The Walt Disney Company (DIS - Analyst Report) reported yet another better-than-expected quarter, marking the seventh consecutive quarter of earnings beat. Adjusted earnings per share for second-quarter of fiscal 2015 came in at $1.23 per share, cruising past the Zacks Consensus Estimate of $1.11 while rising 11% year over year. Shares of the company are trading up 2.3% in the pre market session.
The Walt Disney Company - Earnings Surprise | FindTheCompany
Revenues came in at $12,461 million, up 7% year over year and way ahead of the Zacks Consensus Estimate of $12,239 million, driven by Consumer Products, Parks and Resorts and Media segments.
The Media segment revenues grew 13% to $5,810 million, attributable to an 11% rise in Cable Networks revenues to $4,030 million and 19% rise in Broadcasting revenues to $1,780 million. Moreover, Parks and Resorts continued their good show lifting the segment’s revenues by 6% to $3,760 million while Frozen andAvengers associated merchandise led Consumer Products division to post a 10% increase in revenues to $971 million.
However, tougher year-over-year comparisons, owing to Frozen’s success last year, marred Studio segment revenues, which fell 6% to 1,685 million. Interactive segment revenues, too, suffered because of lower sales of mobile game titles due to fewer releases, falling 12% to $235 million.
Though Studio segment revenues failed to impress this quarter, Disney has a solid movie slate for the rest of fiscal 2015. The much awaited Avengers: Age of Ultron amassed a smashing $191.2 million over its debut weekend in North America, finishing as the second biggest opening weekend of all time in the U.S.
Moreover, with over $623 million in worldwide box office collections in just 14 days, the movie is now on its way to breach the $1 billion mark when it opens in China on May 12.
Disney’s other releases for the year includes Marvel’s Ant-Man and Pixar’s Inside Out. Given the runaway success of Marvel studios these days and the fact that Pixar has hardly ever let down Disney, both are likely to deliver at the box office. Lastly, release of Star Wars: The Force Awakens will be a befitting end to a spectacular year.
Total segment operating income increased 4% to $3,482 million, on the back of strong performance across Consumer products, Interactive and Parks and Resorts segments.
Segment Details
Media segment’s operating income fell 2% to $2,101 million owing to a 9% decrease to $1,799 million in Cable Networks, that ran down 90% growth to $302 million in Broadcasting operating income.
Higher programming costs at ESPN including the launch of SEC Network last August ran down growth in affiliate and advertising revenues.
Parks and Resorts operating income increased 24% to $566 million driven by domestic operations. However, international operations were marred by the lower footfall at the Hong Kong Disneyland, higher operating costs of Disneyland Paris and pre-opening expenses of the Shanghai Disney Resort.
Studio Entertainment operating income of $427 million decreased 10%. Tougher year-over-year comparison was the primary reason behind lower revenues which ran down the increased revenue share from Consumer Products segment.
Consumer Products operating income rose 32% to $362 million, owing to gains from Merchandise Licensing business.
Interactive segment’s operating profit increased 86% to $26 million due to lower marketing and product development costs.
Other Financial Details
During the quarter, Disney generated free cash flow of $2,011 million, up 10% year over year. The company ended the quarter with cash and cash equivalents of $3,745 million, borrowings of $12,186 million and shareholder’s equity of $46,038 million, excluding non-controlling interest of $3,699 million.
Currently, Disney carries a Zacks Rank #2 (Buy). Apart from Disney, other media/publishing companies which are scheduled to report quarterly results this week include Twenty-First Century Fox, Inc. (FOXA - Analyst Report) and CBS Corp. (CBS - Analyst Report) and Time Inc. (TIME - Snapshot Report). Twenty-First Century Fox is likely to report on May 6 while CBS and Time are slated to announce the same on May 7.
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