Q1 2018 earnings report shows Parks and Resorts revenues increased 13%

Feb 07, 2018 in "The Walt Disney Company"

Posted: Wednesday February 7, 2018 9:14am ET by WDWMAGIC Staff

The Walt Disney Company yesterday reported quarterly earnings for its first fiscal quarter ended December 30, 2017, showing an increase in both revenue and attendance for its theme park operations.

Diluted earnings per share (EPS) for the quarter increased 88% to $2.91 from $1.55 in the prior-year quarter. Excluding a $1.6 billion one-time net tax benefit associated with new U.S. federal income tax legislation (Tax Act) and certain other items affecting comparability(1), EPS for the quarter increased 22% to $1.89 from $1.55 in the prior-year quarter.

“The strategic investments we’ve made have driven meaningful growth over the long term, and we remain confident in our ability to continue to deliver significant shareholder value,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “We’re excited about what lies ahead, with a robust film slate, the launch of our ESPN direct-to-consumer business, new investments in our theme parks, and our pending acquisition of Twenty-First Century Fox.”

Read for the full Q1 2018 report, and see below for the Parks and Resorts segment.

Parks and Resorts revenues for the quarter increased 13% to $5.2 billion and segment operating income increased 21% to $1.3 billion. Operating income growth for the quarter was due to increases at our domestic parks and resorts, cruise line and vacation club businesses as well as at Disneyland Paris. Domestic results benefited from the comparison to the impact of Hurricane Matthew, which occurred in the prior-year quarter.

Higher operating income at our domestic parks and resorts was driven by guest spending growth and an increase in attendance, partially offset by higher costs. Guest spending growth was due to higher average ticket prices, food, beverage and merchandise spending and average daily hotel room rates. The increase in costs was driven by labor and other cost inflation, expenses for new guest offerings and an increase in depreciation associated with new attractions. At our cruise line, growth was primarily due to higher passenger cruise days, which reflected the impact of the Disney Wonder dry-dock in the prior-year quarter. The increase at Disney Vacation Club was driven by sales at Copper Creek Villas & Cabins in the current quarter.

Growth at Disneyland Paris reflected higher attendance and increased average ticket prices, both of which benefited from the 25th Anniversary celebration.

Comments from Christine McCarthy - Senior Executive VP and Chief Financial Officer, The Walt Disney Company

Turning to segment results, Parks and Resorts delivered another strong quarter of financial performance. Operating income increased 21% due to growth at our domestic operations and Disneyland Paris. I’ll note the year-over-year growth reflects the unfavorable impact of Hurricane Mathew and a dry dock at Disney Cruise Line during Q1 last year. At our domestic operations, operating income was up 18% over prior year driven by higher results at domestic parks and resorts and growth at Disney Cruise Line and Disney Vacation Club. Attendance at our domestic parks was up 6% in the quarter, as Pandora - The World of Avatar contributed to record attendance at Disney’s Animal Kingdom and Walt Disney World overall, and Guardians of the Galaxy: Mission BREAKOUT! contributed to higher attendance at Disneyland Resort. Per capita spending was up 7% on higher admissions, food and beverage and merchandise spending. Per room spending at our domestic hotels was up 6% and occupancy was comparable to last year at 91%. So far this quarter, domestic resort reservations are pacing up 3% compared to prior year despite reduced room inventory due to conversions and ongoing room refurbishments. Booked rates are pacing up 13%, which reflects our strategy of improving the guest experience through better load balancing of attendance throughout the year, as well as the benefit of one week of the Easter holiday falling in Q2 this year, whereas the two-week holiday period fell entirely in Q3 last year. 5 We estimate the timing of the Easter holiday period will shift approximately $35 million in operating income from Q3 to Q2. This benefit will be partially offset by the impact of a 14-day dry dock of the Disney Magic , which will adversely affect Disney Cruise Line’s operating income by about $20 million. I’ll also note Disneyland Paris continued to benefit from the resort’s 25 th Anniversary celebration, which drove higher attendance, guest spending, and hotel occupancy. The resort set a new Q1 record in revenue and has now been profitable for the last three quarters, so we are very pleased with the progress we’re making there. Total segment operating income margin was 26.1%, up 170 basis points compared to Q1 last year, and represents the highest quarterly margin for the segment since 2004 when we began consolidating our international parks.
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ThemeParkJunkeeMay 09, 2018

I am already priced out and only go every four or five years. There is not enough new to go any more frequently. They are charging for every little convenience as well. Still listen as a stockholder but as a park lover...I always get discouraged. Price increases and stock buybacks during record profits bug the (expletive deleted) out of me.

NealApr 20, 2018

...and yet, they still want to charge for parking at the hotels.

seascapeFeb 20, 2018

No matter how one looks at Disney it is hitting on almost all cylinders. Yes, ESPN is a minor problem but given the strength of movies and theme Parks it will not matter too much. DVC sales hit the highest January sales, 236,957 points, since DVC news has been tracking them in 2010. They also had a major price increase. Their movie box office is now their largest ever for January and February combines with over a week to go. It is very possible they will top their record January to March quarter by the end of February with A Wrinkle in Time still to come. It is clear Disney will set record earnings this year.

seascapeFeb 10, 2018

I used to go 3 times a year and now thanks to the Festival of the Arts, we are up to 4 times a year. Plus we still have to eventually make a NYE trip.

LegendaryFeb 10, 2018

I think the ceiling will crash. We used to go every single year sometimes several times a year and with prices for everything just going up we have definitely slowed down. We now go every other year and manage to cut costs by eating Disney food 1 meal a day. Other guests have reduced their trips as well. It’s only a matter of time.

John park hopperFeb 10, 2018

Park attendence up, revenue up, taxes down----great reason to raise ticket prices --sad

Walt dFeb 07, 2018

Good news bob” now is the time to give the share holders. A stock split right bob” right bob” were waiting” you have been there for 17 years. And nothing for the share holders bob” lets go bob... whats the hold up??

BoarderPhreakFeb 07, 2018

Woohoo - full steam ahead on raising ticket prices! 🙄

seascapeFeb 07, 2018

Disney 6% increase in domestic attendance while partially offset by 2 days of closing WDW in 2016 thus allowing for a 2.2% increase in days still yield a 3.8% increase in average daily attendance. How does this compact to Universal? Based upon their numbers? I think they were flat or down a fraction domestically because their 8% increase in revenue less the 2.2% in increase days leaves only 5.8% increase in revenue which was the result of higher per capita spending. Universals 3.2% increase in EBITA from the parks is even worse when you take into account that besides losing 2.2% of the days there was also large costs associated with preparing for and restoring from the Hurricane in 2016. A 3.2% increase was nothing.

StripesFeb 06, 2018

A massive 78% increase in net income for the quarter, largely due to tax cuts.