The Challenge:
A 100+ year old small-cap industrial company was replacing its CEO of 12 years. Shares had languished during much of that time and consistently traded at a mid-single-digit P/E multiple and at a considerable discount to direct peers. The new CEO and board vision for the company called for a strategic shift away from legacy low margin and capital-intensive end markets, and a reallocation of company resources toward higher growth verticals where its technologies and solutions had readily deployable commercial applications.
Alpha’s Solution:
- Alpha integrated IR and PR team was engaged early in the process by the general counsel and board, allowing for the delivery of a fully developed communications packet to internal HR and IR teams on day one of the CEO transition.
- The comprehensive communications packet included a letter to employees, a letter to customers, a media holding statement, an announcement press release, and company townhall talking points.
- Alpha also developed an 18-month engagement and communications plan to reposition the company in the eyes of Wall Street and other key stakeholders, in order to enable the company to further capitalize on tangible improvements in business’ fundamentals driven by the new CEO’s strategy.
- The components of the IR portion of the plan included:
- Meeting history analysis to reallocate management’s time with investors and maximize ROI.
- Investor targeting with a bias for investors that seek companies experiencing structural accelerations in growth and earnings power.
- Messaging and materials review to identify the central themes and messages to emphasize throughout all investor communications.
- Benchmarking and goal-setting to better track the IR program’s progress and adjust course as needed.
- These efforts culminated in the company’s first ever investor day roughly 18 months into the new CEO’s tenure.
- Alpha drove the creation of materials for the event and assisted with the company’s presentation of its newly re-segmented reporting structure – in this case, a critical aspect of simplifying and enhancing the company’s Wall Street perception.
Results:
- Despite the surprise announcement of the outgoing CEO, the communication was well received by all stakeholders and set the foundation for a significant transformation of the company.
- The company’s shareholder base has completely turned over into a more long-term focused, growth-biased institutional list.
- Growth ownership expanded from 16% of the institutional base 2.5 years prior to 35% today.
- Several “lead-steer” investors (Fidelity, T. Rowe Price, AllianceBernstein, Capital Group, Wellington) are now top-15 shareholders.
- The sell-side coverage expanded from two analysts to six over the course of three years.
- Wall Street visibility is greatly enhanced through a more robust and diverse conference and roadshow calendar.
- The 2.5-year period following the investor day saw the share price appreciate over 1,000%.
