Guidance and Bridges

In this earnings environment, an executive is probably thinking (using their best Jim Mora Sr. voice). . .

Guidance, Guidance?! Are you kidding me? Guidance! I just hope I dont get slammed by a short investor on my Q&A this quarter.

In this environment, no CFO wants an investor holding his or her feet to fire for an overly detailed performance number.

So how do you give guidance without boxing yourself into a corner?

Bridges.

Bridges allow you to communicate how to go from A to B, driven by X, Y, and Z.

You have the performance for FY19 and you have at least an internal target for FY20.

The X, Y, and Z, are the building blocks that lead investors to your target.

If you are worried about being boxed in then provide very wide-ranging building blocks. Think one vague item drives one number e.g., a $100M tailwind from wholesale leasing.

Just remember, provide the lowest likely performance result you believe you can hit. Doing so sets you up for a nice beat at the end of the year.