Disney's Q3 FY16 Earnings

CaptainAmerica

Premium Member
Original Poster
No. Down 2%.
Honestly, are you making things up on purpose? Q2 was flat. It would have been up, as xdan suggested, but the favorable Easter shift was offset by an unfavorable New Year's shift.

Q2: Operating income at our domestic operations was up over 20% in the quarter, and margins were higher by about 300 basis points. Attendance at our domestic parks was comparable to the second quarter last year and per capita spending was up 8% on higher admissions, food and beverage, and merchandise spending. Per room spending at our domestic hotels was up 5% and occupancy was down one percentage point to 88%.

Second quarter results reflect the unfavorable impact of the New Year's holiday shifting into our first fiscal quarter, which was largely offset by the favorable impact of the shift of the Easter holiday. The shift of the Easter holiday period will also have an impact on Parks' third quarter results, as the holiday period fell in the second quarter this year, whereas the holiday period fell during the third quarter last year. As a result, about $90 million in operating income was shifted into Q2 that was recognized in Q3 last year.
 

SorcererMC

Well-Known Member
They can't just make crap up.

Well, they can to a certain extent as WDW attendance numbers are not released publicly. Hence the skepticism here. It is difficult to independently verify this information, which is why I'm curious as to what the tourism trend may be for Orlando; WDW's numbers may of course diverge from those trends. Last week, SeaWorld cited Brazilian tourism down for them 40%; it doesn't mean that WDW would see same or that a decline in Brazilian tourists would have the same impact on WDW.
 

SorcererMC

Well-Known Member
It doesn't matter. They can withhold information, but to the extent that they do release information, they can't lie.
Point taken. I'm also thinking - in terms of forward-looking statements on earnings guidance, wouldn't they want to establish expectations for 4Q on attendance being down? But they are saying it's strong.

Edit: and so long as revenue continues to be up, it may not matter so much ('dynamic pricing').
 

CaptainAmerica

Premium Member
Original Poster
Point taken. I'm also thinking - in terms of forward-looking statements on earnings guidance, wouldn't they want to establish expectations for 4Q on attendance being down? But they are saying it's strong.

Edit: and so long as revenue continues to be up, it may not matter so much ('dynamic pricing').
Fiscal Q4 (calendar Q3, July-September) should generally be the cleanest comparison because it's free from shifts of Christmas, New Year's, or Easter.
 

Ripken10

Well-Known Member
My guess is that DVC members and other frequent guests who "know better" tend to stay away during busy times as a proportion of the total guest population. With room occupancy up around 90% consistently, I think it's inaccurate to use booking rates, especially within the DVC points system, as a proxy for attendance.
Question - wouldn't the availability of DVC rooms be insignificant for the most part. The rooms are already paid for, so if the rooms are available, that just means either (1) points are going unused or (2) the availability of rooms exceeds points sold due to them always selling DVC rooms. Probably a combination of both, but it doesn't negatively effect them to having points go unused. They essentially get someone paying for a room but not staying in it. right?
 

SorcererMC

Well-Known Member
FWIW and with a market focused on earnings, after hours trading on Disney's stock was down 1.8% from close at 96.67 to 94.41. But after opening this morning and as of 10:20am, it is up to 99.00 from yesterday's close (+2.51%).
 

Disneyhead'71

Well-Known Member
I believe some of the problem is some of us are talking about WDW's attendance decline. And some of us are talking about the entire domestic P&R division.
Directly from the Q2 2016 report:

"Attendance at our domestic theme parks was relatively flat, as an increase at Disneyland Resort was offset by a modest decrease at Walt Disney World Resort."

And this quarter we know from the report that Domestic P&R are down 4% with Disneyland being up again.

So everything I am seeing is that WDW is trending down in attendance.
 

ford91exploder

Resident Curmudgeon
Question - wouldn't the availability of DVC rooms be insignificant for the most part. The rooms are already paid for, so if the rooms are available, that just means either (1) points are going unused or (2) the availability of rooms exceeds points sold due to them always selling DVC rooms. Probably a combination of both, but it doesn't negatively effect them to having points go unused. They essentially get someone paying for a room but not staying in it. right?

