Hugh Burns
Hugh Burns

The duration of the coronavirus will define its depth. Yet it is becoming increasingly clear that the duration of the crisis—at least for now—is essentially unknown.

Government officials may speak about “opening” the economy, but it cannot be turned on and off like a light switch. Supply chains have been disrupted and unemployment already is escalating at an unprecedented pace. Fundamental health concerns also will remain, absent a vaccine, effective therapies or nationwide, systematic testing—none of which appear close. So, the question of when, and to what extent, workers and consumers are willing and able to return to offices, factories, stores, restaurants and the like remains almost impossible to answer. And, even as signs of “flattening the curve” begin to emerge in the U.S., the potential for a second wave of cases upon any loosening of societal restrictions cannot be ruled out.

So what are companies to do as they approach first quarter earnings season?

The SEC, in a rare statement, has encouraged companies not to highlight historical results, but to focus on “how its operations and financial condition may change as all our efforts to fight COVID-19 progress.” We believe there is a middle ground, however, between showcasing irrelevant historical results and making bold predictions amidst the uncertainty. We would advise a new level of detail as to what transpired with the business as COVID-19 took hold, particularly towards the end of Q1, and what the company has done so far to address it. These events present an opportunity to highlight trends that may be illustrative for the future—but without speculating.

For example:

  • What were the operational trends as your company progressed through the quarter?
  • What aspects of the business were most affected and how?
  • What have you done to mitigate the impact on revenue and how is that working?
  • What is your liquidity position and how did it change, particularly in March?
  • What have you done to lower costs? Reduce staff?
  • What actions have you taken to minimize service disruptions, as teams adapt to a new work environment?
  • What have been the trends so far in Q2?
  • How has your company contributed to the communities it serves?

The first quarter earnings cycle is likely to be a seminal moment in corporate America and an opportunity for every CEO to start setting the table for the next several quarters. We have been counseling companies to address the communications challenges head on: provide investors a true sense of recent performance and near-term path forward, avoid the temptation to speculate in ways that may not stand the test of time and adopt a posture and tone that demonstrates the type of leadership that will resonate with all stakeholders.


Hugh Burns is a founding partner at Reevemark.