PR Team: SM&A (Newport Beach, CA) and Financial Dynamics (San Francisco) Campaign: Investor relations to enhance stock value Time Frame: August 2002 - present Budget: $125,000
In 1998, SM&A went public at $12 a share. But the company, which provides its clients with services including proposal-management support, program management, systems engineering, and other support services, soon fell on hard times. In 1999, due to a string of acquisitions that failed to bear fruit, the company failed to perform as well as investors had hoped, and the stock price dropped below $1, leading the company to be delisted. SM&A founder Steve Myers returned as CEO, terminating the management team. The company had little ability to communicate with the Street, and when it did, the messages were inconsistent. Not only did SM&A not understand which metrics were important to Wall Street, but institutional ownership was low, analyst coverage nonexistent, and Wall Street's few impressions of SM&A were limited to the company's IPO, low earnings, and poorly executed acquisitions. Strategy In mid-2002, SM&A hired Financial Dynamics [then known as FD Morgen-Walke] to raise its visibility, and help increase the value of SM&A's stock. "We needed someone to help us make those calls to the right investors and analysts to get the notice we wanted," says SM&A CFO Cathy Wood. "One of the challenges is that SM&A was in such an obscure industry," adds FD VP Teresa Thuruthiyil. FD worked with SM&A to simplify the investment thesis of its unique business, improve management's communication skills with presentation training, and coach management with trial Q&A sessions to learn how to explain the company's poor historical performance. The firm and company also sought to enhance the investor audience with focused marketing and consistent messaging, as well as increase SM&A's visibility by developing relationships with financial and business media. Tactics FD targeted potential institutional investors, as well as sell-side analysts who would eventually cover SM&A, and analysts who were well regarded for their sector expertise. The firm focused on marketing and meetings that would lead to SM&A's inclusion in industry reports, updates, and investor conferences sponsored by national and boutique investment-research teams. And in the second half of 2002, FD and the company went on road shows that took SM&A's new management team to San Francisco, New York, Boston, and Milwaukee for meetings with analysts, media, and institutional investors. This was followed by more road shows to Richmond, VA and New York in early 2003. Media and analyst outreach served as a conduit to institutional investors, leading to coverage by Dow Jones, Reuters, and the Los Angeles Times. "The coaching really helped," says Wood. "We were able to refine our message, and developed the ability to deliver a consistent message. And that, with putting profitability in front of analysts, the media, and investors, got their attention." Results On July 1, 2003, SM&A's stock price closed at $11.75, approaching analysts' price targets of $12, and representing a near four-fold increase from its August 1, 2002 stock value of $3. On November 13, the stock was at $12.16. Trading volume on July 1, 2003 was 597,220 shares, more than a 100-fold increase from just 11 months earlier. And institutional investors went from owning just 3% of stock in August 2002 to now owning 48%. "Financial Dynamics has performed beyond our expectations," says Wood. Future "We're going to do more of the same," adds Wood. "It has been incredibly successful. We are putting a plan together for 2004 that will continue our success, and help us continue to get our story out. It's extremely important for us to do that."
