Disney's Q3 FY16 Earnings

[ford91exploder]

Not exactly.

The number of available room nights decreased by 1.0%.

Per Room Guest Spending was down 1.3% compared to the same quarter in 2015.

The occupancy rate was up mostly because Disney offered more discounted rooms.

Thanks @ParentsOf4, Kind of runs counter to Disney's narrative though, And of course Disney is decreasing available room nights and even 1% is a heck of a lot of rooms.

Missed the bit that the holy PRGS went DOWN 1.3%

 

[ParentsOf4]

Domestic Parks & Resorts revenue was up only 4.8%, the smallest quarterly increase since the Great Recession.

 

[HauntedMansionFLA]

Domestic Parks & Resorts revenue was up only 4.8%, the smallest quarterly increase since the Great Recession.

Several members have stated that some of the wings at Resorts are not opened to cut back on staff. Would this make it look every room is being booked up when trying to book a room. The December discounts are out now with not very many resorts included. Is there anything showing that attendance will be down in between Thanksgiving and Christmas?

 

[ThemeParkJunkee]

After reading the full report, it seems like more of the same on steroids. More cuts. More price hikes. More on-site advantages filling rooms. More flattening of attendance as a result of "dynamic pricing" for rooms and park tickets. More stock buybacks.

Anecdotal reports indicate that traditionally lower attendance periods are looking to be busier than ever. Crowd calendars are revising and re-revising their crowd estimates. Resorts are fillingup for September and October while the percentage discounts being offered are more limited in selection and lower in amount.

I wonder what the stock price would be without the massive buybacks. I sold most of mine for a hefty gain last year at around $120 per share. The nostalgic few shares I kept keep going down and down with mild upturns on occasion.

I appreciate that I can always count on WDWMagic to provide a thread for this quarterly event.

I am also curious as to how DIS determines occupancy. Are rooms temporarily taken out of service for refurbishment (or cost savings?) considered part of inventory in determining occupancy rates? I would think GAAP would require that. @ParentsOf4 ?

 

[SorcererMC]

More flattening of attendance as a result of "dynamic pricing" for rooms and park tickets

FWIW - On the earnings call, an analyst asked about the parks business and specifically what kind of favorable impact the dynamic pricing introduced in the spring may be having.
Iger responded by saying that the 'domestic parks have had incredible strength, both in Disneyland and WDW....the cruise business has been strong...and the mix of international tourists [to Orlando] hasn't shifted that much, some shifts with Brazil but it's basically in line with what we've seen....Great Britain has been strong'.

(The earnings report itself says that the higher operating income at the domestic parks was offset by guest spending growth and lower costs, partially offset by lower volumes.)

So, what accounts for 'lower volumes'? domestic attendance? Brazil? No real indication/ answer as far as I can tell.

Edit: OS is saying it is from the Easter holiday/one week shift from 3Q last year (which they mentioned in the report).

 

[Rteetz]

A look at the email Bob Iger sent to all Disney Employees after today's earnings report.


Dear Fellow Employee,



Today was a great day for the Company, as we announced third quarter adjusted earnings per share that were 12% above last year, marking our 12th consecutive quarter of double-digit growth.


Our Studio led the way once again, delivering 62% growth in operating income year-over-year. Our Studio is having a tremendous year both creatively and commercially, with great successes from Pixar, Marvel, Disney Animation, and Disney live action. Marvel’s Captain America: Civil War; Disney Animation’s Zootopia, and Disney’s The Jungle Book are the world’s three biggest movies of the year so far– earning critical acclaim and averaging more than $1 billion each in global box office – and Pixar’s Finding Dory is the #1 domestic release of 2016. The Studio’s slate of upcoming releases looks very strong, too.


