Around the world, two thirds of IR teams report into the chief financial officer. CFOs spent an average of 20 days on IR in 2023, compared with 14 days dedicated to the program by the CEO and six days typically spent by other senior management figures, according to the IR Magazine Global Investor Relations Practice Report 2023.
Here at IR Magazine, we’re diving into the people behind the numbers and speaking to global CFOs to hear about where they focus their energies when it comes to IR activities, how they decide which investor meetings to join and what they look for from the IR program.
To kick-start our new CFO series, we talk to Kurt Barton of Tractor Supply Company (TSC), the IR Magazine Award-winning Fortune 500 company loved by America’s rural community, with Mary Winn Pilkington, senior vice president of IR and public relations, joining the conversation.
What is it you look for in investor relations?
Barton: You have to understand that not all target investors clearly understand your business, your culture and all the other critical aspects that are important for the long-term investor in particular. This applies to all companies and all IR teams, I think.
I believe investor relations is about storytelling. It’s a way of taking all of your critical assets and values and being able to bring them to life. That’s key for your investor relations team: to be a great representation of everything that makes up your company.
In our case, what’s unique to us is that we are a unique lifestyle retailer, one that serves a unique customer – and that customer may well not be a Wall Street analyst. We serve a rural customer who lives on the land, who deals with and has a passion for animals. And our culture is embedded in a high-touch customer service, which is a huge part of why our customers are so loyal. So IR has to be able to help an investor understand why that is a differentiator, why that brings value, why that helps create a defensible position in our market, because it’s rather distinctive.
That’s a skill – and an extremely important one in turbulent or volatile times, when the investor relations team can bring confidence and stability to the investment community that we’re resilient.
How does TSC management measure the success of IR?
Barton: I look at three main areas. Hal [Lawton, TSC’s CEO] and I measure success with regards to relative value, so within retail and against our peers [that’s] the P/E ratio on our stock price.
Other things we look at from a productivity standpoint is where we stand on targeted investors, for example. We talk often about the plan for the year, how much exposure TSC and our management team is getting with our top shareholders, as well as exposure to the targeted shareholders that we want to get into our top shareholder list. It’s important to continue to tell the story to those targeted shareholders.
We also look at the top shareholder list to ensure we are making progress with regard to those long-term investors that bring continued volume, value and stability to our stock price.
What percentage of investor one-on-one meetings do you attend?
Pilkington: It’s typically around 10 percent to 15 percent, but in 2023 that was up to around 25 percent because we changed how we did our post-earnings calls, with a jump off the back of those.
How do you decide which investor meetings to attend in person?
Pilkington: We have this contingency of top shareholders that we really want Kurt to spend time with, because he’s that strategic view, that capital allocation approach that’s so important to reinforce.
If it’s just next-quarter or annual-modeling questions or general business, I will take that meeting – but then again, we have a contingency that will ask to speak to Kurt after those calls, which we always arrange.
Strategically, we want to get Kurt in front of investors, because our management team is a competitive advantage, I believe.
What’s your favorite aspect of the IR work you do? And your least favorite?
Barton: My favorite and least favorite things are perhaps obvious in their contrast. By far my favorite – and I think the most valuable – is to speak about the uniqueness of our business, being able to take and translate and create a vision of what it’s like to serve this rural lifestyle that many of the folks on the other side of the table haven’t lived and don’t necessarily understand. There’s so much value in that uniqueness. And it’s so important for any investor to understand it.
The opposite of that – and it comes with the job and depends a lot on who you’re having the meeting with – is having consistent, short-term-focus modeling questions. That’s my least favorite only because it doesn’t really give us the opportunity to share the story and we like to focus on investors that have the same focus we do, which is long term.
What have been your biggest IR challenges to date?
Barton: This is something more individual, but many CFOs could probably reflect back and identify with this moment. That early learning curve, where you’re getting up to speed as a new CFO, making that transition and really learning and developing your style and your art of IR is a challenge.
Learning how to tell the individual across the table what he or she needs to know versus maybe what he or she is asking is a balance and a challenge for any new CFO moving outside of the core focus of finance and accounting and becoming the brand and the spokesperson for the business.
The other challenge is again about getting investors and analysts who may not truly understand the big difference between the consumer need and lifestyle in say, the urban metropolis, where all of your goods and groceries can be delivered to your front porch, and what life is like in rural America. What is just natural to many folks – including me, growing up in the Midwest – is maybe not so natural in a rural area.
That was an early IR challenge for me but once you get that you can really play off it and then have fun with it, you can tell some great stories that really pop and resonate with the investor.
What’s the one tip you’d share with other CFOs from an IR perspective?
Barton: Have the ability to say no – and know when to say no. That’s principally related to the fact that there are going to be so many demands that if you tried to meet everybody’s request it would become unmanageable. Mary Winn has roughly 30 sell-side analysts, for example. So you’ve got to be able to pick where you’re going to say yes, which can be tough, but the majority of your time is best spent running and managing the business.
Finally, what are your favorites when it comes to TSC stores or products?
Barton: By far, it has to be Chick Days because it’s so different. The minute you walk in the store, you hear the chirping of birds and we also have a bit of a mini zoo there.
Then, what’s been so neat during my career at TSC is where we somewhat brought backyard chickening to the market – we made it so simple. Many people, including myself, realized during Covid-19 that chickens are like pets – pets that produce eggs. So it’s this really neat, fun, backyard phenomenon that we have the pleasure of being the experts in.
I’d say the second thing is some of the big-ticket products we sell, like a zero-turn riding lawnmower or a log splitter. There’s something therapeutic about getting on your riding lawnmower and going in and mowing something down or just going out to split wood. You get out in the fresh air and you’re doing something and you’re just getting that outdoor therapy.