TWDC 2QFY16 Earnings Call Thread

[Dad 2 M & M]

What is the take on this?

"Higher operating income at our domestic operations was due to guest spending growth, partially offset by higher costs."

This is Income Statement info, or was this carefully worded? Higher costs on the Income Statement is not capex (Balance Sheet).

What operating costs were higher? If there were so many cutbacks?

 

[ParentsOf4]

Domestic Parks & Resorts revenue was up only 5.7%, the smallest quarterly increase since the last recession.

Looks like all those price increases and lack of new attractions over the last 12 months are starting to boomerang.

 

[PhotoDave219]

What is the take on this?

"Higher operating income at our domestic operations was due to guest spending growth, partially offset by higher costs."

This is Income Statement info, or was this carefully worded? Higher costs on the Income Statement is not capex (Balance Sheet).

What operating costs were higher? If there were so many cutbacks?

They had higher costs (labor, costs of doing biz, etc) yet they still had growth because they raised the prices of everything.

 

[Dad 2 M & M]

They had higher costs (labor, costs of doing biz, etc) yet they still had growth because they raised the prices of everything.

Right...I should have been more specific; WHY/HOW were the costs higher if they were cutting back? Again, this was implied to be Income Statement data.....not Balance Sheet capex stuff...

 

[ParentsOf4]

What is the take on this?

"Higher operating income at our domestic operations was due to guest spending growth, partially offset by higher costs."

This is Income Statement info, or was this carefully worded? Higher costs on the Income Statement is not capex (Balance Sheet).

What operating costs were higher? If there were so many cutbacks?

Parks & Resorts operating expense was up only 2.7%, the smallest increase since Disney started reporting this as a separate line item. This is consist with reports of cuts at WDW and DLR to control operating costs.

For some perspective, opex increased by 8.4% the previous quarter.

 

[GhostHost1000]

Domestic Parks & Resorts revenue was up only 5.7%, the smallest quarterly increase since the last recession.

Looks like all those price increases and lack of new attractions over the last 12 months are starting to boomerang.

I wonder if or when they will get the hint to start putting some MAJOR attention into wdw instead of just cutting and delaying things up there

 

[Dad 2 M & M]

Parks & Resorts operating expense was up only 2.7%, the smallest increase since Disney started reporting this as a separate line item. This is consist with reports of cuts at WDW and DLR to control operating costs.

For some perspective, opex increased by 8.4% the previous quarter.

2.7% from Q1 to Q2 FY16? Or Q2 15 to Q2 16? If the previous, wouldn't we expect the opex expenditure to be higher in Q1 than Q2? Q1 including the holiday crunch?

 

[GhostHost1000]

2.7% from Q1 to Q2 FY16? Or Q2 15 to Q2 16? If the previous, wouldn't we expect the opex expenditure to be higher in Q1 than Q2? Q1 including the holiday crunch?

Usually it's compared year to year

 

[WDW1974]

Would really like to know where you get this attitude that the "middle class" could always afford to go. My parents were firmly in the middle class when i was growing up in the 60's and early 70's, and we could never afford to go either to DL or WDW.

I think it's simply stunning that you think this way.

Oh puh-leaze. WDW was never as out of reach for so many Americans as it is today. I don't want to bother @ParentsOf4 and get him here with charts and graphs, but you are way off here.

And I grew up firmly in the middle of the middle class and WDW was not only affordable, but, in some cases, a value.

I think it is stunning that people don't get that WDW has never been more profitable, yet never offered less quality and value for more $$$. Let's not even talk about how in the 70s and 80s you didn't have CMs living out of their cars.

Dammit, let's have some reality here.

 

[WDW1974]

They know their business and their goals.

I'd agree with the second part, not completely the first ... but I'm just an online schmuck. What do I know?

But their goals are all about greed, strip-mining the history and letting the next management team worry about things. Wall Street, baby. Pure MAGIC!

 

[CJR]

My take away is that Iger is really milking the cow and bailing right before it runs out of milk. He knows the business is about to head into a series declines and is hoping to be out before it happens. I wouldn't be too shocked if he finds a way to leave early, if it starts to tank before 2018.

Domestic Parks & Resorts revenue was up only 5.7%, the smallest quarterly increase since the last recession.