Today we also announced an important strategic investment, acquiring a 33% stake in a technology platform called BAMTech, which provides Major League Baseball and the National Hockey League with a robust means of delivering live, streamed sports on a direct-to-consumer basis. We have an option to acquire majority ownership in the future, which will enable ESPN, and other Disney media businesses, to reach more people in more modern, compelling ways.

If you’d like to know more about our investment in BAMTech or our performance in the third quarter, you can read our press releases or listen to a replay of this afternoon’s earnings call by clicking here.

This has been a year of many highlights, including the opening of Shanghai Disney Resort in June, ESPN’s coverage of one of the most exciting NBA Finals in history, and excellent coverage by ABC News of one of the most interesting presidential elections we’ve ever witnessed.


I hope you are enjoying your summer and I thank you all for your numerous contributions to this performance.


Best,


Bob

 

[CaptainAmerica]

Oh well the usual pathetic earnings call,

- Attendance Down check
- Occupancy Up (by decreasing rooms in service) check
- PRGS - Up (check - see above for reason)
- YoY gain single digits due to operational efficencies (what the rest of the world calls cuts) and price increases
- On track to spend 9 Billion in share repurchases (shiny object to keep Analysts from looking too deeply)
- As usual refuses to answer questions about core business

So glad I sold my Disney stock...

Attendance isn't really down. The only reason it looked that way is due to the Easter shift. Easter was in Q3 last year but Q2 this year so this year's Q3 looks worse by comparison.

EDIT: Also, if they achieved these metrics in the conspiracy-minded way you outlined, Domestic Parks OI would have been down. It wasn't. They didn't just have high occupancy, that high occupancy contributed to a favorable YOY variance.

So, what accounts for 'lower volumes'? domestic attendance? Brazil? No real indication/ answer as far as I can tell.

In the Q&A, they said the Domestic to International guest ratios are consistent, but the mix of home country for international guests has shifted. In other words, softness from Brazil is being covered by strength from other countries.

Edit: OS is saying it is from the Easter holiday/one week shift from 3Q last year (which they mentioned in the report).

 

[Disneyhead'71]

Attendance isn't really down. The only reason it looked that way is due to the Easter shift. Easter was in Q3 last year but Q2 this year so this year's Q3 looks worse by comparison.

EDIT: Also, if they achieved these metrics in the conspiracy-minded way you outlined, Domestic Parks OI would have been down. It wasn't. They didn't just have high occupancy, that high occupancy contributed to a favorable YOY variance.


In the Q&A, they said the Domestic to International guest ratios are consistent, but the mix of home country for international guests has shifted. In other words, softness from Brazil is being covered by strength from other countries.

That's not actually what they said. But, OK.

 

[SorcererMC]

In the Q&A, they said the Domestic to International guest ratios are consistent, but the mix of home country for international guests has shifted.

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

In other words, softness from Brazil is being covered by strength from other countries.

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.

 

[CaptainAmerica]

That's not actually what they said. But, OK.

Are you a liar or just an honest clueless person? That's EXACTLY what they said.

Bob Iger on Domestic Theme Park results: Operating income at our domestic operations was up over 20% in the quarter and margins were higher by about 400 basis points, driven by continued growth in Domestic Parks and Disney Cruise Line. Attendance at our Domestic Parks was down 4% in the third quarter, with most of that decline due to the adverse impact of the shift in the Easter holiday period. The impact from lower domestic attendance was more than offset by the impact of strong per capita spending, which was up 8% on higher admissions and food and beverage spending. Per room spending at our domestic hotels was down slightly. However, occupancy was 3 percentage points higher at 90%.

Bob Iger on international tourism in the Domestic Theme Parks: Interestingly enough, while there's a fair amount of concern about the international tourists, the mix of international tourists to our domestic Parks hasn't really shifted that much. We've had shifts market-to-market. Brazil's had some big issues in the last year, as a for instance. But the mix from international versus domestic attendance is basically in-line with what we've seen. And interestingly enough, Great Britain has been fairly strong, which given what's gone on there, particularly the headlines and the Brexit issue, you'd expect otherwise. And also of course the pound versus the dollar, but business is quite strong there.

