Disney's FY20 Q3 Earnings (8/4/20)

brb1006

Well-Known Member
Original Poster

The next earnings call will occur August 4th, 2020 at 4:30 p.m. EDT / 1:30 p.m. PDT. This should be very interesting.
 

CastAStone

Wannabe Peoplemover Enthusiast.
Premium Member
Parks Experiences and Products made $1.7bn last year on $6.6bn in sales in Q3.

$5.5bn of that was attributable to the theme parks, cruises, DVC, and ABD, with $1.1bn attrbutable to licensing and "other", the latter of which includes in part the TDL license revenue.

Depreciation was $0.55bn of the $4.9bn in expenses.

Roll it all together and in my estimation the revenue floor for PEP is ~$700 million, the revenue ceiling is ~$1.2bn, they will have to depreciate probably $600mil, and then whatever they paid to humans in wages and benefits will be on top of that; my back of the envelope math is at least $600mil and probably more like $1bn in additional expenses on top of the depreciation. A loss of $1bn seems perfectly reasonable but some of the analyst numbers I see being kicked around seem a little negative to me. A substantial amount of the operation is scale-able and was, in fact, scaled in early April.

Looking forward to the call!
 

DVCakaCarlF

Well-Known Member
Parks Experiences and Products made $1.7bn last year on $6.6bn in sales in Q3.

$5.5bn of that was attributable to the theme parks, cruises, DVC, and ABD, with $1.1bn attrbutable to licensing and "other", the latter of which includes in part the TDL license revenue.

Depreciation was $0.55bn of the $4.9bn in expenses.

Roll it all together and in my estimation the revenue floor for PEP is ~$700 million, the revenue ceiling is ~$1.2bn, they will have to depreciate probably $600mil, and then whatever they paid to humans in wages and benefits will be on top of that; my back of the envelope math is at least $600mil and probably more like $1bn in additional expenses on top of the depreciation. A loss of $1bn seems perfectly reasonable but some of the analyst numbers I see being kicked around seem a little negative to me. A substantial amount of the operation is scale-able and was, in fact, scaled in early April.

Looking forward to the call!
“Humans” lol
 

Notes from Neverland

Well-Known Member
It's going to be a historic call in Disney history. After seeing the massive 90-plus percent drops for competitors, Disney's is going to really be something.
 

Dan deesnee

Well-Known Member
For anyone looking for a massive price drop, it's definitely possible but as someone who has worked in the industry for 16 years most of the time the market sees these things coming and it's already reflected in the current price...to some extent.

It'll still probably drop, and the call is going to be terrible, but I wouldn't be shocked if it doesn't drop a huge amount. Guess we'll see, I'd love to pick up some Disney stock under $90...

I think it's pertinent to mention that the US GDP just dropped almost 35 in q2. A number that is simply unfathomable. How did the market react? Well it's been up ever since. The market is forward looking and Disney's Q3 and Q4 profits are likely to be massively better than Q2.
 

MisterPenguin

Rumormonger
Premium Member
Here's the transcript from Q2 in which they were already dealing with a quarter with the domestic parks closed for 2 weeks, and by the time of the call, 2 months.


Pertinent for this call is the metric Chapek set for opening the parks:

Question: I wonder if you could tell us or speak generally about what capacity you guys can operate at the park profitably? And we assume, obviously, when you do open -which I know is very fluid and we can't pinpoint that right now in terms of domestic opening... just trying to get a sense of what sort of capacity you think could still sort of get you to breakeven or profitability?

Chapek: ..in terms of how we look at our park reopenings and what hurdle we need to make to have it make sense -we actually look at it as a positive net contribution to overhead and profit. In other words, it's not about breakeven point for profitability necessarily,but just making a positive contribution at the net contribution level. So what we're thinking is that while every site is completely different, that's the approach that we're going to take. And frankly, we would not reopen any park unless we can make at least a positive contribution to that overhead and operating profit level.



Question: I wonder, for Bob Chapek, how do you staff the parks in anticipation of an opening? What signals do you look for? And what drives your optimization? Is it the number of... does basically the experience you want to have,measure up to a park full opening? So any type of signals, any type of history you have to staff up in anticipation of an opening?

Chapek: In terms of the signals we look for park opening, our hypothesis is because of pent-up demand that if we open up, it's something less than 50% of our standard capacity that we're probably not going to have trouble filling that. So whatever level we state that at, whether it's 10%, 25% or 50% of typical crowds, that's what we'll be able to have at our park. Therefore, we'll staff accordingly to that type of level, whatever that level will be eventually.In terms of optimization and sort of how we'll approach that. Obviously, labor is a huge component of our cost base. And so that will slide with the attendance. And that's why I said when we're looking at the decisions for what that level would be inside the parks and what we're going to be targeting for, it's really looked at as a contribution to net contribution and profit as opposed to saying that we're goingto sort of cover the entirety or not. Therefore, that gives us the ability to make our decisions on a variable basis and keep as much of that cost structure variable as possible. Obviously, we'll practice the yield strategy overall, just like we always have.



And as always, you can get a Bingo when someone from Wall Street asks (i.e., suggests) about forgoing the theatrical window and instead bring movies direct to VoD. Only this time, the question would be actually pertinent given the closure of theaters.
 

Lilofan

Well-Known Member
Here's the transcript from Q2 in which they were already dealing with a quarter with the domestic parks closed for 2 weeks, and by the time of the call, 2 months.



Chapek: In terms of the signals we look for park opening, our hypothesis is because of pent-up demand that if we open up, it's something less than 50% of our standard capacity that we're probably not going to have trouble filling that. So whatever level we state that at, whether it's 10%, 25% or 50% of typical crowds, that's what we'll be able to have at our park. Therefore, we'll staff accordingly to that type of level, whatever that level will be eventually.In terms of optimization and sort of how we'll approach that. Obviously, labor is a huge component of our cost base. And so that will slide with the attendance.
Chapek -" labor is a huge component our our cost base. And so that will slide with the attendance."

English translation - layoffs are coming
 

TJ Vazquez

Premium Member
In the Parks
No
Chapek -" labor is a huge component our our cost base. And so that will slide with the attendance."

English translation - layoffs are coming
Yeah that is a no-brainer from a business perspective. Obviously not for corporate employees and some CM's.
 

brb1006

Well-Known Member
Original Poster
@pheneix lessening to today's earnings call to prepare for his next thread.

He's been working on a draft for that thread since yesterday.
 

MisterPenguin

Rumormonger
Premium Member
Chapek -" labor is a huge component our our cost base. And so that will slide with the attendance."

English translation - layoffs are coming

The question is whether they need more reductions than has already happened with the loss of contractors of cancelled projects, cancellation of CP, and cancellation of International CMs.

And whether there were secret lay-offs this week.
 
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