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New Trend in Sales Reporting? (Monthly) An Editor Can Hope

November 16, 2020 12:00 AM

JAMIE BUTTERS: Chief Content Officer overseeing Automotive News, its website and reporting teams


Dave Zuchowski remembers when sales reporting switched to monthly from every 10 days. He was out in the field for Ford back then, and folks used to joke — gallows humor during a recession — that if you were going to miss your forecast, it would be better to just get yelled at once at the end of each month instead of two or three times during the month and again at the end.

Pulling together the numbers every week and a half was a grind, he said, and with so many sales coming at the end of the month, the interim reports weren't terribly useful. So switching to monthly reporting — in addition to avoiding bad headlines during a downturn — just made better sense.

That's how incentives are lined up. It's how bonuses are earned. It's how marketing promotions run. And it's how seasonal adjustments are defined. The business, by and large, operates on a monthly basis.


That reporting standard held for almost three decades before General Motors started a trend toward quarterly reporting two years ago. The largest U.S. automaker said quarterly reporting would smooth out monthly fluctuations to give a truer — if less precise — picture of the sales performance.

"Hogwash," I said then and say now (when polite ears are within range). Yes, it crossed a few items off of the corporate to-do list. But mostly it appeared to be an effort to avoid reporting sales declines after the 2017 peak. And — perhaps not coincidentally — GM stopped reporting monthly numbers right when Ram pickups started outselling the Chevrolet Silverado for the first time in history.

If you can't beat 'em, play fewer games.

‘A good thing'
Automotive News has steadfastly opposed the move, though I'm the first to admit that we are not a disinterested party: Sales and earnings reports are crucial to the work we do as financial journalists.

I was glad to hear from Zuchowski, who went on to run Hyundai's U.S. sales arm, that we are not alone in favoring monthly reporting.

"If 10 days was too often, I thought quarterly was not often enough to give [investors and news media] a good external view of what's going on," he said, adding: "I like the idea of monthly — I think monthly is the right way to do it."

Ford Motor Co., Fiat Chrysler Automobiles and most European brands followed GM's example — until this month, when Ford reversed course and resumed disclosing monthly sales.

Jim Farley spoke passionately on his first earnings conference call as CEO about his determination to be more transparent on key indicators so investors would be able to see and believe in the company's turnaround.

Quite frankly: That's how the system is supposed to work.

Zuchowski, now a senior partner at consulting firm Motormindz and helping dealers digitize their operations as chief strategy officer at Unite Digital, said he doesn't have inside knowledge of Farley's thinking. But he likes it.

"I think he should be commended for the visibility," he said. "I think getting greater visibility into the operating capabilities of the company is a good thing."

Don't bet on change
Will it attract more investors to Ford, thus compelling GM and the future Stellantis to revert to the old norms? An editor can dream, but I'm not holding my breath.

There is a more cynical way to view Ford's more frequent reporting. It comes in a quarter when Ford is launching a redesigned F-150 pickup, the all-new Bronco SUV and the Mustang Mach-E electric crossover. On the brink of what promises to be a strong sales streak, one might think that the company is just looking to get more positive headlines from its product momentum.

Zuchowski conceded that it would be tough to make such a move if the company was coming off a record year and had an empty product pipeline.

I had often suspected that not reporting monthly gave an automaker a competitive advantage — getting to see rivals' results without showing them your own.

Zuchowski helpfully disabused me of that idea. Industry players have access to databases that are updated almost in real time, he said, breaking down retail and fleet sales by market and product line. Sales reports are for the news media and investors.

While most of the credit — or blame — for the trend goes to GM, it arguably started with Tesla. The electric vehicle maker and its CEO, Elon Musk, have challenged convention at almost every turn, in ways that have been good and not so good.

Musk and Tesla turned EVs from a noble sacrifice into an indulgence. But Musk also has continued to run the company like a private startup, including reporting only quarterly and only global figures. That was fine when it was just one factory making one model sold mostly in the U.S. and Norway. Tesla's opacity becomes more problematic for the industry as it grows in size and complexity.

But it's also the most valuable automaker in the world after a streak of small quarterly profits aided by selling green-car credits to incumbent rivals. So it's unlikely to change.