 

[CaptainAmerica]

Admittedly I'm not an expert in theme park attendance, but how does one minor spring holiday shifting to a different week lead to a decrease in attendance? I'm not buying or understanding that excuse.

It's not an "excuse."

Quarterly earnings releases are reported compared to the same quarter from the prior year. So this release is comparing Q3 of 2016 to Q3 of 2015. Q3 of 2015 included Easter which is a very busy (i.e. profitable) week but Q3 of 2016 did not include Easter. So you're comparing last year's 12 regular weeks and 1 super busy week to this year's 13 regular weeks. Easter is not a "minor spring holiday" by any stretch of the imagination in the tourism industry.

Think of it from a retailer's perspective. If Christmas falls in one fiscal quarter one year and a different fiscal quarter the next year, that's going to affect comparability year-over-year.

Honestly, do you guys have any idea what goes into preparing a quarterly earnings report for a publicly traded company? They can't just make crap up.

 

[xdan0920]

FWIW....

I am traveling to WDW the week leading into Easter of April 2017. And right now, DVC has a metric crapton of available rooms across all resorts. Sort of surprising.

 

[xdan0920]

It's not an "excuse."

Quarterly earnings releases are reported compared to the same quarter from the prior year. So this release is comparing Q3 of 2016 to Q3 of 2015. Q3 of 2015 included Easter which is a very busy (i.e. profitable) week but Q3 of 2016 did not include Easter. So you're comparing last year's 12 regular weeks and 1 super busy week to this year's 13 regular weeks. Easter is not a "minor spring holiday" by any stretch of the imagination in the tourism industry.

Think of it from a retailer's perspective. If Christmas falls in one fiscal quarter one year and a different fiscal quarter the next year, that's going to affect comparability year-over-year.

Honestly, do you guys have any idea what goes into preparing a quarterly earnings report for a publicly traded company? They can't just make crap up.

So, this years Q2 attendance should have been up over last years? Was it? I can't remember.

 

[CaptainAmerica]

FWIW....

I am traveling to WDW the week leading into Easter of April 2017. And right now, DVC has a metric crapton of available rooms across all resorts. Sort of surprising.

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.

 

[SorcererMC]

Are you a liar or just an honest clueless person?

Honestly, do you guys have any idea what goes into preparing a quarterly earnings report for a publicly traded company? They can't just make crap up.

These kinds of statements hardly seem necessary, nor do I think they are 'helping' to clarify what may or may not be happening w/ attendance according to this last earnings statement.

 

[CaptainAmerica]

These kinds of statements hardly seem necessary, nor do I think they are 'helping' to clarify what may or may not be happening w/ attendance according to this last earnings statment.

@Disneyhead'71 implied I was a liar, which he has a habit of doing. I apologize if it was unclear that my ire was directed at him specifically.

 

[CaptainAmerica]

So, this years Q2 attendance should have been up over last years? Was it? I can't remember.

Yes, but there was a similar effect on the front end of Q2 from New Year's.

Q2 Earnings release:
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 Easterholiday 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.

 

[Bob Harlem]

@Disneyhead'71 implied I was a liar, which he has a habit of doing. I apologize if it was unclear that my ire was directed at him specifically.

Huh, you said the Easter shfit was the only reason, which it wasn't, just one of the larger reasons. It's still a decline with or without it. I don't see it him calling you a liar, just incorrect.

 

[CaptainAmerica]

Huh, you said the Easter shfit was the only reason, which it wasn't, just one of the larger reasons. It's still a decline with or without it.

Fine, if you want to nitpick. "Most of the decline" is not the same as "all of the decline," but it's still materially the same thing.

 

[Disneyhead'71]

So, this years Q2 attendance should have been up over last years? Was it? I can't remember.

No. Down 2%.