Unrented DVC rooms supposedly are released to CRO at the the 60 day mark and the revenue supposedly goes to offset member fees - though I'm sure the payment to DVC is nominal and the majority of the benefit goes to CRO. Based on availability I think but have no proof that rooms are being released to CRO long before the 60 day mark especially since prime room classes this year have not even been available at the 11 month mark. And by 'prime' I mean GV's and 2 Br accomodations not the 'value' villas.
 

ford91exploder

Resident Curmudgeon
I believe some of the problem is some of us are talking about WDW's attendance decline. And some of us are talking about the entire domestic P&R division.
Directly from the Q2 2016 report:

"Attendance at our domestic theme parks was relatively flat, as an increase at Disneyland Resort was offset by a modest decrease at Walt Disney World Resort."

And this quarter we know from the report that Domestic P&R are down 4% with Disneyland being up again.

So everything I am seeing is that WDW is trending down in attendance.

The key of course is does the pace accelerate as time wears on, The increases at DL are not surprising as the 60'th and associated activities will draw in additional visitors.
 

ford91exploder

Resident Curmudgeon
I was quoting from the Q&A vs. earnings statement.



As far as Bob Iger is saying, yes. It could be from increased domestic attendance as well. It sounds like dynamic pricing has increased the guest spending and lowered domestic attendance though. I would like to verify the intl tourism trend independently, or see what will be reported for 4Q. A noticeable shift may not have occurred - yet.

Love the voodoo spending reports out of Disney according to @ParentsOf4 their most important metric PRGS (per room guest spending) is DOWN 1.3% YoY
 

CaptainAmerica

Premium Member
Original Poster
Unrented DVC rooms supposedly are released to CRO at the the 60 day mark and the revenue supposedly goes to offset member fees - though I'm sure the payment to DVC is nominal and the majority of the benefit goes to CRO. Based on availability I think but have no proof that rooms are being released to CRO long before the 60 day mark especially since prime room classes this year have not even been available at the 11 month mark. And by 'prime' I mean GV's and 2 Br accomodations not the 'value' villas.
Florida timeshare law is extremely strict. If they're playing games like you allege, it's extremely unlikely that DVC is any part of it.

Love the voodoo spending reports out of Disney according to @ParentsOf4 their most important metric PRGS (per room guest spending) is DOWN 1.3% YoY
I'd suggest that PCGS is more important than PRGS. Higher occupancy actually has a negative effect on PRGS, which is a bit backwards.
 

xdan0920

Think for yourselfer
Question - wouldn't the availability of DVC rooms be insignificant for the most part. The rooms are already paid for, so if the rooms are available, that just means either (1) points are going unused or (2) the availability of rooms exceeds points sold due to them always selling DVC rooms. Probably a combination of both, but it doesn't negatively effect them to having points go unused. They essentially get someone paying for a room but not staying in it. right?

I was simply adding a bit of anecdotal evidence to the "are the parks less crowded" question. Typically at least some of the DVC resorts are booked by this point. It struck me as strange that there would be so much "studio" availability across the board. Lending credence to the idea that attendance is trending downward.
 

SorcererMC

Well-Known Member
I believe some of the problem is some of us are talking about WDW's attendance decline. And some of us are talking about the entire domestic P&R division.

FYI for quick reference or for anyone who hasn't read the earnings report - not the numbers, but the segment results statements on P&R from the Q3 FY16 earnings report:

Parks and Resorts

Parks and Resorts revenues for the quarter increased 6% to $4.4 billion and segment operating income increased 8% to $994 million. Operating income growth for the quarter was due to an increase at our domestic operations, partially offset by a decrease at our international operations. Results were adversely impacted by the absence of the Easter holiday, which occurred in the third quarter of the prior year compared to the second quarter of the current year.

Higher operating income at our domestic operations was due to guest spending growth and lower costs, partially offset by lower volumes. The increase in guest spending was driven by higher average ticket prices at our theme parks and cruise line. Lower costs reflected decreases in labor and marketing costs from efficiency initiatives. Costs also benefited from lower infrastructure costs due to timing and a decrease in fuel costs. These decreases were partially offset by higher depreciation, labor and other cost inflation and costs associated with new attractions. The decrease in volumes was due to lower attendance, partially offset by higher occupied room nights.

Lower operating income at our international operations was due to higher pre-opening costs at Shanghai Disney Resort and lower attendance and higher operating costs at Disneyland Paris. These decreases were partially offset by cost efficiency initiatives as well as higher volumes and guest spending at Hong Kong Disneyland Resort.
 

ford91exploder

Resident Curmudgeon
Florida timeshare law is extremely strict. If they're playing games like you allege, it's extremely unlikely that DVC is any part of it.


I'd suggest that PCGS is more important than PRGS. Higher occupancy actually has a negative effect on PRGS, which is a bit backwards.