"As long as their market cap stays where it's at, people aren't going to demand much more visibility because they're happy with the way things are. But if that starts to fluctuate — as it inevitably will — then they might get requests for greater visibility and more timely reporting," Zuchowski said. "Right now, it's hard [for shareholders] to complain about anything they're doing."
 

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GM went quarterly to mimic trendy Tesla. Zero/zero/zero.
 

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Discussion Starter #3 (Edited)
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But mostly it appeared to be an effort to avoid reporting sales declines after the 2017 peak. And — perhaps not coincidentally — GM stopped reporting monthly numbers right when Ram pickups started outselling the Chevrolet Silverado for the first time in history.

I don't know about this line of thinking. It doesn't hide anything, it puts the reporting off for a little bit, but if you have a decline you are still going to show it on the quarter. I think it's more about ad revenue - news outlets get more clicks with people interested in seeing monthly volume. They only get 1/3 of the revenue with quarterly reporting. And, on the flip side, if you are hiding bad results it also hides good monthly results - who wants to hide good results?

And the whole "transparency" thing is kind of wishy washy too - if they want to really be transparent, then report your financials monthly.

I did like the monthly, was fun to see the data and glad that at least Ford is back to doing it.
 

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I don't know about this line of thinking. It doesn't hide anything, it puts the reporting off for a little bit, but if you have a decline you are still going to show it on the quarter. I think it's more about ad revenue - news outlets get more clicks with people interested in seeing monthly volume. They only get 1/3 of the revenue with quarterly reporting.

And the whole "transparency" thing is kind of wishy washy too - if they want to really be transparent, then report your financials monthly.

I did like the monthly, was fun to see the data and glad that at least Ford is back to doing it.
WHAT!? Sure it does, if your boss only asked you for an update on your projects once a quarter vs. every month; you don't see the difference?

WRONG; rolling-up full financials every month, would be burdensome and very time consuming; "internal tracking" vs. public reporting is very different.

I thought you were in accounting?

------------------

As stated in the article, weekly made zero sense because the way most deals martialize and sales promotions are timed/structured.

- (internally) ALL Automakers still use monthly as their guide, they just don't share it publicly. (that's the opposite transparency)
 

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You still have to pay the piper on the quarter, it buys you a little time but the results are the same. And yes, it gives you the opportunity to hide a little bit and gives you more time to make up a shortfall, but at the same token you get no immediate credit for doing well. So you think hiding the downside at the expense of not beating your chest at an upside is worth it? Seems like a wash to me.

Not as much work as you think to report financials monthly, higher level numbers can be worked up just as easily volume (Meaning total sales, COGS, OPEX, etc.). All you need is a disclaimer that the numbers are unaudited. All the work you are referring to revolves around providing auditors with backup for the quarterly and annual reports. Put that "unaudited" disclaimer on it then your work load falls by 99.9%, it becomes little more than pressing a few buttons. The only sticking point is the legal perspective of issuing unaudited numbers. Don't forget that all publicly traded companies close their books monthly, 99.999% of the work is already done. Just a couple more topside entries to get the financials into "Wall Street" format.
 

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Discussion Starter #7
You still have to pay the piper on the quarter, it buys you a little time but the results are the same. And yes, it gives you the opportunity to hide a little bit and gives you more time to make up a shortfall, but at the same token you get no immediate credit for doing well. So you think hiding the downside at the expense of not beating your chest at an upside is worth it? Seems like a wash to me.
You got a couple things right in there!..............


Not as much work as you think to report financials monthly, higher level numbers can be worked up just as easily volume (Meaning total sales, COGS, OPEX, etc.). All you need is a disclaimer that the numbers are unaudited. All the work you are referring to revolves around providing auditors with backup for the quarterly and annual reports. Put that "unaudited" disclaimer on it then your work load falls by 99.9%, it becomes little more than pressing a few buttons. The only sticking point is the legal perspective of issuing unaudited numbers.
Monthly US Dealer Sales verses a Financial Statement, for a Global Company; "an be worked up just as easily volume"
- Yeah-sure WOW, OK.

Love the idea about a disclaimer I would use something like"
*** These numbers are pulled from our back side and absolutely worthless.

