Edit: Updates Below
The Walt Disney Company will be releasing its first quarter 2012 earnings report this afternoon, sometime after the 4pm closing bell. This is expected to be a particularly strong quarter for a company that is looking at record attendance at its theme parks, record-breaking revenue at ESPN, and increased profits from investments made abroad in infrastructure and entertainment. Standard & Poor’s reiterated a “Strong Buy” recommendation this morning and Davenport raised its rating from “neutral” to “buy” yesterday. Wells Fargo initiated coverage on January 31st as “market perform.” Company stock is currently trading up 9 cents to $40.55 with a 52-week range of $28.19 – $44.34. The annual dividend is 60 cents or 1.48%.
Looking forward, Disney has a number of expensive investments coming online over the next six to twelve months. The billion dollar Fantasy cruise ship will be making its debut next month. Cars Land in California is expected to open in June as part of as 1.1 billion dollar overhaul of Disney’s California Adventure. Parts of New Fantasyland out in Walt Disney World are expected to come online throughout the year. Coupled with the multi-billion dollar investment in “NextGen,” Disney has poured billions into its Walt Disney World division over the past two years. And then there’s Shanghai.
In entertainment, Disney is gambling on a number of expensive films. From the $250,000,000+ John Carter to the $300,000,000+ Brave to the $250,000,000 budget of The Avengers, we’re looking at a number of high risk gambles. Can you believe Tangled had a budget of 260 million for that matter? Life is expensive.
I’ll be reading over the release and listening along to the conference call, which is scheduled for this evening at 5pm EST. I’ll update this post throughout the call with any interesting nuggets. You can also listen along here. Mr. Iger and Mr. Rasulo usually offer a bit of color on the health of its various divisions. Expect to hear about resort occupancy, vague attendance numbers, how much guest spending has gone up, and a bunch of stuff neither of us care about.
Disney beats estimates, reporting earnings of 80 cents per share versus a street estimate of 71.3 cents per share. And no I didn’t make that decimal up. The stock is trading down 84 cents, or about 2%, after hours.
Disney’s Parks and Resorts segment reported profits of 553 million dollars for the quarter on 3.16 billion in revenue.
Media Networks income comes in at 1.19 billion dollars on 4.78 billion in revenue.
Total net income for the quarter is 1.46 billion on 10.78 billion in revenue.
Disney has 3.77 billion dollars in cash or cash equivalents on hand.
Profit was up a higher-than expected 12%, but revenue grew only 1% and missed estimates, which is why the stock is trading lower after hours.
From the conference call:
- Cable Networks and Theme Park divisions drove revenue and profit.
- Disney channel has all of the top 5 shows for kids age 2 to 11
- Disney XD had most watched quarter ever, target audience of boys – great opportunity to target Marvel merchandise
- Disney Jr. had a 24% increase for its best quarter ever – Jake and the Neverland Pirates is the top show for preschool boys
- Launched over 100 channels for kids worldwide
- Disney channel coming to Russia and Turkey, reaching over 100 million households
- ESPN continues to dominate in all arenas
- Disney has purchased India’s UTV outright, goal is to make Disney the #1 family entertainment business in India
- Key upcoming titles – John Carter, The Avengers, Brave – Frankenweenie, Wreck It Ralph, Oz, Iron Man 3, Monsters University coming in fiscal 2013.
- Higher guest spending and attendance at domestic parks drove Parks income
- Attendance up 3%, spending up 8% at domestic theme parks
- Resort occupancy flat at 80 – 82%
- Expecting 500 million in additional revenue from new initiatives in fiscal year to offset 500 million in costs
- Opening Art of Animation Resort “in waves.” Most of what they’re opening are family suites. Opening different parts over the next 18 months. Selling family suites at $200-$225 per night – very popular in the marketplace. Want to expand. For that price, it’s a “value accommodation.” In Florida, many more value priced keys available – 40% of total rooms. That number will grow with Art of Animation coming online. The push to “value priced accommodations reflects marketplace and popularity of product – making it more accessible to more people with affordability factor.”
- If you look at two domestic destinations, relative to mix of international guests to prior years, the mix is precisely the same. An increase from Brazil and Mexico with weakness in Canada and UK. UK is far and away biggest European market. European visitation is down.
- People are still booking, on average, 13 weeks ahead as they have in past quarters.
Conference Call concluded.
It’s interesting to see that international visitation is flat compared to prior years, considering the influx of South American visitors we’ve all been seeing. Considering the number of South Americans in the theme parks, European visitation must be down substantially. The attendance gains are higher than they have been in past quarters. Usually domestic attendance is up 1% to 2%. Three percent is a decent jump. Otherwise, there was a disappointing number of questions about the Parks and Resorts segment. Most questions revolved around media licensing agreements with Comcast and specifics about contracts regarding ESPN. It took us until the last question to get that nugget about international visitors.
Walt Disney Company stock is currently down 36 cents, or 0.88% after-hours as of 6pm EST. Standard & Poor’s has already reiterated a five-star, “Strong Buy” on the company’s stock.