Walt Disney Company Quarter 2 Earnings Report 2020

[yulilin3]

I feel like I got a lot more info from that call than what I was expecting, so good day for me
I'm going to stick to my guns and still say June opening of the parks

 

[rteetz]

I’d expect Disney+ to exceed expectations after Netflix’s report. Shanghai opening is positive. As for the revenues, they were still open for most of last quarter.

What I’m thinking about is the next two years and how they will manage their cash burn. They sounded like they would have to raise more cash if they couldn’t open back up soon. And it looks likely they will cut their other dividend too.

This stock should become far more cheaper, and my fall Disneyland trip looks less likely to happen.

Of course next quarter(s) will look worse.

I don’t think fall is out of the question by any means.

 

[andyman8]

I thought Chapek downplaying potential similarities between reopening procedures for different parks was interesting. It seems like he's trying to accomplish what the SVP for Disney Resorts was trying to accomplish at the OC Task Force Meeting a few days ago. They want to curtail any comparisons or speculations in the media. The reality is that if you look at the DPB post today, a lot of is aligns with what Shanghai is doing/did. I've been saying (and will keep saying) that we should be paying close attention to Shanghai Disneyland to get an idea of to expect here. No, not every policy, practice, and procedure will come stateside, but I do think the larger ideas and restrictions will, assuming they have success with them. They'll of course be some changes accounting for cultural differences, but the larger ideas will travel here.

To caution, I'm talking about the restrictions and guidelines put in place, not the timeline of the closure. Obviously, it's a different country with a different culture and the effects of this pandemic vary drastically. We're already not in line with their timeline (by this point in their closure, Disneytown and SDLH were open again), but I wouldn't be surprised to see WDW's reopening accelerated relative SDL for a variety of factors (not the least of which, Chapek confirming the presence of government in the decisions regarding SDR's opening). SDL's closure will have lasted three and a half months. At least based on those I've talked to and the preparations at WDW, it does not seem to me that Disney thinks a 3.5 month or longer closure of every park in WDW is the likeliest outcome here (meaning no parks open in 3.5 months), especially given the State of Florida's eagerness to reopen its tourism industry. Disneyland may be a different story for that reason.

Also, remember that while DS does draw lots of locals, it still generates most of its traffic (especially its heavy spenders) from tourists (especially international tourists). Even for locals, it's more of a destination shopping district, so the curbside retail delivery we're seeing in other malls of Florida doesn't really make as much sense at DS. It is certainly not the most convenient "mall" in the Orlando metropolitan area. It's a different situation from SDL's Disneytown, given that Disneytown is 1) more conveniently accessible to the metro area and 2) pulls from a tremendously larger metro area. That's not to say DS won't reopen soon or first; I think as we approach the middle of the month we may hear more about DS reopening, but this would explain why DS isn't in the first wave of malls and shopping centers to "reopen."

As to the questions on positive contributions, I think that is more of a factor for parks already struggling like HKDL and even DLP. There's not a doubt in my mind that WDW could make a "positive contribution" without international tourists. Again, we're not talking about profitability or break-even.

I haven't got a clue about HKDL and DLP, but with SDL opening next week, perhaps we'll see some reopenings accelerated if things go well there. I still think that Disney does believe a partial reopening of at least one of WDW's parks sometime in June is a distinct possibility. To be clear, this doesn't mean the first day of June or even by the middle of the month nor is this a firm date that can't change. This call didn't change my assessment that WDW is preparing to be ready for a reopening at some point in June if it is safe to do so at this time. My guess is that TDR (who's Ikspiari retail complex is semi-open right now) will follow WDW's lead (this aligns with the State of Emergency in Japan running through the end of this month as of now). Disneyland, on the other hand, will take much longer, given the stricter government guidelines we're seeing in CA. Could be August or later.

 

[rteetz]

Also, remember that while DS does draw lots of locals, it still generates most of its traffic (especially its heavy spenders) from tourists (especially international tourists). Even for locals, it's more of a destination shopping district, so the curbside retail delivery we're seeing in other malls of Florida doesn't really make as much sense at DS. It is certainly not the most convenient "mall" in the Orlando metropolitan area. It's a different situation from SDL's Disneytown, given that Disneytown is 1) more conveniently accessible to the metro area and 2) pulls from a tremendously larger metro area. That's not to say DS won't reopen soon or first; I think as we approach the middle of the month we may hear more about DS reopening, but this would explain why DS isn't in the first wave of malls and shopping centers to "reopen."

Disney doesn’t release numbers on this. Locals certainly do visit Disney Springs and I definitely think those things are much easier to reopen than a theme park especially with less visitors.

 

[thingaboutarsenal]

I feel like I got a lot more info from that call than what I was expecting, so good day for me
I'm going to stick to my guns and still say June opening of the parks

I like you. Optimism is so much more fun than doomsaying when stuff like this is happening.
China has never told the truth about how bad the virus hit them, and SDL is opening.
Florida was supposed to be just as bad as Italy and it never played out. Comparing SDL to WDW is apples to oranges.
Florida went phase 1 Monday, which means Phase 2 May 18th, and Phase 3...............June 1st.
I don't expect a YOLO approach and think maybe masks on transport and indoors will be a thing, but I'm pretty optimistic that June 1st bookings weren't an arbitrary date.

 

[RamblingMad]

Of course next quarter(s) will look worse.

I don’t think fall is out of the question by any means.

Possibly. My SO loves the Haunted Mansion overlay, and she loves the parks decorated for Halloween.