Q3 ended Wednesday, September 30th, GM reported earning on Thursday, November 5th, 5-weeks and a day later, it takes that long for a reason. Throwing something together on the fly, would be of little value, and majority of the time, so far off, the only consistent thing they would to is mis-lead.
 

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You got a couple things right in there!..............




Monthly US Dealer Sales verses a Financial Statement, for a Global Company; "an be worked up just as easily volume"
- Yeah-sure WOW, OK.

Love the idea about a disclaimer I would use something like"
*** These numbers are pulled from our back side and absolutely worthless.

Q3 ended Wednesday, September 30th, GM reported earning on Thursday, November 5th, 5-weeks and a day later, it takes that long for a reason. Throwing something together on the fly, would be of little value, and majority of the time, so far off, the only consistent thing they would to is mis-lead.
In this conversation, there is one person writing responses dripping with sarcasm but doesn't work in the field and another person with extensive background in accounting for a worldwide fortune 50 company coupled with a background in public accounting and with strong experience all the way from month end reporting to preparing annual/quarterly reports as well as what it takes to complete an audit.

You should ask questions vs. mocking what you clearly don't understand. You do not understand the difference between audited quarterly numbers issued to Wall Street vs. what I'm proposing, correct?

The first maybe 4 days is spent closing the books and rolling up the worldwide results and providing the numbers for management review (management reviews probably start on day 2) and to submit for audit. The other 4+ weeks is spent pouring over them, writing up footnotes, reviewing 20 times over and answering audit questions. In a well run company any audit adjustments will be small, more for show so the auditors can beat their chest to show what great value they provide (which, in general, they don't). In other words, the materially correct numbers are already there by day 3 or 4 with work that is normally done on a monthly basis.

So if topside, simple one pager, financials are issued with "unaudited" plastered on them it can be done quickly and easily with only minor, incremental steps needed. Only thing is the SEC needs to sign off on doing something like that.
 

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Discussion Starter #9
In this conversation, there is one person writing responses dripping with sarcasm but doesn't work in the field and another person with extensive background in accounting for a worldwide fortune 50 company coupled with a background in public accounting and with strong experience all the way from month end reporting to preparing annual/quarterly reports as well as what it takes to complete an audit.

You should ask questions vs. mocking what you clearly don't understand. You do not understand the difference between audited quarterly numbers issued to Wall Street vs. what I'm proposing, correct?

The first maybe 4 days is spent closing the books and rolling up the worldwide results and providing the numbers for management review (management reviews probably start on day 2) and to submit for audit. The other 4+ weeks is spent pouring over them, writing up footnotes, reviewing 20 times over and answering audit questions. In a well run company any audit adjustments will be small, more for show so the auditors can beat their chest to show what great value they provide (which, in general, they don't). In other words, the materially correct numbers are already there by day 3 or 4 with work that is normally done on a monthly basis.

So if topside, simple one pager, financials are issued with "unaudited" plastered on them it can be done quickly and easily with only minor, incremental steps needed. Only thing is the SEC needs to sign off on doing something like that.


Thanks for proving my point!


Depending on holidays and what day the months ends on, sales numbers are "rolled-up" overnight and released in basically 9 or 10 hours.
(release between 8:00-10:00am EST, West Coast Dealers closed less than 12 hours earlier.


Just refreshing your memory of what you said...........

Not as much work as you think to report financials monthly, higher level numbers can be worked up just as easily (as) volume.

And again, they would be "garbage" numbers.
 

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Thanks for proving my point!


Depending on holidays and what day the months ends on, sales numbers are "rolled-up" overnight and released in basically 9 or 10 hours.
(release between 8:00-10:00am EST, West Coast Dealers closed less than 12 hours earlier.


Just refreshing your memory of what you said...........




And again, they would be "garbage" numbers.
They would not be garbage numbers and the closing process is done every month, this would be very little work to add to the existing, normal process.

I'm glad you think you've scored a major victory, but I don't see where your win is. But I'm not going to argue endlessly about something that will most likely never happen. Bottom line is the work is done every month, issuing monthly high level financials to the public would be little effort and they'd have it less than 5 days from the end of the month vs. waiting well over a month for quarterly or annual reporting.
 

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They would not be garbage numbers and the closing process is done every month, this would be very little work to add to the existing, normal process.

