight, strength and prudence. Challenges can represent a rare and exciting opportunity to ensure your investment message is underscored and your value proposition clearly and emphatically communicated.

For more information on how InspIR can assist you in developing and refining your investment message contact us.

Monique Skruzny
CEO, InspIR Group
monique@inspirgroup.com
+1 212 661 2243

Fabiane Goldstein
CEO, InspIR Brazil
fabiane@inspirgroup.com
+5511 98103 0201

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