 

[Spaceguy55]

So bottom line ..with Fox and D+ they have a liquidity problem that will make them want to open the parks as soon as possible...I'm planning on going 4th of July weekend myself, I just hope they have the fireworks.

 

[RamblingMad]

I feel like I got a lot more info from that call than what I was expecting, so good day for me
I'm going to stick to my guns and still say June opening of the parks

I’m thinking sometime in July or August. If it was really June, I think, they would have been more confident with their second half dividend.

 

[OnceUponATime15]

what border? I'm not understanding what you mean

Canuck is slang for Canadian.. I assume (maybe incorrectly) that James Canuck is a Canadian - our border with the US has been shut down for months.. & If our PM has his way., it won’t open anytime soon

 

[cakebaker]

I feel like I got a lot more info from that call than what I was expecting, so good day for me
I'm going to stick to my guns and still say June opening of the parks

I'm counting on you being right. No pressure. The line about no clear visibility about an opening time frame bothered me.

 

[yulilin3]

I’m thinking sometime in July or August. If it was really June, I think, they would have been more confident with their second half dividend.

it's a wait and see at this point. I think they are waiting on announcement to see the data that will come in 2 weeks, we opened phase 1 yesterday, the numbers in 2 weeks will show how big the spike in cases really is, when Disney gets that number they will be able to make a more informed decision

 

[SaintsManiac]

I’m thinking sometime in July or August. If it was really June, I think, they would have been more confident with their second half dividend.

August seems most likely to me, but I really do hope I am wrong.

 

[andyman8]

Disney doesn’t release numbers on this. Locals certainly do visit Disney Springs and I definitely think those things are much easier to reopen than a theme park especially with less visitors.

I'm not disagreeing with you, but the point I'm trying to make is that the dynamics of DS are very different than those of your typical shopping center, even those in Orlando. DS relies more heavily on tourism traffic (they wouldn't have built that large WDW Resorts bus depot if resorts guests don't visit), and it's been my experience that locals (which I was at one point) spend longer periods of time at DS than they would at a traditional mall like Millennia or Florida Mall. Most locals I know don't go to DS because they need to make a quick return or pickup an online order from Lucky Brand. Those retailers have locations in malls far more convenient and accessible for the majority of locals to fulfill those purposes. Just ask any Leader who works there or even any of the third-party tenants and they can vouch for that as well. That's why I think that just because DS can theoretically open right now, it's not. They're not waiting for the tourists to return, but they are waiting for tangible evidence of growing confidence among locals and perhaps some loosening of restrictions.

Again, I'm not trying to say DS won't open before the parks. It definitely will. I think by the middle of this month (if not earlier) we could very likely see DS up and running. What I'm trying to say is I think the timeframe between when it does open and when we see the first WDW park reopen will be significantly shorter than we saw in Shanghai. That's all.

 

[yulilin3]

Canuck is slang for Canadian.. I assume (maybe incorrectly) that James Canuck is a Canadian - our border with the US had been shut down for months.. & If our PM has his way., it won’t open anytime soon

Got it, thanks for clarifying the point. Our Florida border is not closed but is being controlled so I wasn't sure if that's what you meant

 

[DavidHobart]

For those struggling with “positive contribution,” it’s a financial term (from “positive contribution margin”) that means that the extra cash revenue that comes in from a specific decision is higher than the extra cash costs that go out from that same specific decision.

In the case of a park, it means that the extra cash costs that come from the decision to open (e.g. lotsa paid staffing, increased utility costs, cash costs of food) are less than the extra cash revenue that comes from opening the parks (tickets, food and merchandise purchases). To think of very low capacity offerings, it's for such reasons events like DAH work--the incremental cash from offering it is more than the incremental cash costs of staffing it.

Note that just on the math this does not bode that well for APs who are not resort guests, as they contribute little new cash when they enter the park—the cash from their AP is (mostly) already in WDW’s hands. Possibly thus, so long as capacity is restricted, AP attendance MAY be restricted even more…

 

[CastAStone]

So bottom line ..with Fox and D+ they have a liquidity problem that will make them want to open the parks as soon as possible...

Not exactly...

Disney finished the quarter with FOURTEEN BILLION DOLLARS in Cash on Hand. They are Prepared.

Disney reports $94 Billion Dollars in Equity (Assets minus Liabilities, eg what they can still borrow against if needed).

 

[OnceUponATime15]

August seems most likely to me, but I really do hope I am wrong.

I agree.. I’ve been saying for awhile now (very unpopularly) that mid summer seems right with everything that has to be considered, reviewed and acted upon before welcoming guests.

 

[J-BOY]

Not exactly...

I really appreciate that you're sharing your knowledge, especially in an easily digestible way.

 

[OnceUponATime15]

Got it, thanks for clarifying the point. Our Florida border is not closed but is being controlled so I wasn't sure if that's what you meant

I’m hoping that we get back to open borders & flights by Canada day July 1st. Guess it will depend on how the virus behaves as we relax our restrictions.

 

[RamblingMad]

it's a wait and see at this point. I think they are waiting on announcement to see the data that will come in 2 weeks, we opened phase 1 yesterday, the numbers in 2 weeks will show how big the spike in cases really is, when Disney gets that number they will be able to make a more informed decision

If they’re going to reopen soon, they need to bring their CMs in to teach them new procedures and tweak their queues, retail, and restaurants for social distancing. I feel like you’d need at least two weeks to get that done, but you’d probably need a lot more lead time. And with people probably making more with unemployment, I wonder how many would want to immediately return.