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Earnings Calls in the Age of COVID-19: Proceed with Caution

May 1, 2020

Canadian public issuers are grappling with the COVID-19 pandemic and its implications for earnings calls and disclosure. This bulletin highlights certain considerations for earnings calls that prudent management teams of Canadian public issuers should bear in mind as they navigate the next several quarters, which will be far from the norm and subject to higher scrutiny.


Businesses across all industries have taken exceptional measures to adapt to the direct and indirect consequences of the COVID-19 outbreak, in some cases to survive and in other cases to seize new opportunities. Considering this disruption, investors and other key stakeholders are paying close attention to the current operational and financial standings of issuers. 

In April 2020, the Securities and Exchange Commission (SEC) issued a joint statement providing guidance for U.S. issuers in connection with earnings releases and analyst and investor calls. In this guidance, the SEC recommends that such issuers disclose information addressing investors’ key interests, including:

  • The issuer’s operational and financial position

  • The issuer’s response plan (for instance, the measures taken to protect the health and well-being of its workforce and customers) and its progression

  • The projected unfolding of the issuer’s operational and financial position as the COVID-19 outbreak, and responses to it, evolve.

Prudent Canadian issuers will set out as much information as is practicable to provide a high-level summary of their current operating status and their future operating plans reflecting the implementation of various COVID-19-related impact-mitigation measures, layering in specifics where instructive and setting an accurate tone that is not overly dismissive of negative impacts or overly hopeful of positive resolutions. In earnings press releases, management must disclose all material facts that would reasonably be expected to have a significant effect on the price or value of their securities, including equity and debt securities. In determining materiality, management should be cautious of using current financial thresholds alone as long-term strategic impacts can also be material. Employing measured judgment and precaution are paramount.

On earnings conference calls, management should be particularly mindful of the risk of selective disclosure – being when an insider or issuer shares non-public material information with a limited number of market participants. A dynamic environment, coupled with probing questions from investors and analysts and good intentioned management, risk creating fertile grounds for inappropriate disclosure of material non-public information. To prevent selective disclosure, issuers must ensure all material information has been disclosed in the earnings press release prior to the earnings call, and that presentations and other materials be made available on the issuer’s website. Management should also try to anticipate the questions that will arise from investors and analysts and prepare their responses in advance in order to ensure that the publicly available information is reflected and consistent.

In addition to commonly used non-GAAP financial measures, certain issuers may use new measures to depict a clearer picture of all the impacts of the COVID-19 outbreak on their financial performance, both current and future. An explanation of such non-GAAP financial measures, including a reconciliation to the most comparable GAAP measure, should be included in all written materials and a reference to such reconciliation should be made during discussions with investors and analysts. Moreover, management should highlight why any new non-GAAP financial measures help investors assess the impacts of the COVID-19 outbreak on the issuer.

Finally, issuers should review and update their risk factor disclosures, as applicable, and ensure that such risk assessments are responsive to the information disclosed by management during earnings calls. For additional information on COVID-19 risk disclosure, please see our April 2020 Blakes Bulletin: Anatomy of a COVID-19 Risk Factor.


Producing timely, accurate and comprehensive forward-looking information represents a challenge for most issuers in the current circumstances. The timeframe of the recovery is unclear, and the length of the slowdown and physical distancing requirements will likely determine the severity of the crisis. Meanwhile, expert projections regarding the contraction of the economy and the timing surrounding the easing of health and safety directives vary significantly. All this makes the challenge of formulating financial and operational projections even more daunting.

Certain issuers that had previously provided earnings guidance may choose to withdraw or revise that guidance, or announce that it is under review, as the underlying facts have changed, and the reasonableness of such guidance requires reconsideration. The reasoning behind such withdrawal, revision or review should be discussed in the issuer’s public disclosures and during its earnings call. Further, without providing earnings guidance as such, management may decide to share insight with investors and analysts on the issuer’s future, such as its plans for adapting to the new reality, its most pressing priorities or the current trends in its financial metrics. Management may also wish to outline the various scenarios underpinning the issuer’s plans to address the (ripple) effects of the COVID-19 outbreak, provided that there is a reasonable basis for such statements and, if any such statements are material, that they are first disclosed in a press release. Moreover, any forward-looking statements should be accompanied by carefully crafted cautionary statements, and reference to those statements should be made during the earnings call. The cautionary language should make it clear that:

  • The actual results could differ materially from those contained in the forward-looking statements

  • Certain material assumptions (concerning both internal matters as well as, potentially, macro-level variables, such as GDP and unemployment, or industry-specific variables) were applied in formulating the statements

  • Additional information about material assumptions and the material factors that could cause actual results to differ materially are contained in an identified, readily available written document or in a portion of such a document.

Finally, the issuer’s dividend policy may be the subject of questions from investors and analysts who are wary that the return on their investment may be reduced or suspended. Responses to such concerns should be carefully reflected upon and prepared prior to the earnings call, with any material developments disclosed by press release in advance. As the pace of recovery has yet to be determined with any specificity and the competing demands of multiple stakeholders will determine the capacity and willingness of an issuer to pay dividends, management should exercise caution to guard against over-committing.

As always, management needs to make its own assessment of what and how to disclose, as there is no “one size fits all” approach when engaging with stakeholders. Nevertheless, adequate disclosure and transparency will facilitate such engagement, which has become even more important in these uncertain times, while a clear understanding of the legal requirements will steer issuers away from the risk of problematic disclosure practices.

For further information, please contact:

Jeff Bakker                      403-260-9682
Howard Levine               514-982-4005
Matthew Merkley          416-863-3328

or any other member of our Capital Markets group.

Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.