Walt Disney Co Q1 2019 Earnings Results

The Walt Disney Company stock closed for the day at $112.66 a share before reporting their earnings for the first quarter (Q1) of fiscal year 2019 which ended on December 29, 2018. According to Bob Iger, the focus going forward is the 21st Century Fox acquisition and the launch of the Disney+ streaming service.

“After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”

Diluted earnings per share (EPS) for the quarter decreased 36% to $1.86 from $2.91 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter decreased 3% to $1.84 from $1.89 in the prior-year quarter.

The Parks and Resorts segment (which includes Disney Cruise Line and is now referenced as Parks, Experiences & Consumer Products) saw revenue revenues for the quarter increased 5% to $6.8 billion and segment operating income increased 10% to $2.2 billion. Operating income growth for the quarter was due to an increase at the domestic theme parks and resorts, partially offset by a decrease from licensing activities.

Operating income growth at the domestic theme parks and resorts was due to increased guest spending and higher occupied room nights. Guest spending growth was due to higher average ticket prices, an increase in food, beverage and merchandise spending and higher average hotel room rates.

Operating income at Disney’s international parks and resorts was down modestly compared to the prior-year quarter as lower results at Shanghai Disney Resort and Disneyland Paris were largely offset by an increase at Hong Kong Disneyland Resort. Lower operating income at Shanghai Disney Resort was primarily due to lower attendance and higher costs, partially offset by increased guest spending. Lower operating income at Disneyland Paris was due to increased costs, partially offset by higher average ticket prices. At Hong Kong Disneyland Resort, the increase in operating income was driven by increased guest spending and higher occupied room nights.

Lower income from licensing activities was driven by a decrease in revenue from products based on Star Wars and Cars and higher third-party royalty expense, partially offset by an increase from minimum guarantee shortfall recognition, higher revenues from products based on Spider-Man and an increase in licensee settlements. Higher minimum guarantee shortfall recognition was due to an impact from the adoption of ASC 606.

At the beginning of fiscal 2019, the Walt Disney Company adopted new a revenue recognition accounting standard (ASC 606). Results for fiscal 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with our historic accounting.

The current quarter includes a $115 million favorable impact on segment operating income from the ASC 606 adoption. The most significant benefits were $56 million at Media Networks and $34 million at Parks, Experiences & Consumer Products, both of which reflected a change in the timing of revenue recognition on contracts with minimum guarantees.

For more information and an overall report click over to the Q1-2019 Earnings Report.

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