A profile of Carol DiRaimo, joint winner of the 2017 IR Magazine Award for best US small & mid-cap IRO
Carol DiRaimo, vice president of IR & corporate communications at Jack in the Box, won three of this year’s IR Magazine Awards, and her ratings from the investment sector were way ahead of the field. Jack in the Box jumped 62 places to take third place in the overall rankings of IR performance in the US across all sectors and cap sizes. The firm won the award for best overall IR at a small or mid-cap and best IR in the consumer discretionary sector, while DiRaimo shared the best small & mid-cap IRO gong with Julie Tracy of Wright Medical.
Positive comments about DiRaimo abound in the investor community. Chris O’Cull of KeyBanc Capital Markets volunteers: ‘Carol responds quickly, thoroughly and accurately to requests, as she knows the company and the industry well. She never goes into hiding if, say, earnings are soft, and she’s very comfortable about going on the road whatever the news. She is one of the few people in IR I have no worries about hosting with experienced portfolio managers, as a really important ingredient in her success is that she has a seat at the table with the executives, and analysts and investors know that.’
Before Jack in the Box, DiRaimo spent 14 years with Applebee’s, the first seven in financial planning and reporting. She began her accounting career at Deloitte where she became a CPA. ‘A lot of people think accountants don’t have much personality,’ DiRaimo says – but of course IROs do, and she adds: ‘It was very satisfying to see the results in 2017. We’d won in 2011 but we were small cap then. Now we’ve grown to mid-cap and the recognition is even more gratifying because many mid-cap companies have more staff.’
DiRaimo had her IR baptismal broiling at Jack in the Box within months of starting in summer 2008. ‘I’d already had a trip planned to Europe in the fall and, while I was there, out of the blue came a bizarre mini-tender from a company we’d never spoken to – so, as many IR folks can appreciate, instead of vacationing, I was co-ordinating calls in California from Prague at 1.00 am, though the tender went away as suddenly as it came,’ DiRaimo recalls.
Since joining Jack in the Box, DiRaimo has seen the company change its ticker to JACK, and analyst coverage has grown to 17 sell-siders from the initial eight. ‘When I began, I targeted some of the more respected analysts for the industry,’ she says. ‘But I firmly believe not all coverage is equal: you feel some of them are just going through the motions, because they don’t even bother to read the information in our public filings or listen to what we say at webcast conferences.’
How they do it at Jack
It is a small team: DiRaimo handles all contacts with Wall Street, and is supported by her assistant Linda Wallace, along with Brian Luscomb, vice president of corporate communications and government affairs. Lean and effective IR depends on support from other departments, ‘especially financial reporting, analysis and planning,’ says DiRaimo. ‘And then just being attuned to what’s happening with both brands, such as touring restaurants with our Qdoba president to understand what’s happening in its 700 restaurants. Jack in the Box is in 22 states with more than 2,200 restaurants, but 70 percent of them are in California and Texas, so a lot of people on the East Coast have never been in one.’
That means DiRaimo often has to introduce analysts to the quirks of the business. ‘Tacos are our biggest-selling item,’ she points out, referring to the signature deep-fried specialty that Jack in the Box sells half a billion of annually. She also has to demonstrate how the firm is a ‘quirky cult-like brand on the West Coast, bringing back college memories for some analysts of going out at three in the morning. The restaurants are open 24 hours, and you can get anything on the menu at any time: egg rolls, teriyaki bowls and tacos as well the usual fries and shakes, breakfast at 5.00 pm or a burger at 5.00 am.’
At time of writing, the stock had ‘10 buys, six neutrals and one sell’, but DiRaimo does not treat ‘sell’ as a four-letter insult. ‘You know, some management people won’t travel with an analyst who is neutral, let alone a sell,’ she observes. ‘But I see it as an opportunity. About five years ago, there was a well-respected analyst who had a sell on us, and I went to the CFO and said I’d really like to travel with this analyst, who had missed our analyst day and I thought he’d missed some of the story. Despite some reluctance, in the end, I took the COO. It was a great trip and two days later we had a double upgrade from sell to buy.’
She shows similar broad-mindedness when tracking holders or meeting hedge funds, but notes a ‘fairly stable shareholder list’. One reason is that since 2012 the stock price has pretty much quadrupled, ‘but we know not everyone will stay for the ride.’ And she is also persistent in her targeting. ‘Some people will conclude, I’ve met the investor a lot of times and it didn’t buy my stock, so why waste my time? But I don’t buy that,’ she says. ‘I persist with a good firm over the years because we’ve had a good run, and the minute there is a pullback, that might well be the investor that will jump in to support your stock.
‘I sometimes travel alone, but we like for management to meet investors at least quarterly to see the whites of their eyes. Being on the West Coast can result in some short nights during earnings season. We release at night and have the earnings call in the morning, but we know the cycle: there is a flurry of notes up until midnight Pacific, but some publish at 3.00 am or 4.00 am – a tight window for a nap!’
Location, location, location
Of course, location is everything in the restaurant trade. ‘It’s hard when we have no Jack in the Boxes on the East Coast and few Qdoba locations in the New York area,’ DiRaimo concedes. Asked whether analysts double as food critics, she replies: ‘Some will go and check out what’s happening, but some wouldn’t be seen dead eating fast food. Several track social media mentions. We don’t use social media in IR, but they track what our marketing teams post to social media as well as customer reviews or searches on various sites. There are a lot of sources for information that don’t involve going to a restaurant.’
The social media obsession puzzles her. ‘Some companies have people tweeting during earnings calls, and I can’t see why,’ she says. ‘Snippets of partial information can easily be taken out of context. I can hardly get analysts to read a press release, so I’m not a fan of tweeting in IR.’
And it is essential to put information in context. ‘In February, we were one of the first companies to talk about the effect of the delayed tax refunds of $63 bn compared with the previous year. That’s a lot of discretionary spending, and it was lower-income consumers – our customers – who were affected,’ DiRaimo explains. ‘Jack in the Box customers don’t care about the stock market going up; they care about how much money they have in their pocket today and whether their jobs are safe.’
This much-lauded IRO’s post is clearly secure: at time of writing, she was celebrating promotion from vice president to chief IR & corporate communications officer, in part to recognize the IR Magazine Awards. Lenny Comma, Jack in the Box’s chairman and CEO, refers to ‘her unique perspective, out-of-the-box thinking and unwavering passion for our business that make her one of the most respected executives at the table.’
This article appeared in the summer 2017 issue of IR Magazine