I've been DVC a LONG time, It's only been the past couple of years that reservations have been 'unavailable' at the 11 month window, As to regulatory Disney is required to report availability to the STATE not to the membership so Disney can do what it pleases as long as they comply with the letter of the law in reporting and that data is not available to the public.

Interestingly enough this lack of availability at 11 months began when the DVC member meetings went to the 'no questions from the floor' format. How is the membership supposed to voice their opinions or question Why is this so.

There are indeed legitimate reasons why some room classes are not available (renovations, damage, new construction in the area, even revenue management) but there is no TRANSPARENCY in the process. And when those room classes are available via CRO at 11 Months but not DVC and in my case we are talking AKL/BLT where the majority of the rooms belong to DVC something ODD is going on.

Perhaps DVC management feels it's more beneficial to the members to cede the 'premium' room classes to CRO to offset member fee increases. If so that's a legitimate choice but the lack of transparency in the process is the problem.
 

CaptainAmerica

Premium Member
Original Poster
I've been DVC a LONG time, It's only been the past couple of years that reservations have been 'unavailable' at the 11 month window, As to regulatory Disney is required to report availability to the STATE not to the membership so Disney can do what it pleases as long as they comply with the letter of the law in reporting and that data is not available to the public.

Interestingly enough this lack of availability at 11 months began when the DVC member meetings went to the 'no questions from the floor' format. How is the membership supposed to voice their opinions or question Why is this so.

There are indeed legitimate reasons why some room classes are not available (renovations, damage, new construction in the area, even revenue management) but there is no TRANSPARENCY in the process. And when those room classes are available via CRO at 11 Months but not DVC and in my case we are talking AKL/BLT where the majority of the rooms belong to DVC something ODD is going on.

Perhaps DVC management feels it's more beneficial to the members to cede the 'premium' room classes to CRO to offset member fee increases. If so that's a legitimate choice but the lack of transparency in the process is the problem.
Fair enough. My perspective is not that of a member, just an investor with experience analyzing financial statements. Is there nothing in the contract that says Disney must provide enough inventory to meet demand? It seems inappropriate that they'd be allowed to withhold inventory if the contract states 60 days.

As an aside, I was under the impression that the premium room classes aren't wanted by DVC members anyways. I was looking into DVC resale awhile back and I was led to believe that the most difficult rooms to get were the "cheap" (in terms of points) units... values, studios, standard views.
 

ford91exploder

Resident Curmudgeon
Fair enough. My perspective is not that of a member, just an investor with experience analyzing financial statements. Is there nothing in the contract that says Disney must provide enough inventory to meet demand? It seems inappropriate that they'd be allowed to withhold inventory if the contract states 60 days.

As an aside, I was under the impression that the premium room classes aren't wanted by DVC members anyways. I was looking into DVC resale awhile back and I was led to believe that the most difficult rooms to get were the "cheap" (in terms of points) units... values, studios, standard views.

Like so many other things at Disney you have 2 basic classes of DVC member, One is the type who wants to do deluxe vacations at Disney annually and historically if you bought points for $100/pt and under as many of us did it was hard to beat the investment value (NOT AS A INVESTMENT VEHICLE) for years of vacations in a deluxe Disney room class and even investing the money in a high yield investment would not throw off sufficient cash to do so. If you were doing 1-2 BR accomodations your breakeven point was 3-5 years.

You also have the 'value' DVC member who is actively chasing the 'value' studio rooms and they will generally have 200 points or less. This is probably the more common DVC member but it gives them good value for the vacation dollar.

Now with point prices in the $185 dollar range It's really hard to 'break even' on a DVC investment now for most the breakeven if they buy now is 9-12 years which is a much different proposition financially.

One reason DVC is easy to sell is unlike other timeshares you are not locked into a particular accomodation type and time of year unfortunately that can lead to a lack of transparency if the leadership is not accustomed to sharing information freely.
 

Ripken10

Well-Known Member
I was simply adding a bit of anecdotal evidence to the "are the parks less crowded" question. Typically at least some of the DVC resorts are booked by this point. It struck me as strange that there would be so much "studio" availability across the board. Lending credence to the idea that attendance is trending downward.
I don't see how the occupancy of DVC can show this. It is already paid for, so at best it just shows that DVC members are going at other times, but even that wouldn't be reflective of that. It could, however, show that more people are banking their dvc points, possibly showing people are saving their points for when new things open (and as a result could mean it will be a case of demand is higher than supply when these things do open up...on the flip side it could also show that people borrowed points in the past, and have to wait now and that is the reason for more availability.). But even that would be a stretch imo
 

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