TWDC Q2 Earnings & Conference Call

[ParentsOf4]

Nope, they have taken a lot of rooms out of service for "refurbishment" to prop that number up. DVC has been canabalizing Deluxe sales for years on top of the high prices disney charges for its resorts, on all levels.

The most recent 10Q numbers tell something very different. They hint at what Disney should do as a business, but it's something that they've already started undoing.

It's going to take me some time to write it up.

I'm working on it.

 

[Darth Sidious]

Somebody might. But asking Iger about the Yeti in such a setting is the equivalent of asking the CEO of Ford why the F-150 doesn't come in green when Ford said it would.

It's worse and more immature than that.

 

[Kman101]

There are definitely more people in the parks. Absolutely insane crowds. On a NOT busy day (wait times were very reasonable). I believe that statement that more people are 'allowed in'. That's for sure.

 

[CDavid]

Hotel occupancy at 86% shows they need more rooms not less. they are taking rooms from the poly for the DVC, and right now they have no more hotels being built that I am aware of. Given that and the rumors of a Ft. Wilderness DVC it is possible that it will include a hotel portion. They need more deluxe rooms not less.

Just because they might fill more value resort rooms (the least expensive and least profitable) doesn't necessarily mean they can fill even the number of deluxe resort rooms (most expensive and profitable) they already have - at least at the prices they are expecting. If resort pricing better reflected reality, superior amenities, and good value for the money Disney could, indeed, fill its resort rooms as it once did.

 

[The Crafty Veteran]

Dis stock is trading like crazy in off hours. Dis stock is also almost universally rated as A+ buy. That Iger sure don't know what he's doing.

 

[flynnibus]

Good catch. I can't figure that out either.

Disneyland Resort attendance is up (Duh), and they are accommodating "thousands" more per day at WDW parks per Jay Rasulo, but no mention of WDW attendance stats at all. There's part of this information pie that is missing for some reason.

Simple... because I can get more people in park #1 - doesn't mean all parks are up concurrently. Distribution is not uniform.

The idea that by altering guest behavior and visiting patterns leads to a better optimization of existing park capacity has been mentioned all along as a potential benefit. Yet so many refuse to open their eyes to how it works and instead call it lies. They fail to understand that park capacity is not just 'all my ride capacity added together'. Plus, if the FP+ model is causing people to ride attractions that previously had lower rider counts... you are improving the utlization of the ride capacity you had as well.

They even mention this difference in the Q&A (from the OS article..)

"Because Fastpass+, the ability to basically plan your day as it relates to top attractions in the park in advance, has had huge pickup by our guests, it allows a better distribution of guests around the park," Rasulo said. "And quite often the amount of capacity we can let into the park is highly driven by pinch points and particular areas of the park that we don't want to get too overcrowded. So when guests are better distributed around the park, we can let more in."

It's not about increasing the ride capacity, it's about increasing the park's capacity.. whose's theoretical peak is hard to reach due to 'human behaviors'. They mention key pinch points that can cap the system before it's fully utilized. Shaping guest behavior is how you reclaim that lost potential.

 

[Vegas Disney Fan]

Company is thrilled with results of investment of capital into DCA expansion. Very bullish on those returns. Won't share specific figures.

Feels similar with FLE. They don't take on expansion without expectation of growth. Feel very strong about growth of volume there, which allowed them to increase prices early taking into account new investments.

As a DL AP holder and WDW visitor this is all I care about. If Disney is happy with the ROI of DCA and NFL the chances are high they'll keep investing in more new rides and more love for the parks.

 

[Rodan75]

It will be interesting to see how they do for the rest of the calendar year, given there is no big Pixar movie this year and maleficient, GOTG, and Big Hero 6 are all big risk movies.

 

[the.dreamfinder]

It will be interesting to see how they do for the rest of the calendar year, given there is no big Pixar movie this year and maleficient, GOTG, and Big Hero 6 are all big risk movies.

Provided WDAS can even get Big Hero 6 out of the door for its release date.

 

[fractal]

I would imagine that a big chunk of MM+ costs are due to the implementation of the system. I would expect that these costs would now drop as the system is up and running.

 

[Rodan75]

Provided WDAS can even get Big Hero 6 out of the door for its release date.

Can you imagine the firestorm that would cause?

 

[fillerup]

I would imagine that a big chunk of MM+ costs are due to the implementation of the system. I would expect that these costs would now drop as the system is up and running.

Maybe, maybe not. A lot of MM+ expenses will be depreciated over time. Things like door locks and band readers may be expensed over 5 to 7 years. Other things like wi-fi gear and Ipads over 2 or 3 years.

The ongoing operational expenses will probably drop but I wonder how much. Until they figure out how to not keep sending multiple sets of MBs to returning guests I would imagine they're producing 30,000 to 40,000 of these every week.

Labor also is a big issue the way I see it. Just an anecdote, this past Sunday, mid afternoon, I walked around Future World and did some counting. Between 4 FP+ locations and 1 MM+ Service Center, I counted 62 CMs. Add in entry gate personnel, attendants at FP entrances, back office support, and 3 more parks and the numbers have to be astounding. That's a lot of bodies to assist with a program that doesn't produce any direct revenue on its own. Maybe this was all anticipated, maybe it wasn't.

This labor number will drop for sure, but given that every single day of the year as far as the eye can see, tens of thousands of first timers will enter the parks, FP+ is always going to be labor intense.

 

[BigTxEars]

Dis stock is trading like crazy in off hours. Dis stock is also almost universally rated as A+ buy. That Iger sure don't know what he's doing.