I'm glad you think you've scored a major victory, but I don't see where your win is. But I'm not going to argue endlessly about something that will most likely never happen. Bottom line is the work is done every month, issuing monthly high level financials to the public would be little effort and they'd have it less than 5 days from the end of the month vs. waiting well over a month for quarterly or annual reporting.
He doesn’t even know how the close works
 

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Discussion Starter #13
They would not be garbage numbers and the closing process is done every month, this would be very little work to add to the existing, normal process.

I'm glad you think you've scored a major victory, but I don't see where your win is. But I'm not going to argue endlessly about something that will most likely never happen. Bottom line is the work is done every month, issuing monthly high level financials to the public would be little effort and they'd have it less than 5 days from the end of the month vs. waiting well over a month for quarterly or annual reporting.
No, Ed definitely does not have an understanding and I'd say not interested in learning.

Glad I'm not the one arguing 9 hours and 5 days are the same..............


Not as much work as you think to report financials monthly, higher level numbers can be worked up just as easily (as) volume.
As as you stated, you'd have to include a disclaimer that they are unaudited, translated that means, "they might not be right, so don't take them too seriously" aka "garbage".

9 Hours = 120 hours
 

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Glad I'm not the one arguing 9 hours and 5 days are the same..............




As as you stated, you'd have to include a disclaimer that they are unaudited, translated that means, "they might not be right, so don't take them too seriously" aka "garbage".

9 Hours = 120 hours
A couple of days doesn't mean they aren't relevant.
 

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Discussion Starter #15
A couple of days doesn't mean they aren't relevant.
Companies often give "guidance" mid-quarter, if it's outside of what people are expecting.

I never said "a couple days" meant they aren't relevant; I said "5 days" is greater than 9 hours, and since there is only 5 weekdays in a week, 5 days to roll-up numbers turns into 7 or 8.

And you've still got that asterisk * Un-Audited, meaning please don't hold us to these, because they aren't official and verified; we through them together and have no idea why they are what they are.

Appreciate you expertise.


-------------------------------------

Hey did you hear!? Ford is going to start reporting sales number on a monthly basis! (and based on October, Inventory and Production too!)


:woot:
 

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Companies often give "guidance" mid-quarter, if it's outside of what people are expecting.

I never said "a couple days" meant they aren't relevant; I said "5 days" is greater than 9 hours, and since there is only 5 weekdays in a week, 5 days to roll-up numbers turns into 7 or 8.

And you've still got that asterisk * Un-Audited, meaning please don't hold us to these, because they aren't official and verified; we through them together and have no idea why they are what they are.

Appreciate you expertise.


-------------------------------------

Hey did you hear!? Ford is going to start reporting sales number on a monthly basis! (and based on October, Inventory and Production too!)


:woot:
That's where I think you aren't getting it. The month end close process is already being done. The incremental work to do this reporting summary will be minimal, literally pressing a couple of buttons.

Let me clarify what "audited" means as most people don't understand. "Audited" means the CPA's are certifying that the audited company has the necessary controls are in place to prevent material misstatements. Auditors are not checking through every transaction (or even .0001%) as it will be impossible due to the shear quantity. Say a company has one million sales invoices, auditors might physically look at a couple of hundred at the most. That's how unscrupulous companies, like Enron, were able to pull the wool over the eyes of the auditors. In other words, auditors are NOT doing what most people think they are doing.

So, now you ask, what does this have to do with our made up scenario of a company issuing monthly abbreviated financials? First, step back that we have the annual attestation of the auditors stating that the company has the necessary controls in place to issue materially correct financials, then couple that with their lesser scope quarterly reviews further attesting the the soundness of the issued financials. This quarterly/annual work will be used as guidance to the public that the abbreviated financials are reliable. Also, the same SEC rules will apply to any unaudited statement** - if you are issuing inaccurate financial data you are opening the door to SEC audits and censuring, which will of course lead to their stock tanking. If a company is playing with their unaudited numbers it will quickly come out. A well run company is not going to take that risk. And to re-emphasize what I said earlier, auditors generally are NOT making material changes to the reported financials.

**as in companies currently provide a lot of unaudited data to Wall Street, like guidance of what the upcoming year will be. And, for example, when Musk started running his mouth with inaccurate numbers the SEC came in and slapped him around a bit.
 
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