SO... prices go up by double digits and earnings go up 5.7%. I'm sensing a closing of "the gap". Keep in mind, spring break was included in this time period. [EDIT] Also, staff was cut significantly to pay for those "wage increases"... and other stuff.

 

[WDW1974]

We visited the MK for the first time in five years this past weekend and I'm going to do a trip report later in the week on the boards. Most interesting to say the least. The price increases are staggering throughout every component and the property simply looks rundown and tired. The amount of non-working show elements on attractions It's a Small World to the flat out rust all over the Space Mountain building really says a lot about what's going on there. If they have successive quarters of down attendance at WDW, I think it will be clear that the public is pushing back against their new pricing schemes.

Funny enough, I was at the MK this past weekend and I noticed lots of the same ... I 'may' even be writing about what I saw.

 

[WDW1974]

It was last on the list even before Shanghai. They have ground to make up and the are well on the way. A little more patience. 2017 begins the new era.

Just stop, Frank.

Your shtick wore out here a good 4-5 years ago. Why you persist astounds me.

 

[Dad 2 M & M]

Usually it's compared year to year

That was my thought as well. So that increased cost was BS, as 2.7% increase is relatively low....

 

[ParentsOf4]

That was my thought as well. So that increased cost was BS, as 2.7% increase is relatively low....

Selling, general, administrative and other (SG&A) was up a very modest 3.5%.

What increased the most (by far) was deprecation, up 8.0%, reflecting increased capital expenditures at both Shanghai and domestically.

 

[GoofGoof]

Selling, general, administrative and other (SG&A) was up a very modest 3.5%.

What increased the most (by far) was deprecation, up 8.0%, reflecting increased capital expenditures at both Shanghai and domestically.

A lot of components on MM+ are depreciated over a rather short time period compared to things like rides or buildings. I think that probably factors into some of the increase in depreciation.

 

[ParentsOf4]

A lot of components on MM+ are depreciated over a rather short time period compared to things like rides or buildings. I think that probably factors into some of the increase in depreciation.

P&R capex was up 38.7% for the first six months of the year.

Disney's got a lot more to depreciate.

 

[zakattack99]

I hope that view (not looking at Disney quarterly) catches on. The more incentive for Disney to focus on the longer-term, the better.

I hope your right that this is the plan, that they are going to invest and that will hurt in the quarterlies but in the long run will pay off. However I think he is prepping the shareholders for coming bad quarters. Some of it will be investment SWL, TSL exact. But we still will have to deal with the black hole that is shanghai

Bob: Shocked that no questions on studio. Bob pimping the studios. Studio Operating Income over $1.5B in 2 quarters....

But of course. The next quarter parks will still be crap. He has to play the shell game. Look over over here while parks burns over there.

Translation - He knows the company's gonna crash and he intends to be gone before it does so his successor gets the blame.

Ford, for a long time I considered you the local conspiracy crazy that rants and raves about every little thing honestly I barely ever read your posts. Then I started reading your posts and I realized you were spot on a lot of the time, and honestly I enjoy having your opinion around here. And with this issue I thinknow you are right again this is a the ship is going down but don't panic because we still need to get threw the next few months but come 2018 I'm out and then it's someone else's problem!

My take away is that Iger is really milking the cow and bailing right before it runs out of milk. He knows the business is about to head into a series declines and is hoping to be out before it happens. I wouldn't be too shocked if he finds a way to leave early, if it starts to tank before 2018.

Themail cow is already dry. Park attendance is down, he has cut everywhere he can and pulled every penny he can out of us. The parks need investment which he has tried to avoid to keep the revenues up. The bubble is going to burst and burst soon. He needs to cover his behind if it happens under his watch and lay the groundwork for the next guy to deal with the mess. Problem is that Disney was a multifaceted company if parks struggled pictures would cover when pictures struggled parks covered. Problem is that I think he is taking pictures the same way he took parks, turning it into an atm and holding his finger on the withdraw button until it goes bust. The next guy might have two big messes to clean up and a shovel when he needs a backhoe

 

[cwoms197]

If things get as bad as we think they are going to get, could we be headed for a world without Disney theme parks?

 

[aladdin2007]

Truth

One place I will give them a lot of credit for is Disney Springs. Impressed so far

yeah because its all about booze and shopping profits so they go all out, yet the parks/attractions are treated like crap, it feels like anyway.