Not a bad climb the last 5 days in stock price. Lots of folks voting with their wallets on Disney performance. Glad to see it, I like the direction they are headed and want them to continue to do so

 

[BigTxEars]

I would imagine that a big chunk of MM+ costs are due to the implementation of the system. I would expect that these costs would now drop as the system is up and running.

I would agree the hardware alone was a huge investment, let alone installing that hardware. Working out the system bugs would be pretty penny too. As the system progresses in the future Disney will become better at tweaking it for savings on their part.

 

[ggaffiganu]

Thanks! And i look forward to it.

 

[CJR]

Even if the numbers don't look good, I would say they will do some nice spin on it to make it sound better than it actually is. These guys are great at what they do and they will no doubt convince people that any expense will result in higher earnings.

I think it's true too. As long as things continue to roll out well, Disney will pay more and more off of this investment.

 

[jlsHouston]

Dis stock is trading like crazy in off hours. Dis stock is also almost universally rated as A+ buy. That Iger sure don't know what he's doing.

Sometimes I have to read things several times to actually digest what a sentence is saying. But I'm not sure what you are saying here.

Are you saying the stock being a Wall Street Darling is in spite of Iger not making prudent and fiscally sound choices for the long term health of TWDC?

 

[jlsHouston]

Simple... because I can get more people in park #1 - doesn't mean all parks are up concurrently. Distribution is not uniform.

The idea that by altering guest behavior and visiting patterns leads to a better optimization of existing park capacity has been mentioned all along as a potential benefit. Yet so many refuse to open their eyes to how it works and instead call it lies. They fail to understand that park capacity is not just 'all my ride capacity added together'. Plus, if the FP+ model is causing people to ride attractions that previously had lower rider counts... you are improving the utlization of the ride capacity you had as well.

They even mention this difference in the Q&A (from the OS article..)


It's not about increasing the ride capacity, it's about increasing the park's capacity.. whose's theoretical peak is hard to reach due to 'human behaviors'. They mention key pinch points that can cap the system before it's fully utilized. Shaping guest behavior is how you reclaim that lost potential.

I think I am finally getting this...in a way. I'm still not thrilled about being led a certain direction when it's my vacation time and dollars, but I think I see in general how this is somewhat positive since Disney is not doing a lot of expanding.

 

[seascape]

I love my magic bands and my Disney experience. I also love being a stockholder and the great returns I have made I only wish I owned more but I am not rich enough. on the other hand I did buy into the DVC last year and have enough points for 1 long trip and 2 short ones every year. I didn't buy direct from Disney so that didn't help the profits but my going 3 times a year and eating and buying things will. All that is needed is for Disney to keep improving and growing. many here may not care about the money invested into Disney Springs but once that is done and MM+ and related expenses are done there will be much more coming to WDW.
Star Wars is coming and will be a great addition.

Just step back and take an impartial look at what is currently being built at AK and Disney Springs and the road expansions and tell me that you do not expect some more major additions. It would make no sense to spend all that money on the infrastructure and land outside the original borders if they were not going to do more. Finally adding another major park My Disney Experience cost almost nothing.

 

[PhotoDave219]

Sometimes I have to read things several times to actually digest what a sentence is saying. But I'm not sure what you are saying here.

Are you saying the stock being a Wall Street Darling is in spite of Iger not making prudent and fiscally sound choices for the long term health of TWDC?

Yes… That's exactly what is being said.

Wall Street wants a very large return on investment in a very short amount of time. They do not care about what the company's going to be in five years, they care about getting their profits next quarter.

I had this very conversation with a corporate CEO at the grand Floridian. He's one of those CEOs the comes and cleans up a mess After previous management has screwed everything up. He's a big believer in telling Wall Street to go pound sand… Or something similar.

Disney management has direct self interest in the stock price being as high as possible… Because stock is part of the executive compensation.

I don't agree with that, I feel that the management team should be given a flat bonus if they meet stock price goals. Basically, you get a $50,000 bonus instead of several million after cashing in stock options.

Now how did all this happen? Well, back when Roy Disney brought in Michael Eisner and forced out Ron Miller and card Walker (saving the company at the time) Eissner asked for stock options to be part of his compensation and the board signed off on it. It was 1984.

It has grown worse over time as Wall Street demands record profits every quarter and management is more than willing to make that happen because it lines of their pockets as well. Everyone gets rich excepts the animators to make the films… Or the frontline cast to check you into your hotel… or anybody who actually does any real work.

This company needs real corporate governance reform… But it will never happen. Wall Street controls most of the voting stock… So they're going to get what they want when it comes time for shareholders votes, they're going to keep the gravy train coming…

So how does this get fixed? Slowly. First, we need a new CEO that has a vision for the company. The CEO that is not content with the status quo and wants to be the best entertainment company out there. A CEO who is ruthless enough to take on Universal and spend the money to go head-to-head rather than just excepting things the way they are.... Which is losing market share in Central Florida.

Also, more balance on the Board of Directors is desperately needed. We need people who are more in touch with society then they are in touch with their servants at their mansions.

Essentially, we need corporate leadership that is willing to take this company To where it once was and should be. If the company is set up for long-term continual reinvestment, you will be a Wall Street darling because of long-term stability and room for growth in segments they once felt were "mature". If you keep investing and innovating, They will be on your gravy train only this time it will be on your terms and not theirs. That's what Apple did under Steve jobs.

We have to stop letting the tail wag the dog.

Such is my opinion.