Choose 1 of the following documents that you will provide talking points for as outlined below:
1. Management Discussion & Analysis
2. Tough Analyst Questions
3. Earnings Press Release
4. Risk Factors
Submit a ~250-500-word (you will not be penalized for going over) Microsoft Word or PDF Document with document choice, and the following details, depending on your choice above:
Option 1: Management Discussion & Analysis (MD&A)
The MD&A comes in three parts:
a. Part 1: Finance — This section of the MD&A assignment provides the overarching financial messages for the MD&A. Your important task is to identify the 3-5 overarching messages that the senior writer will need to touch on for the narrative they write on the company’s financial performance over the past year. Think: i) What is your overall “COVID” message? ii) What is the one main P&L takeaway? iii) What is the one main Balance Sheet takeaway? iv) What is the one main Cash Flow Statement takeaway? v) What other important financial takeaways might you have?
b. Part 2: Operations — This section of the MD&A assignment provides the 3-5 operations-focused high-level messages they need to integrate into their fuller operations narrative. While part 1 focuses on “the bottom lines” of the P&L and other sheets, the operations discussion focuses more on the top and middle lines — the revenue and the expenditures, and the resulting impact on the bottom line. You can include 1) top-line revenue; 2) direct costs; 3) indirect costs; 4) changes in assets (capital expenditures, etc.); 5) their impact on the company’s profitability.
c. Part 3: Guidance — This is your advice to the “CFO” on how other companies have handled guidance. I encourage you to find transcripts for late 2020, early 2021 earnings conference calls to see how the competition (Hilton, Marriott, Hyatt, Four Seasons Hotels and Resorts (not the landscaping company please), Carlson and Wyndham Worldwide, etc.) handled forecasting 2021. Did they give guidance? What did it look like? As we now know, 2021 didn’t exactly start well for most of these companies, but they have seen some recovery. Comparing this to what you know historically of HomeAway’s EPS ($0.56 in 2011, $1.77 in 2012, $2.05 in 2013, $2.60 in 2014, $3.22 in 2015, $2.78 in 2016, $3.89 in 2017, $5.45 in 2018, $3.89 in 2019 and $0.82 in 2020 — nicely mirroring Marriott, its closest competitor), what guidance would you give the guidance maker?
Option 2: Tough Analyst Questions
The CFO is going to get some tough questions during the earnings call. What do they look like? Anticipate 3-5 of the most challenging questions, and prepare a response for each.
Option 3: Earnings Press Release
The earnings press release is a critical communication tool. Its writer needs your help to get started. Your job is to look at existing past earnings releases from the competition (you know, Hilton, Marriott, Hyatt, Four Seasons Hotels and Resorts but not Landscaping, Carlson and Wyndham Worldwide, etc.), compare that to HomeAway’s information, and come up with the top 4-6 talking points to be included in this release. While the 10-K must be comprehensive, you can — to a certain extent, and within reason — pick and choose the information you share here. While certain information (earnings, EPS, etc.) is certainly expected by investors, you do have more flexibility in calling out the information that both plays in your favor and also sets expectations accordingly.
Option 4: Risk Factors
What are some of the top risk factors that we need to consider. This can be a very tight but ideally long list of just the names (not descriptions) of the bigger risk factors you think your IR team needs to include in their work fleshing out the full list of slightly more detailed risk factors. Be sure to include 3-4 internal (operations- and finance-related) factors, 3-4 stakeholder-related (i.e., supply chain, customer demand, etc.) factors, and 3-4 external (environmental, health, societal, political, etc.) factors.
