The Walt Disney Company will discuss fiscal second quarter 2021 financial results via a live audio webcast beginning at 4:30 p.m. ET / 1:30 p.m. PT on Thursday, May 13, 2021. We’ll bring you the latest news from the webcast as it is announced!
4:47 p.m.: That’s it from me! Stay tuned on the blog for Teetz’s Take on everything we heard from this call … we’ll keep our eyes peeled on the Disney Parks Blog for any further announcements!
See ya real soon!
4:30 p.m.: And that’s it! Some takeaways …
As we’ve always talked about, the capacity limit at Walt Disney World has seemed to be operating on a “sliding scale” around the perceived 35-50 percent levels the company publicly states. So it was nice to hear Chapek acknowledge that they’ve already been increasing capacity as they get weekly and daily guidance from the CDC, as well as mandates dictated by state and local government.
Given Chapek’s tone and tenor, I think it’s safe to assume that masking outdoors (if at all) will be voluntary come “summer” — most likely by July 4.
The questions about the parks being more profitable now, while at reduced offerings and reduced capacity did give me pause for the future of some of the more beloved offerings — live shows, parades and fireworks — being left out of the budget through at least the end of the year in an attempt to keep a nice free-cash flow going.
No mention of Disney Cruise Line at all other than recapping the announcement of the Disney Wish, not even mentioning that the line has been in discussion with the CDC and Healthy Sailing panels about resuming operation outside of the U.K.-only itinerary (though, these itineraries could ultimately serve as their “test cruises” to meet CDC clearance for domestic sailing — even though the U.K. itineraries do not require vaccination). Most major cruise lines were expecting to announce domestic policies and overall on-board experience details this week (pending today’s announcement by the CDC regarding masking policies for vaccinated individuals), so it was interesting to not even hear a throwaway line such as “and we look forward to releasing more details about the return to service for other ships soon.”
4:25 p.m.: On potentially using some of their sports programming rights to tie-in to sports gambling/gaming:
Said Chapek: “In terms of the gambling opportunity, as you know, we stuck our toe in this water in the last couple years in terms of sport … links with a few of the players out there, and I think that going forward we see this as an opportunity. We know that it represents very little risk to the company, and very little risk to ESPN. As a matter of fact, it will build the brand equity from the research that we’ve had in terms of some of the younger audience that follows sports, because it is such an integral part of the experience. And so we think it’s actually a growth vehicle for us. But we’ll walk into it carefully and monitor it carefully, but we have a greater appetite to doing more and more in that area.
4:16 p.m.: Coming out of the pandemic, it appears the parks may be more profitable that going into the pandemic — will this affect your operations and pricing at the parks once they can return to full capacity?
“In terms of Parks and the relative profitability, as you know, there’s a lot of negative impacts, of course, with COVID. But one of the things that it gave us a chance to do, as we were forced to stop operation, was to completely re-examine how we priced and programmed our tickets. And as you all know, we ended our current Annual Pass program at Disneyland, and that gives us a chance to sort of create a modern version of a park loyalty program, an affinity program that isn’t necessarily governed by legacy,” said Chapek.
“And as you know, the net contribution back to the company varies tremendously and was one of the levers that we use to grow yield over the past several years — depending on what type of tickets structure a particular guest came in, ” added Chapek. “With the ability now for us to sort of completely reconsider how we go about our loyalty programs — and our frequent visitor programs — we have the chance to make even more advancements not only in terms of the guest experience and make sure that guests have a tremendous experience no matter what day of the year they come — whether it is a high demand day or a relatively low demand day — but also the ability to increase our per caps and yields. We’ve already seen tremendous growth in those, as you’re seeing over the last couple quarters. But I don’t think we have even scratched the surface in terms of what we can do when we finally restart with some of our programs in terms of making sure, again, that not only do we improve the guest experience, but at the same time get an adequate return to our shareholders for the type of experience that we do give to our guests.”
4:11 p.m.: On optics from parks, with photos making the parks look at traditional “full capacity” so obviously there is a strong demand for travel, Chapek began by stating that “in terms of the parks demand domestically, our intent to visit at Walt Disney world is growing and is actually already flat with 19 which is obviously our last pre-COVID year. So that’s really good news for us.”
When asked about hiring and the labor market at the domestic parks, Chapek stated: “In terms of labor, we had about 80-percent of our cast members return that we’ve asked to return. And obviously one of the gating factors is to continue to get more and more cast members back, it thrills us to be able to do that. We’ve had no problems whatsoever in terms of trying to get our cast to come back and make some magic for our guests.”
4:05 p.m.: Asked about raising capacity limits at Parks, Chapek said that based on guidance of the CDC and the Governor of Florida — capacity limits are already in the process of being raised at the Florida parks.
Said Chapek: “Obviously today’s guidance that we got from the CDC in terms of those that were vaccinated do not necessarily need to wear masks anymore — both outdoors and indoors — is very big news for us, particularly if anybody’s been in Florida in the middle of the summer with a mask on … that could be quite daunting. So we think that’s going to make for an even more pleasant experience and we believe that as we’re now bringing back a lot of people back to work, that it’s going to be an even bigger catalyst for growth in attendance, and we’ve been quite pleased to date. So I think you’re going to see an immediate increase in the number of folks that were able to admit into our parks through our reservation systems that we recently implemented.”
3:59 p.m.: Q & A time!
3:43 p.m.: New sports programming contracts include extending an existing contract through 2028 with Major League Baseball, which will feature 30 exclusive regular season games and access to the expanded Wild Card playoff series, as well as Sunday Night Baseball. An eight-year deal with the Spanish-based La Liga professional soccer league will begin in August.
“We believe in the power of live sports, and are confident our multi-platform rights deals we’ve made will provide us tremendous value now and into the future. Overall, we are pleased with the encouraging signs of recovery across our businesses, and we are confident we continue to move in the right direction for our future growth” said Chapek.
3:38 p.m.: 20th Century’s “Free Guy” and Marvel Studios’ “Shang-Chi and the Legend of the Ten Rings” will be the first studio productions that will be available in-theater only for 45 days before becoming available on Disney+.
3:34 p.m.: “Its been fantastic to see Cast Members back at work” Chapek said, when speaking of the recent reopening of the Disneyland Resort in California.
Says that parks are at or near reduced capacity levels at domestic parks, with Shanghai and Hong Kong operating at capacity levels. Reopening date for Disneyland Paris will be announced soon.
3:30 p.m.: Here we go!
3:26 p.m.: Official statement from The Walt Disney Company regarding Q2 earnings:
BURBANK, Calif. – The Walt Disney Company today reported earnings for its second fiscal quarter ended April 3, 2021. Diluted earnings per share (EPS) from continuing operations for the quarter increased to $0.50 from $0.26 in the prior-year quarter. Excluding certain items(1), diluted EPS for the quarter increased 32% to $0.79 from $0.60 in the prior-year quarter. EPS from continuing operations for the six months ended April 3, 2021 decreased 64% to $0.52 from $1.43 in the prior-year period. Excluding certain items(1), EPS for the six months decreased 48% to $1.11 from $2.13 in the prior-year period. Results for the quarter and six months ended April 3, 2021 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
“We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN+.”
3:14 p.m.: From Scott Gustin: Disney+ subscribers 103.6 million (Bloomberg projected 110.3 million). Parks and Experiences operating loss $406 million (estimate was $369 million). EPS: $0.79 vs. $0.31. Expected Revenue: $15.6B vs. $16.0B Expected
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